HELSINKI (Reuters) - Niche steelmaker SSAB (ST:SSABa) has not seen steel demand decline due to the Ukraine crisis, its chief executive said on Monday, adding that he expected pricing margins to remain tight but not fall further.
Sweden's SSAB has said it expects third-quarter shipment volumes to be at about the same level as in the preceding three months as a continued upturn in North America offset a seasonal slowdown in Europe and lingering weakness in Asia.
"I don't see any big difference now, the outlook has not changed during the summer. We've seen the typical seasonal slowdown," CEO Martin Lindqvist told Reuters, when asked whether the crisis had cut back steel demand.
Steelmakers such as SSAB, which recently acquired Finnish peer Rautaruukki, have been squeezed by weak European demand in recent years amid widespread overcapacity in the industry.
Steel consumption in the region fell by about 4 percent last year to stand at only two-thirds of its 2007 peak but has lately shown signs of recovery while in North America demand and prices have picked up in recent quarters.
Lindqvist does not expect to see a return to 2007 levels in the foreseeable future, saying we are now seeing "the new normal" of gradually improving steel demand as the economy slowly recovers.
"There will be no heyday in Europe in the coming years, it will be a tough and competitive market," he said.
Steel prices are highly dependent on raw material prices. Lindqvist did not offer an outlook for these, but said a decline in pricing margins should be at end. At the same time, they are not expected to recover quickly.
"I am not expecting margins to come down ... Margins now are, according to history, very squeezed, and I expect them to stay squeezed," he said.
While further plant closures and mergers are needed in the industry to get rid of overcapacity, SSAB is not planning on closing any entire plants, Lindqvist said, adding that with the combination of SSAB and Rautaruukki, the new company can more easily adapt to changes in demand.
With the integration of Rautaruukki into SSAB it will take time before SSAB it can think of further acquisitions, he said.
"First of all, we have to digest the current one and take the synergies, so I think we have our plate full with work already."
(Reporting by Sakari Suoninen, editing by Anna Ringstrom and David Evans)