Outlook for Q3 2024
Group stainless steel deliveries in the third quarter are expected to remain stable compared to the second quarter. Slow market recovery in Europe is expected to continue while the market environment for business area Americas is expected to remain soft. The scrap market is expected to remain tight. With the current raw material prices, some raw materialrelated inventory and metal derivative gains are forecasted to be realized in the third quarter
Guidance for Q3 2024
Adjusted EBITDA in the third quarter of 2024 is expected
to be at a similar or higher level compared to the second
quarter.
Short-term risks and uncertainties
Outokumpu is exposed to various risks and uncertainties
that may have an adverse impact on its business and
operations. However, the company has taken prompt
measures to manage and control these risks.
The development of the global economy, geopolitical
tensions, and the continued war in Ukraine all expose
Outokumpu to risks and uncertainties within its operating
environment. The main uncertainties in the global
economy relate to slow global economic growth,
inflation, high interest rates, and continued uncertainties
concerning China’s economy. Possible further escalation
of geopolitical tensions and conflicts, especially in the
Middle East, could increase the disruption in the global
supply chains. The consequences of these disruptions
could impact Outokumpu's operating environment,
business, and stainless steel demand.
Outokumpu is exposed to energy price risk due to the
continued high price sensitivity towards adverse
geopolitical events. Any severe disruption or possible
further sanctions in the natural gas supply could affect
the price or availability of gas for Outokumpu’s
operations in Europe. Outokumpu acquires energy
gases from the European market, for which Russia is
one of the indirect suppliers. The EU has issued new
sanctions in June which will reduce LNG supply from
Russia to the European market.
During the second quarter, electricity prices declined but
Outokumpu remains exposed to an increase in energy
costs as uncertainties in volatility and price peaks remain
for part of the consumption. Outokumpu’s energy
portfolio has been hedged with more than two thirds of
the estimated consumption for the rest of the year.
Possible increases in the cost of electricity would mainly
affect the Ferrochrome business area due to the high
electricity consumption in ferrochrome production. The
activities implemented in relation to electricity
optimization enable the mitigation of peaks in spot
market electricity prices.
Cyber security threats, trade disruptions with raw
materials and dependencies on critical suppliers expose
Outokumpu to the risk of operational disruption and
additional costs. Further tightening of the scrap market
could impact the scrap price and availability.
Outokumpu does not purchase any scrap or nickel of
Russian origin for its operations. At the end of the
second quarter of 2024, an indirect supply from Russia
still exists for a very limited amount of raw material, and
the company is demanding that its supplier finds
alternative sources globally.
The company remains exposed to risks related to
volatile metal prices, especially nickel. Volatile metal
prices may impact Outokumpu’s result, among other
financial risks.
In June, the EU decided to extend the safeguard
measures by two years until June 2026. The purpose of
these measures is to mitigate the surge of imports. In
May, as a result of the anti-circumvention investigation
on cold-rolled stainless steel from Indonesia, the EU
imposed duties on some producers in Taiwan, Turkey,
and Vietnam.
Outokumpu Corporation has been joined during the year
2023 in arbitration proceedings over a dispute between
Fennovoima and Rosatom entities related to the
termination of the EPC (Engineering, Procurement and
Construction) contract. Outokumpu disputes the
existence of any contractual relationship, obligation, or
arbitration agreement between Outokumpu and any
Rosatom entity. Outokumpu has not made any provision
concerning this case.
For more information on Outokumpu’s risks, please refer to the Annual Report for 2023 and the Notes to the 2023 Financial Statements.