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Market situation and outlook

The market

According to the World Steel Association, global crude steel production for the first nine months of 2018 amounted to 1,347 (1,286) million tonnes, up 4.7% compared with the same period in 2017. Chinese steel production increased by 6%, compared with the first nine months of 2017. Steel production in the EU-28 was up by more than 1%, whereas production in North America rose by more than 3% during the first nine months of the year.

In North America, demand remained strong during the third quarter. In consequence of the Section 232 investigation, import tariffs of 25% on steel have been introduced and this boosted demand for locally-produced material. Around 90% of the volumes SSAB sells in the USA are produced locally, with the remainder exported from Europe by SSAB Special Steels and SSAB Europe. It is still unclear as to what extent product exemptions from the tariffs can be granted.

In Europe, good demand continued during the third quarter, albeit with the normal seasonal slowdown during the summer. Stock levels at distributors are considered to be in balance.

In North America, market prices for heavy plate rose somewhat during the start of the third quarter before stabilizing at a high level. In Europe, market prices for strip and heavy plate rose somewhat during the quarter. In China, market prices for both strip and heavy plate were more less at the same level at the end of the quarter as at the beginning.

Market outlook

In North America, demand for heavy plate is estimated to remain strong during the fourth quarter of 2018. In Europe, demand is expected to be good, albeit with a certain seasonal slowdown towards the end of the year. The demand for high-strength steels is expected to remain strong during the fourth quarter.

For SSAB Americas, shipments are estimated to be lower during the fourth quarter compared with the previous quarter because of a major maintenance outage in Montpelier. Shipments for SSAB Europe are expected to be higher during the fourth quarter than during the third quarter, which was characterized by seasonally lower sales. Shipments for SSAB Special Steels are expected to be somewhat lower compared to the third quarter, due to the upcoming planned maintenance outage in Oxelösund.

Prices realized during the fourth quarter are expected to be somewhat higher than in the third quarter for SSAB Americas and SSAB Special Steels, but to be somewhat lower for SSAB Europe due to a seasonally weaker product mix.