Just under ten years ago, during June 2006, Mittal Steel finally gained control of Arcelor, creating what in turn is still today the world’s largest steelmaker, ArcelorMittal.
Mention the Spanish stainless steel industry and one is likely to think first and foremost of Acerinox, one of the world’s largest stainless steelmakers with production facilities not only in Spain, but also in Malaysia, South Africa, and the USA.
Spain is also home to another world leader when it comes to stainless steel products, however. That company is Tubacex, the focus of this article and the world’s largest producer of stainless steel seamless tubes.
Recently-released financial results from Europe’s stainless steelmakers painted a predictably grim picture. With nickel prices, and thus stainless steel prices, falling, large-volume buyers have had little appetite to restock, instead waiting for a clear bottom in prices. The pernicious effects of deflation in action.
That said, Aperam appears to be outperforming its peers this year. Why is this?
With commodity prices dropping sharply over the past 15-18 months, many economies have been hit hard. Oil-rich Saudi Arabia issued its first government bonds since 2007 earlier this year as it looked to cover a widening budget deficit caused by the collapse in oil prices, while commodity-dependent Brazil and Russia have entered outright recession this year.
It is the latter of these countries that is the focus of this article, and in particular Russia’s steelmakers. How have they coped with the significant falls in domestic GDP this year, of some 3.5-4%, as well as a sharply weakened currency and a large jump in inflation and interest rates?
With prices of many commodities at multi-year lows, recent financial releases from some of Europe’s major steelmakers delivered a reminder that not everything is bad in the steel industry.
Why, when most stories surrounding the steel and commodity markets are overwhelmingly negative these days, might this be the case?
Recently-released results from Europe’s stainless steelmakers showed a decline in margins for all three of the continent’s major producers – Acerinox, Aperam, and Outokumpu – during the final quarter of 2014.