European stainless steel longs demand to rebound to 1.2 million mt in 2022: CAS

The European stainless steel market should rebound to close to pre-COVID levels at around 1.2 million mt of finished longs products this year, up from 1.05 million mt in 2021, according to Emilio Giacomazzi, director of sales at Italy's Cogne Acciai Speciali.

North Italy-based CAS, which has a capacity of over 200,000 mt/year of stainless steel, is one of the main European manufacturers of stainless steel and nickel alloy long products, providing melting, casting, rolling, forging and machining services. The company sold 180.000 mt of stainless longs products in 2021.

"We recorded a jump in demand for stainless steel after the COVID pandemic [although] since May the market has been in a pause as stocks are high and there is also an element of seasonality -- but overall demand is good," Giacomazzi told S&P Global Commodity Insights on June 23.

"Raw materials prices went up, but like most of our competitors we managed to transfer the costs into our final products," he added, noting that high energy and nickel prices were also partially covered by flexibility in the company's long-term contracts.

The London Metal Exchange three-month nickel contract hit a high of $48,078/mt on March 7 in the wake of Russia's invasion of Ukraine, but has since fallen back to $24,449/mt as of June 22, down 15.7% since the start of 2022 although still well above the average of $19,406.38/mt in the second half of 2021.

"We have a very good order intake until Q1 2023 and we see demand continuing to be driven by the automotive sector, even with the new engine regulations, but also from the aerospace, oil and gas, medical and food sectors," Giacomazzi said.

Merger to close this year

At the end of May, CAS's board agreed to the sale of a 70% stake in the company to Taiwan-listed industrial conglomerate Walsin Lihwa Corporation. The deal, which is still subject to approval by antitrust authorities, would create the third-largest stainless long producer in the world with a 700,000-800,000 mt/year long stainless steel products capacity.

Giacomazzi said the deal is expected to close this year, and that the companies are currently finalizing documents to be presented to the Italian government.

Giacomazzi also said that the company plans to invest Eur110million on expanding production capacity by at least 50,000 mt/year and on environmental upgrades over the 2022-2024 period, with the additional product likely to be exported to Asian markets.

"China's demand has slowed down but as COVID lockdown measures ease, we expect a pickup in demand, so we expect that part of the new production will go to Asia," Giacomazzi said.

"We are also very positive for the US market, in particular for the aerospace and CPI [chemical and processes industry], and we have a strong ambition to further enlarge our operations in North America," he said.

CAS's operations in the US currently comprise four warehouses.