Swedish steelmaker SSAB navigated a difficult year in 2020, taking down production and idling blast furnaces due to lower demand and COVID-19 restrictions.
“Looking back at it, I think our flexibility in the system has served us well because when the market started to recover in Q4, we were quite fast to adapt to that and get up production quickly and run it on a stable level, get the blast furnace up and running,” said CEO Martin Lindqvist during the Q4 2020 earnings call.
Revenue for full-year 2020 was SEK 65.4 billion ($7.8 billion), down 15 percent compared with 2019. Operation loss was SEK 325 million ($38.9 million), down from a profit of SEK 2,484 million ($297 million) in 2019. The decrease was primarily attributable to SSAB Americas, although earnings decreased in SSAB Europe as well.
Fourth-quarter revenue was SEK 16.99 billion ($2 billion) for an operating profit of SEK 557 million ($66.6 million).
SSAB dropped its inquiry into the acquisition of the Tata Steel Ijmuiden steel mill after deciding the transaction would not meet financial expectations.
In the Americas segment, demand was impacted by COVID-19 in the second and third quarter, but improved significantly in the fourth quarter. Shipment volumes rose 19 percent to 569,000 metric tons in Q4. Revenue for the quarter increased 27 percent from the prior quarter to SEK 3.45 billion ($413 million). Lower steel prices and higher scrap costs negatively affected quarterly earnings. The segment reported positive operating results of SEK 45 million ($5.4 million) compared to a loss of SEK 435 million ($52 million) in Q3.
For the full year, SSAB Americas posted an operating loss of SEK 293 million ($35 million) compared to a profit of SEK 2.13 billion ($255 million) in 2019. The segment reduced fixed costs by SEK 270 million ($32 million) and increased its share of the plate market in North America in 2020.
Scrap in the U.S. rose dramatically in December and January with purchase prices rising 14 percent over the third quarter. Increased costs are expected to carry through to first-quarter results.
A major maintenance outage is planned for the Mobile, Ala., facility, including the quench and temper lines, in the second half of 2021.
Market demand is generally healthy in the U.S. In heavy transport, truck production is at high levels with some weakness in railcars. Automotive and construction are expected to remain strong. Demand is good from the mining sector. The energy market is doing well overall with good activity in wind power and transmission, although activity in oil and gas remains slow, the company said.
Service center inventories in Europe and the U.S. are low, so restocking is expected, although COVID-19 surges may still affect demand in the near term. The general outlook is one of optimism for first-quarter 2021.
The new U.S. administration is expected to strongly support the wind energy and transmission segment, which will benefit SSAB. Oil and pipe will have less support, said Lindqvist. Regarding plate prices, he added, “We see a strong fundamental right now for plate, and we also see a very unusual situation where steel prices are clearly higher than plate. That doesn’t happen very often in the U.S. market.”
SSAB is focusing on reaching its goal to be fossil free by 2045. The HYBRIT plant was inaugurated in 2020 and will be an industrial scale demonstration for using hydrogen in place of coke and coal in the steelmaking process to reduce carbon dioxide emissions.
(NOTE: 1 SEK = $0.12)
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