Outokumpu Rebounds to Q1 Profit on Lower Costs and Ferrochrome Gains

Outokumpu

European cost savings and strong ferrochrome drive Outokumpu’s recovery

Outokumpu rebounds to Q1 profit after posting a loss in the previous quarter, driven by cost reductions and robust ferrochrome performance. The Finnish stainless steel producer reported a 29% year-on-year increase in adjusted EBITDA, reaching €49 million in Q1 2025, compared to a loss of €3 million in Q4 2024.

Ferrochrome unit leads growth despite U.S. headwinds

Outokumpu’s ferrochrome unit nearly doubled its EBITDA to €43 million, supported by higher prices and strong external demand. European operations also improved, with EBITDA rising to €6 million. However, the Americas segment saw a 54% drop in EBITDA to €11 million, reflecting ongoing regional cost pressures. Stainless steel deliveries rose 6% year-on-year to 470,000 tonnes, although realized prices declined across both regions.

Outlook improves, but geopolitical and cost risks persist

Despite a €15 million impact from a union strike in Finland, the Q1 cost hit was smaller than last year’s €30 million loss. Outokumpu expects stainless steel deliveries to grow by up to 10% in Q2, but a €10 million impact from scheduled ferrochrome maintenance is anticipated. The company also warned that global tariffs and geopolitical instability could affect future pricing and profitability. Still, Q2 adjusted EBITDA is projected to be equal to or higher than Q1.

The Metalnomist Commentary

Outokumpu’s return to profitability reflects its operational agility in Europe and the strategic advantage of in-house ferrochrome supply. However, declining U.S. margins and external risks highlight the need for regional diversification and cost discipline in a volatile trade environment.

Outokumpu Reports Decline in 2Q Steel Shipments and Revenues Amid European Market Challenges

Finland-based stainless steel producer Outokumpu has reported a significant decline in both steel shipments and revenues for the second quarter of 2024, as the company continues to grapple with a slow recovery in the European market, tight scrap metal supply, and the lingering effects of strike action in Finland earlier this year. Despite these challenges, the company experienced a year-on-year increase in shipments within the Americas sales region, providing some relief to the overall downturn.

During the April-June period, Outokumpu shipped 468,000 tonnes of stainless steel, representing a 6.8% decrease compared to the same period last year. The decline was more pronounced in Europe, where shipments fell by 9.77% year-on-year to 316,000 tonnes. However, the United States saw a nearly equivalent rise in shipments, totaling 161,000 tonnes.

Over the first half of 2024, Outokumpu's shipments declined by 9.5% to 912,000 tonnes, underscoring the challenges faced by the company. The second quarter saw distributor inventory levels in Europe remain low, largely due to limited supply stemming from strike actions at major production facilities. Interestingly, shipments in the January-March period had increased by 4%, a trend attributed to a slight easing in scrap metal sourcing during the second quarter.

Outokumpu's financial performance reflected these operational challenges. The company's adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) for the second quarter plunged by nearly 75% year-on-year to €56 million. The financial impact of the Finnish political strike was substantial, with a reported negative effect of approximately €30 million on the adjusted EBITDA, mirroring the impact seen in the first quarter.

For the first half of the year, adjusted EBITDA fell sharply to €94 million, marking a 76.14% decline compared to the same period in 2023.

The company's ferrochrome production also took a hit, decreasing by 34% year-on-year to 79,000 tonnes due to the strike and the temporary closure of one of its three ferrochrome furnaces in response to weak market demand. Nevertheless, deliveries of ferrochrome increased by 16% year-on-year, reaching 104,000 tonnes.

In January, Outokumpu temporarily shut down one of its three ferrochrome furnaces and one of its two sintering plants. The company expects ferrochrome production to operate at 80% of capacity until the autumn, as market fundamentals for ferrochrome showed significant improvement in the second quarter.

Looking ahead to the third quarter, Outokumpu anticipates that stainless steel deliveries will remain stable compared to the second quarter. While Europe's market recovery is expected to continue at a slow pace, the market environment in the Americas is forecasted to remain soft. Additionally, the scrap market is likely to stay tight, according to the company.

Outokumpu Significantly Increases Chrome Ore Reserves at Kemi Mine

Outokumpu

Finnish ferrochrome producer Outokumpu has announced a substantial 95% increase in its estimated mineral reserves at the Kemi chrome ore mine. This significant expansion is attributed to recent successful underground drilling efforts.

Reserve Increase and Economic Impact

The proven mineral reserves at the Kemi mine have risen to approximately 62.5 million tonnes of chrome ore, a remarkable 30.4 million tonne increase from the previous estimate.  Outokumpu estimates that these reserves, if converted entirely into ferrochrome and sold at average prices from January to September 2024, could generate approximately $15.5 billion. This highlights the substantial economic value of the increased reserves.

Mine Expansion and Long-Term Outlook

Outokumpu's strategic expansion of the mine's depth from 500 meters to 1,000 meters between 2017 and 2023 has played a crucial role in boosting the reserve estimates.  This expansion has significantly extended the mine's operational lifespan, with current projections indicating the availability of chromium until the 2050s. 

This long-term outlook provides Outokumpu with a secure and stable supply of chrome ore, strengthening its position in the ferrochrome market.  The increased reserves not only benefit Outokumpu but also contribute to the stability of the global ferrochrome supply chain.

Samancor Reduces Charge Chrome Benchmark for Fourth Quarter

Samancor

Samchrome FZE, the distributor for South African ferrochrome producer Samancor, has announced a reduction in its reference price for charge chrome in Europe for the fourth quarter of 2024. The new price, set at $1.46/lb, marks a 4% decrease from the previous quarter’s benchmark of $1.52/lb.

Samchrome's reference price replaces the European Benchmark Ferrochrome Price (EUBM), a former industry standard for South African charge chrome with a minimum chrome content of 52%. The EUBM was discontinued in June 2024 due to pressure from European competition regulators and criticism from market participants, who believed it was disconnected from the spot prices of higher-grade ferrochrome.

The EUBM, once negotiated by South Africa's Merafe Resources and Glencore in partnership with a European stainless steelmaker, was abandoned in May 2024. Following the discontinuation, many buyers and sellers continued to use the final Glencore-Merafe price of $1.52/lb. Samancor initially adopted this price for its reference point in July.

Despite Samancor’s new reference price, multiple spot transactions have been reported below the $1.46/lb mark. Traders and end-users are expressing concerns that the new reference price, like the EUBM, may not reflect true market conditions. As a result, many market participants are turning towards alternative pricing mechanisms, such as index-based systems offered by price reporting agencies, to replace the outdated EUBM.

The Move Towards Pricing Reform

In both the European and North American markets, the search for a more accurate pricing system is ongoing. The limitations of the EUBM and concerns over the accuracy of the current reference price highlight the need for a more transparent and market-reflective approach. The future of charge chrome pricing may lie in the adoption of these newer, index-driven mechanisms.

ERG Ferroalloy-Gas Utilisation Plant to Boost Efficiency and Cut Emissions in Kazakhstan

ERG

Kazchrome to Convert Flared Gas Into Clean Power with 80MW Plant

Eurasian Resources Group (ERG) has announced plans to construct a new ferroalloy-gas utilisation plant, reinforcing its position in energy-efficient ferroalloy production. The 80MW facility, to be located within Kazchrome’s Aktobe Ferroalloy Plant, will convert 600,000m³ of flared gas into electricity. ERG signed an EPC contract with China Tianchen Engineering Corporation and expects to complete the $92 million project by 2026.

Power Self-Sufficiency and Cost Reduction Strategy

The ERG ferroalloy-gas utilisation plant will enable the company to increase self-generation capacity, reducing reliance on external power sources. As a result, Kazchrome’s operational costs will decline, improving its already industry-leading position in cost efficiency. The project also supports ERG’s carbon reduction goals by capturing and utilizing gas that would otherwise be flared.

Competitive Edge in the Global Ferrochrome Market

Kazchrome is already recognized for having the lowest production costs among ferrochrome suppliers to Europe. The addition of the ERG ferroalloy-gas utilisation plant will further enhance its cost advantage, making it difficult for competitors — particularly Indian producers — to match pricing. This strategic investment ensures ERG maintains long-term competitiveness while aligning with sustainability and energy efficiency targets.

The Metalnomist Commentary

The ERG ferroalloy-gas utilisation plant reflects a growing trend toward energy recovery in heavy industry. As environmental regulations tighten, ERG’s investment strengthens both its sustainability profile and cost leadership in global ferroalloy markets.

Samancor Adjusts Charge Chrome Pricing Strategy Amid Market Shifts

Samchrome

Samchrome FZE, the Dubai-based distributor for South African ferro-chrome producer Samancor, has announced a reduction in its reference price for charge chrome for the first quarter of 2025. This strategic price adjustment reflects evolving market dynamics following the discontinuation of the European Benchmark Ferrochrome Price (EUBM).

Price Adjustment Details

The new reference price for charge chrome will be $1.35 per pound, marking a 7.5 percent decrease from the current rate of $1.46 per pound. This decision comes in response to the need for a new pricing benchmark after the EUBM, which had served as the industry standard for South African charge chrome with a minimum of 52 percent chrome content sold to Europe, was phased out in June of the previous year.

Market Implications of EUBM Discontinuation

Previously negotiated by Merafe Resources in conjunction with mining giant Glencore and a major European stainless steelmaker, the EUBM had been a global reference point for the charge chrome industry, influencing pricing decisions in Asia and North America as well. Its discontinuation in June 2024 has led to a more fragmented pricing landscape across major global markets, compelling distributors and producers like Samchrome to establish independent pricing strategies to remain competitive.

This shift underscores the broader industry trend towards regionalization and customization of pricing mechanisms in response to local market conditions, rather than relying on a single global benchmark.

Glencore’s Metals Output Declines in 2Q

Switzerland-based mining firm Glencore's base metals production fell on the year in the second quarter, with copper, zinc, and nickel all registering declines. Its copper production was marred by lower grades from some historical stock depletion and unplanned mill downtime at its African assets, with a geotechnical event and subsequent mine stabilisation activities at the Antapaccay site affecting output in South America.

Glencore's copper output fell by 9% on the year to 222,900 tons during April-June, with its Mutanda asset registering a steep 27% drop in copper metal output to 7,100 tons. Copper in concentrates production at Antapaccay shed 42% to 26,500 tons.

The group's January-June copper output fell by 5% year on year to 462,600 tons. But Glencore expects to recoup its losses in the second half of the year and left its annual production guidance for copper unchanged at 950,000-1.01 million tons.

Glencore's second-quarter zinc output fell by 8% on the year to 211,600 tons. Volumes were lower from Antamina given its expected copper/zinc mine sequence this year, but the drop was partially offset by the ramp-up of Zhairem. The group's January-June zinc output fell by 4% on the year to 417,200 tons.

Glencore's nickel output suffered a heavy fall on the transition of its New Caledonia operations into care and maintenance. But the drop was partially offset by recovery at its Sudbury Integrated Nickel Operations in Canada, together with higher production at Murrin Murrin in Australia.

Glencore's nickel output fell by 20% year on year to 20,400 tons in the second quarter, with January-June output registering a 5% fall to 44,200 tons. The drop was the result of its Koniambo operations in New Caledonia ceasing operations, going from an output of 7,700 tons of nickel in ferronickel in the second quarter of 2023 to zero this year.

Glencore's annual production guidance for nickel and zinc was unchanged at 80,000-90,000 tons and 900,000-950,000 tons, respectively.

The group's ferrochrome output fell by 16% on the year to 599,000 tons during January-June owing to the Rustenburg smelter's continued idled status in response to weak market conditions. A restart was pending an improved price and cost environment, the group said.

Glencore's cobalt production also fell by 27% year on year to 15,900 tons in the first half, attributed to lower run rates at Mutanda in response to a weak cobalt pricing environment, together with lower throughput and cobalt grades at the KCC asset.

China’s Jinhai to Halt Stainless Steel Output Amid High Costs and Weak Demand

Jinhai

China’s Jinhai, a prominent stainless steel producer in Guangxi province, has announced plans to suspend its melt shop production from January 1 for approximately 1 ½ months. This decision follows mounting production costs and weak downstream demand in the domestic market.

Production Halt Details

Jinhai, which operates a melt shop with an annual capacity of 1 million tons, produced around 900,000 tons of stainless steel in 2023, primarily using stainless scrap as its feedstock. The suspension of operations will impact production levels, contributing to an expected decrease in China’s total stainless steel output for the January-February period.

As of Q3 2023, Jinhai accounted for approximately 226,000 tons of China’s overall stainless steel production of 9.92 million tons. The company’s temporary shutdown follows broader industry challenges, including thinner profit margins and the threat of potential losses, particularly among producers in Guangxi and Zhejiang provinces.

Market Outlook and Impact

With production cuts becoming more common across various regions, the stainless steel industry is bracing for a downturn, particularly in light of the upcoming Lunar New Year holiday, which is expected to reduce market activity significantly. The Chinese market is forecast to see a reduction of around 300,000 tons in total stainless steel output during January and February. This will likely have a ripple effect on related markets, including feedstock prices for nickel pig iron and ferrochrome.

In the coming months, market participants are monitoring the situation closely, as production halts like Jinhai’s and soft demand are expected to weigh heavily on pricing dynamics across multiple sectors.