Sweden's largest steel producer SSAB said Wednesday it expects the US market to continue to improve in the second half of the year, with further price increases on the way in the third quarter.
"We expect our North American operations to continue to develop positively during the second half of 2014, driven by an improved market and the positive effects of previous price increases," CEO Martin Lindqvist said in a statement.
A planned outage at the company's 1.25 million mt/year Mobile County, Alabama, mill had been factored into the forecast, he added.
"The improved demand in North America has continued within several segments and, following the maintenance outage at the plant in Mobile at the beginning of the quarter, we have had full capacity utilization at both of our North American plants," Lindqvist said. "We have also announced two additional price increases during the quarter."
SSAB said demand in the North American steel market had risen in Q2 after weakening briefly in Q1 due to extreme weather conditions.
"In North America, the increase in market prices for plate, which began during the fourth quarter of last year, has continued as a consequence of announced price increases," SSAB said.
The volume of plate imports into North America had continued to increase but the anticipated fall in plate prices had yet to materialize, it added.
"In North America, the positive demand development we witnessed during the second quarter is expected to continue during the third quarter," SSAB said. "Steel prices have risen gradually during the first and second quarters and are expected to increase during the third quarter as a consequence of the announced price increases."
SSAB said the outlook was stable but less rosy for Europe.
"In Europe, a seasonal weakening in demand is anticipated during the third quarter, but in general demand is considered to be stable and prices expected to be stable or slightly decreasing," the company said.
SSAB said inventory levels in both North America and Europe were in balance and it did not anticipate any major restocking or destocking.
"In China, overall demand for steel is expected to develop positively during the coming quarter, but at a lower rate of growth than in previous years," the company said.
The group said scheduled maintenance would be carried out in summer at its Swedish plants, while no outages were scheduled in North America for Q3.
"It is believed that SSAB's shipment volumes in the third quarter will be at approximately the same level as during the second quarter," it said.
SSAB's shipments totalled 1.137 million mt in Q2, up from 1.085 million mt a year earlier. The company posted a net profit of SEK133 million ($19.4 million) for the quarter, swinging from a SEK144 million loss a year earlier.
Source: Platts
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