Stainless steelmakers reveal restructure plans

Tens of thousands of tonnes of stainless steel production capacity is set to be affected by the restructuring plans of major steelmakers. 

MEPS respondents from across the countries assessed by the Stainless Steel Review reported few signs of recovery from the market’s currently subdued demand. Major producers, including Outokumpu and Acerinox, are responding with long-term solutions.  

Outokumpu has revealed plans to transfer its precision strip operations from Dahlerbrück to Dillenburg. Simultaneously, it plans to close its coil service centre in Hockenheim and transfer the volumes to other sites.  

The possible closure of Hockenheim could happen by the end of quarter two, 2024, at the earliest, it said. The transfer of operations from Dahlerbrück could be completed by the end of 2024. 

Outokumpu’s changes were announced as the Finnish business revealed an 83% decline in its quarter three core earnings. It said that “prompt actions” were required to “secure competitiveness in Europe”. 

Catalysts for restructuring 

The restructuring measures are expected to deliver annual savings of around EUR15 million. However, investments in machinery in Dillenburg and other costs are expected to amount to approximately EUR20m in 2024. The changes are also expected to result in 200 job losses among Outokumpu’s 1,900 employees in Germany. 

MEPS understands that stainless steel supply in the German market will be further affected by a separate restructuring announcement in the coming weeks. 

Respondents to MEPS’s November research confirmed that the German economy – Europe’s largest – continues to suffer from low stainless steel demand. Hamburg Commercial Bank’s Manufacturing PMI rose from 39.6 to 40.8 points in October. This remains Europe’s lowest score, however, and well off the 50-point level between growth and decline. 

The stainless steel market’s challenges are not confined to Europe, however. Recent reports suggest that Acerinox is considering the sale of its Bahru Stainless plant in the city of Johor Bahru, Malaysia. 

The Spanish producer, which has operated the plant since 2011, cited escalating production in China for its planned exit from Malaysia. It said the rising volumes of material had resulted in falling prices, contributing to the plant’s overall loss of over EUR500m since 2018. In that same period, it cut production at the Bahru Stainless plant from 276,000 tonnes to 129,000 tonnes in 2022. 

Shifting market focus 

Acerinox’s strategy is now focused on the United States market, where prices are higher, the Spanish newspaper elEconomista reported. 

MEPS price data reflects the relative stability of the US stainless steel market. 

In China, the MEPS transaction price for grade 304 cold rolled coil fell to USD1,750 per tonne this month. It has fallen 10.5% in three months and is now at its lowest level since July 2020. In the United States, the same product declined to USD3,575 per tonne and has not been below USD3,500 since July 2021. 

China’s stainless steel output increased by 8.2% in the first half of this year. This contrasts with a 13.4% reduction in the United States. 

The falling price of raw materials was the most influential factor in November’s stainless steel price declines, however, as MEPS’s monthly report reveals. 

• This content first appeared in the November edition of MEPS International's Stainless Steel Review. The monthly report provides subscribers with steel prices, indices and market commentary from key steel markets across the globe.