Outokumpu Issues Profit Warning Amid Stainless Steel Market Weakness

Outokumpu

Finland-based stainless steel producer Outokumpu has issued a profit warning, revising its guidance for the fourth quarter due to a combination of challenging market conditions, operational setbacks, and falling raw material prices. The company now anticipates its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for Q4 to be significantly below the €86 million ($90 million) recorded in the third quarter.

Outokumpu cited multiple factors contributing to the revision, including:

• Prolonged maintenance at its Tornio plant in Finland, which exceeded initial expectations of a €10 million impact.

• Weakened stainless steel market conditions, reflecting sluggish demand across the European value chain.

• Negative inventory valuation effects, driven by plummeting stainless steel and scrap prices.

The company hinted that Q4 adjusted EBITDA could approach breakeven levels or even turn negative due to these compounded challenges.

European Stainless Steel Market Pressures Intensify

The European stainless steel market is facing significant headwinds, with demand declining across the value chain. Falling raw material prices and broader economic uncertainties have exacerbated the situation. The Argus assessment for stainless steel 304 cold-rolled 2mm sheet delivered to northwest Europe has dropped nearly 15% since Q2, averaging €2,550/t. Similarly, stainless steel scrap 304 (18-8) solids cif Rotterdam has seen a sharp 21% decline, averaging €1,155/t.

Outokumpu’s stainless steel deliveries in Q4 are expected to decrease by 0-10% compared to Q3, with the company now expecting shipments to hit the lower end of the range. Total stainless steel shipments fell by 2.23% year-on-year to 459,000 tonnes in Q3, reflecting broader market stagnation.

These conditions have forced Outokumpu to reassess its operational strategies, while other producers in Europe are similarly reducing capacities to address supply and demand imbalances.

Looking Ahead

Outokumpu’s profit warning highlights the broader challenges facing the European stainless steel industry. Demand-side struggles, coupled with falling prices for raw materials and finished goods, are reshaping market dynamics. As Outokumpu navigates through these turbulent times, the focus will remain on mitigating operational inefficiencies while anticipating potential recovery in global demand for stainless steel.