Acerinox's return will add to stainless price pressure

An end to strike action at Spanish steelmaker Acerinox’s Los Barrios plant is expected to apply downward pressure to European stainless steel prices in the coming months.

Around 1,800 unionised workers at the facility, in Cádiz, had been on strike for 136 days when they voted 60% in favour of a new employment agreement on June 20. A statement issued by the steelmaker to local press indicated that activity at the plant would start on the afternoon shift of the following day, June 21. 

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The five-year agreement extends to 2027 and will provide workers with a pay rise of almost 13% over that period. It also maintains the plant’s five work shifts without loss of employment. Nonetheless, negotiations will soon begin on an agreement to reintroduce staff to work progressively. The number of shifts could, therefore, initially be reduced in number. 

Lost production and profitability 

MEPS sources say that pressure was mounting to settle the dispute between Acerinox and its striking workers, which started in early February. The ongoing inactivity was becoming a risk to the future of the Spanish operation. 

Acerinox Europa revealed in its quarter one financial results statement that it had incurred an EBTIDA loss of EUR31 million as a result of the strike and “the market situation”. The group’s stainless steel division registered a 15% decline in melting shop production (to 440,000 tonnes), 9% in cold rolling and 22% in long products in the period. Losses from the Los Barrios facility alone have been estimated at around 1,200 tonnes a day, totalling over 163,000 tonnes over the strike period. 

For stainless steel market participants in Spain, in particular, the loss of supply had a marked effect. Material produced by Acerinox accounts for around half of the country’s supply. The timing of the workers’ strike at Acerinox also coincided with industrial action at ports in Finland, which affected deliveries from Outokumpu, resulting in reduced supply across the region. 

Price renegotiations 

Following the end of the industrial action in Cádiz, MEPS research respondents report that Acerinox is contacting customers to renegotiate their outstanding orders. They say that the prices agreed in January are not reflective of the current market. The MEPS Europe average price for grade 304 cold rolled coil has risen by 14%, to EUR2,786 per tonne, in that period. Grade 316 cold rolled coil is up by 7.5%, to EUR4,186 per tonne. 

Market participants believe that the first deliveries from Acerinox’s Los Barrios plant are unlikely to reach customers until September/October. Buyers will, therefore, be mindful of the effect of falling nickel values and quarter four import arrivals on European stainless steel prices. The return of supply from Acerinox is also likely to apply downward price pressure. Despite the steelmaker’s absence from the market, the effects of any reduction in supply have been limited by continued weak demand. 

Consequently, any price renegotiations Acerinox enters into with customers may prove challenging. Few stainless buyers will feel inclined to concede a perceived price advantage.