Spain's Acerinox reported on 3 November that its third-quarter net profit halved and said it is unlikely to recover until 2024, pointing to a contraction in the global steel market.
Net profit for the July-September period decreased 51% from a year earlier to €70 million ($74 million).
Weaker demand in Europe this year due to economic uncertainty and higher interest rates has negatively impacted steel companies' earnings, which reached record highs in 2021 and 2022.
Acerinox said the market downturn meant its earnings before earnings before interest, tax, depreciation and amortisation (EBITDA) in the fourth quarter would be slightly lower than the 146 million euros recorded in the third quarter.
"When visibility is low, buyers always react by reducing inventory, so the second half of the year is weaker than the first," Chief Executive Bernardo Velasquez said.
With the global economy slowing and putting pressure on production in particular, steel supply has outstripped demand in recent months, prices have fallen and customers have reduced inventories.
Apparent consumption in Europe decreased 26% in the year to September and a similar trend was seen in the US in the year to August, the company said.
European steel association Eurofer last week cut its forecast for the steel market, saying demand in the European Union would fall 5.3 per cent this year.
"Customers will maintain current inventory levels or try to reduce them further as consumption is not expected to increase until the end of the year," Velasquez said after the company reported that inventories in the US and Europe had fallen and returned to normal. Velasquez also said that the US market, which accounts for half of Acerinox's revenue, weakened in the third quarter, but the prospects for recovery are slightly better compared to Europe.
US steel prices are currently higher than in Europe due to tighter import controls and the US Federal Reserve starting to raise interest rates before the European Central Bank, the CEO said.
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