CALL US: +358 9 4211 CONTACT US Search Investors Outokumpu as an investment Operating environment Operating environment The long-term outlook for stainless steel remains positive due to the increasing need of long-lasting and sustainable solutions for the world’s most critical challenges. Outokumpu is the undisputed market leader in Europe and strong number two in the Americas. Megatrends drive the demand for sustainable solutions Global megatrends, such as urbanization, mobility, economic and population growth, and climate change, are the main growth drivers for the stainless steel industry. The need to develop sustainable solutions that are durable and can be reused at the end of their lifecycle is apparent, as the megatrends drive the demand for economic, social, and environmental sustainability. Our commitment and contribution to sustainability are embedded throughout our value chain from procurement and production to customer deliveries. We have the lowest carbon footprint in our industry, and we are the leader in the circular economy as the recycled content in our stainless steel is highest in the industry – over 90%. Mitigating climate change by reducing our carbon footprint is a clear focus area, and we aim to reduce our environmental impact for example through energy efficient production and by using low-carbon electricity. We are continuously looking for ways to even further improve the sustainability of our products and processes. Global market with few big players Outokumpu operates in the global stainless steel market. Our world-class assets, comprehensive product portfolio and proven expertise form a sound foundation for our strategy execution and future success. In 2020, the market for cold-rolled products totaled approximately 26.5 million tonnes. Outokumpu’s global market share was approximately 6%. In Europe, our cold rolled market share is approximately 30%, which makes us the market leader in Europe. In the USMCA region our market share is approximately 24% and in the US approximately 22%, making Outokumpu the clear number two in the Americas. (Sources: EUROFER, SMR, US: Foreign Trade Statistics, American Iron & Steel Institute) In addition to Outokumpu, the largest stainless steel producers worldwide include Asian companies Tsingshan, TISCO and POSCO as well as European-based Acerinox and Aperam. Several Asian producers also manufacture carbon steel, while European manufacturers focus on stainless steel. (Source: CRU) Long-term market outlook remains positive The long-term outlook for stainless steel demand remains positive despite the disruption caused by the COVID-19 pandemic in 2020. Global megatrends, such as urbanization, climate change, and increased mobility combined with growing global demand for energy, food, and water, are expected to support the future growth of stainless steel demand. In 2020, the global steel production amounted to 1,864 million tonnes of which approximately 3% was stainless steel. (Source: CRU, Worldsteel) The demand for stainless steel products is impacted by global, regional, and national economic conditions, levels of industrial investment activity and industrial production. Latest quarterly outlook Market environment remains difficult Global consumption and production of stainless steels were in 2020 severely disrupted by the shock arising from COVID-19 pandemic. Due to the wide lockdown schemes, the most pronounced impact in Europe and Americas took place in the second quarter and by the end of the year we started to see a strong recovery. European steel industry continues to suffer from the high level of imports from the third countries and price pressure despite the anti-dumping duties on stainless steel hot rolled from China, Indonesia and Taiwan imposed by the European Union in April. The need for the renewal of the EU’s Safeguard measures after June 2021 remains in place as there are currently no signs of easing overcapacities in Asia, nor lifting of the US imports tariffs imposed in 2018. Global real demand for stainless steel products amounted to 42.8 million tonnes in 2020, a decrease of 3.3% from 44.3 million tonnes in 2019. The demand in EMEA and Americas decreased by 12.1% and 12.3, respectively, while APAC only decreased by 0.2%. The annual demand decreased most, by 15.6% in Automotive & Heavy Transport segment. The demand in Industrial & Heavy Industry decreased by 4.8%, in ABC and Infrastructure by 3.3%, in Chemical, Petrochemical and Energy by 2.3% and in Consumer Goods and Medicals by 0.5%. (Source: SMR) The global stainless steel production decreased by around 5% in 2020 from the previous year, reaching 50.4 million tonnes. The drop in output was pronounced in the most of the regions, while the output only grew in Indonesia and remained on the same levels compared to 2019 in China. This on one hand demonstrates the continuation of the rapid capacity build-up in Indonesia, and on the other hand China’s prompt recovery from the crisis caused by the COVID-19 pandemic. (Source: CRU) The stainless steel industry has been burdened by overcapacity in recent years, especially in Asia. The global stainless steel production capacity of slabs increased in 2020 by roughly 2% to 60.1 million tonnes. The global utilization rate was assessed to have decreased to the levels of 70% in 2020. As the production of stainless steel is capital intensive, producers generally seek to maintain high capacity utilization in order to maintain and improve profitability. (Source: CRU) Stainless steel is sold either directly to end users or to stainless steel distributors, tube makers, and processors, such as steel service centers, who resell the products to end users. In 2020, 52% of Outokumpu’s stainless steel was sold directly to end-user customers. The remaining approximately 48% of sales were shipped to distributors that stock and process stainless steel to serve end users. For latest market comments, check our CEO's review and latest interim reports. 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