Acerinox Reports Decline in Deliveries and Earnings in Q2

Spanish stainless steel producer Acerinox experienced a notable decline in melt shop production and revenues in the second quarter of 2023, largely due to a nearly five-month strike at its Acerinox Europa stainless steel plant. Despite this, the company's earnings showed an improvement from the first quarter, driven by strong performance from its North American subsidiary, North American Stainless (NAS), and its high-performance alloys division.

Acerinox's stainless steel melt shop production plummeted by 17.5% from the first quarter to 384,000 tons, primarily due to the disruption at the Europa plant. For the first half of the year, production dropped by 16% year-on-year to 824,000 tons.

The company's earnings before interest, taxes, depreciation, and amortization (Ebitda) from its stainless steel division more than halved compared to the previous year, standing at €92 million in the second quarter. The January-June Ebitda also nearly halved to €236 million. The strike at Acerinox Europa had a significant impact, reducing the plant's Ebitda by €28 million in the April-June period and by €43 million in the first half of the year.

While there was a slight price recovery in the European market, demand did not meet expectations. Apparent consumption of flat products fell by 7% in May, with inventory levels remaining below the average of recent years. Import pressure decreased, with incoming flat products down by 23% year-on-year from January to May. In contrast, the U.S. market fundamentals remained stable.

Acerinox's high-performance alloys division performed relatively well, with an output of 20,000 tons in the second quarter, slightly down from 21,000 tons in the same period last year. The first half output increased by 3% year-on-year to 42,000 tons. Healthier margins boosted the overall second quarter Ebitda by 12.6% from the first quarter to €125 million.

Looking ahead, Acerinox anticipates continued weakness in the stainless steel market and noted a lack of visibility for the third quarter. However, it expects the high-performance alloys market to remain stable and foresees third-quarter Ebitda to be similar to that of the second quarter, with a gradual recovery of operations at Acerinox Europa.