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“The fact that we have not signed yet, means that we are still in discussions with multiple interested parties,” executive vp of marketing, communications & investor relations, Kari Tuutti, told Steel First on the sidelines of Metal Bulletin’s 12th International Stainless & Special Steel Summit in London.
“We believe we can get a better result.”
Europe’s leading stainless flats producer, Outokumpu has been forced to sell its sheet-producing plant in the central region of Umbria, to comply with European competition regulations.
The European Commission insisted on the sale when it approved the company’s €2.7 billion ($billion) merger with ThyssenKrupp’s stainless steel division, Inoxum.
The sale comes at a difficult time for the European stainless steel market as it struggles with oversupply and increasing imports.
Imports into Western Europe rose by 25% year-on-year in the first five months of 2013, according to Metal Bulletin Research.
The number two in stainless flats in Europe, Aperam, has been the only confirmed party interested in the Italian plant, in a joint-bid with tube producers Marcegaglia and Arvedi.
The marketing executive could not give a new deadline for the sale, which was delayed in May due to “unacceptable bids”, according to Outokumpu.
"Hopefully, we will be able to reach an agreement before the end of the year. We do have clear deadlines with the European Commission, but these are confidential,” Tuutti said.
“What can say is that there are still multiple buyers and that means opportunities for us,” he added.
Daily alloy surcharge
Last week, the Espoo-based stainless group said it would announce the outcome of its daily alloy surcharge pilot in Europe in the coming two-to-three months,
“It is too early to say anything about the outcome, but we are optimistic about positive feedback on a move to the daily model,” Tuutti told Steel First.
“The main point is that the alloy surcharge will not be based on historical alloy prices. Customers [will not] have to pick the day of the order; they [will also be able to] pick a later date, closer to the delivery,” he said.
When asked how the buyers in the new system were going to determine when to buy and how it would affect sales prices and competition at a stockholder level, Tuutti said advantages and disadvantages among buyers would even out over time.
“These are exactly the kind of points to generate feedback on. Our aim is to reduce volatility,” the marketing and communications executive said,
However, Tuutti added that the company is not planning to assist customers with hedging instruments.
“Financial instruments are not a part of our plan,” he said.
Strategy review points
Outokumpu is looking into making other strategic changes to return to profitability.
In its latest quarterly results, the group reported a €250 million ($330 million) net loss in the second quarter of 2013, due to a drop in deliveries, nickel prices and a weaker performance by its Americas operations.
Tuutti reiterated that, as part fo the restructuring, selling the former ThyssenKrupp alloy business VDM was still a possibility.
“We are looking at different strategic options, but have made no decisions on it yet. We will announce more before the year-end. It is too early to assume divestment,” Tuutti said.
The executive would not give any more details on the service centre strategy review and declined to comment on which locations would be affected.
“The review is [continuing] – after the merger we have some overlapping service centres. Changes are expects, but no dramatic changes,” he noted.
Outokumpu also aims to cut its cost base by another €300 million ($396 million) by the end of next year, compared with 2012, owing to its investment in its US coil producing operations in Alabama and the ramp-up of its ferro-chrome expansion at Tornio in Finland.
“Of course, it depends on pricing movements,” Tuutti said. “I expect 2014 to be better [than 2013].”
Earlier this week, Outokumpu’s president for Asia-Pacific, Austin Lu, told Steel First the Chinese market would be the key driver of the company’s plans to boost growth and profits in Asia.
Finnish stainless steelmaker Outokumpu is confident that bidders for its Italian subsidiary Acciai Speciali Terni (Terni) will raise their bids before the end of the year.