Acerinox profitable, but melt shops less active

Madrid-based stainless steel producer Acerinox S.A. says its melt shops produced 9 percent less metal in this year’s second quarter compared with the previous quarter, but it was able to increase its earnings before interest, taxes, depreciation and amortization (EBITDA) by 5 percent quarter on quarter.

The company, while reaching 236 million euros ($262 million) in EBITDA in this year’s second quarter, notes its results are “below those of the exceptional second quarter of 2022,” when Acerinox recorded EBITDA of 523 million euros ($580 million at the current exchange rate).

As he has in previous comments this decade, Acerinox CEO Bernardo Velázquez credits the firm’s North American Stainless (NAS) operation in Kentucky as a bright spot. “The American market has showcased positive performance, underscoring its significance as our primary market,” Velázquez says.

Despite the positive contribution from NAS, Acerinox's overall revenue in the most recently completed quarter fell by 2 percent from the prior quarter.

In the first half of this year, Acerinox's melt shop production of slightly more than 1 million tons was 13 percent higher than in the second half of 2022 but was down by 21 percent compared with the booming first half of last year.

“Acerinox has achieved good results in the first half of 2023, especially considering the weakness in the markets due to destocking and lower demand,” Velázquez says.

The CEO credits strategic choices made in recent years for helping Acerinox in “managing to flatten the cyclicality of its sector and achieve good results even in the weak moments of the cycle.”

Velázquez also points to the firm’s geographic diversification, including NAS, as a business strength and says the Acerinox acquisition of specialty alloys maker VDM Metals has been a plus.

The location of stainless steel and alloys plants on different continents is particularly important in an increasingly regional and potentially protectionist metals trading environment, he says.

”Our global production and distribution network will allow us to stay close to suppliers and customers, support the regionalization process and improve supply chains,” Velázquez says. “This situation will increase the consumption of stainless steel in strategic regions of the world where the appeal of imports has significantly diminished.

“Acerinox finds itself in a favorable position amidst the logistical hurdles and trade defense measures stemming from the contraction of globalization. The company’s ability to supply customers reliably and with exceptional quality, while upholding the highest sustainability standards, sets it apart.”

Regarding the second half of this year, Acerinox states, “Following the normalization of inventories across all markets, we anticipate a positive impact on our order book in the latter half of the year, despite uncertainties and weakened demand.

“In the stainless steel sector, the third quarter will be marked by the seasonal patterns typical of the summer months, especially in Europe. However, the high-performance-alloys sector continues to enjoy robust demand, particularly in the chemical, petrochemical and aerospace industries.”

As a result, Acernicox says it expects good results in the third quarter, though they could be below those of the second quarter.