European steel demand is holding up well despite lingering worries over the economy, according to the chief of Sweden’s top steelmaker, SSAB AB.
(Bloomberg) — European steel demand is holding up well despite lingering worries over the economy, according to the chief of Sweden’s top steelmaker, SSAB AB.
After a slump that was particularly pronounced late last year that led the company to curb production along with its European peers, consumption recovered at the turn of this year. That trend is ongoing, Chief Executive Officer Martin Lindqvist said in an interview after SSAB’s first-quarter results that beat analyst estimates.
“We are guiding for slightly higher volumes, slightly better prices,” he said. Demand from “heavy transport remains strong, automotive is fairly strong and then of course the weakest part is construction.”
The CEO’s comments indicate prospects for the steel industry remain upbeat, even as concerns about the broader economy persist in an environment of high inflation and tight monetary policy. Traders expect the European Central Bank to raise interest rates further and US figures on growth, inflation and wages this week will feed the debate on whether there’s more Federal Reserve hikes to come.
And in Sweden, the Riksbank on Wednesday delivered another half-point rise in borrowing costs and warned that more is to come.
“We have the situation with a war in Europe, high inflation, high interest rates, and that gives uncertainty of course,” Lindqvist said. “And there’s always a question mark over what will happen after the summer.”
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While SSAB’s production recovered with the start of a plant in Raahe, Finland, the firm’s long time goal isn’t to keep growing its regular output, but instead to focus on making production greener, with a number of mini mills that will eventually produce fossil-free steel.
“We see that demand is there in the market, we see a better cost position and better yield, so that is what we are aiming for,” Lindqvist said.
SSAB shares rose as much as 5.3%. They’re up 23% this year, compared with a 2.4% gain for ArcerlorMittal, Europe’s biggest steelmaker.
–With assistance from Eddie Spence.
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