Damstahl: Mills prepare the turnaround

● The 2011 crude steel production of the European mills was +2% above the production in the previous year at a level of 7.6 million t (7.4 million t in 2010). Production in Q4/11 was surprisingly strong compared to the production in the previous quarter (> +15%) which is not in line with the negative expectations about the European market. The production in the ‘Damstahl-Land’ was in line with this development: Germany +1%, Sweden +7% and the UK even +20% (y-o-y).

● European mills are basically optimistic for Q1/12 – they expect increasing surcharges as well as base prices, which enhance their profitability. Especially the base price increases will depend once again on the supply side discipline, which has not been particularly good in 2011. Competition from Asian mills is limited now as the price gap (China to Europe) fell below 300 €/tonne.

● Acerinox: the producer plans to become more independent from the uncertain European banking system. Acerinox has secured a syndicated credit facility in the US with 10 leading banks for 482 million US$. 80% of this amount is a long term loan to Acerinox S.A. and the remainder is provided to NAS.

● Outokumpu has reorganized from January 2012 on. The company is divided into the three business areas a) General Stainless (stainless steel operations in Tornio and the Terneuzen plant), b) Specialty Stainless including Special Coil (Avesta Works and Nyby), Special Plate, Precision Strip (Kloster) and Long Products (including the Sheffield meltshop) and c) Ferrochrome: the Kemi Chrome Mine and ferrochrome smelter in Tornio.

● Inoxum: ThyssenKrupp Nirosta has asked regional authorities for a permit to relocate production from Dusseldorf-Benrath to Krefeld. The company intends to transfer production from Benrath to Krefeld successively until 2016. At Krefeld, Nirosta will expand its ferritic production (NIFO project). The measures include the relocation of a skin pass mill and annealing furnace from Benrath to Krefeld. In Krefeld a new annealing/pickling line and cold rolling stand will be installed and an existing annealing/pickling line will be converted into a bright annealing line. Some outdated equipment in Benrath (Z-mills) will be shut down. The new ferritic line in Krefeld will be substantially more productive than Benrath was.