ATI secures nickel ‘safety stock’: Wetherbee

Allegheny Technologies Inc (ATI) has taken “decisive procurement actions to create a near-term price-protected nickel safety stock,” company chairman, president and chief executive officer Robert Wetherbee said in a conference call on Wednesday May 4.

“This will ensure an uninterrupted flow of materials to meet increasing customer demand,” he added, pointing to “disrupted availability” and noting that nickel prices rose by more than 30% in March.

Goldman Sachs in late April forecast that the Class 1 nickel market faces a 196,000-tonne deficit in 2022, up from a 185,000-tonne deficit in 2021.

Pittsburgh-based ATI also reported significant price increases for other key raw materials – including cobalt, ferro-chrome and molybdenum – in the first quarter.

ATI therefore “raised prices to offset the additional raw material, labor and supply-chain costs we’re experiencing,” Wetherbee said. “In product lines with fewer long-term customer agreements, we’re able to fully offset inflation in the first quarter.”

In product lines with long-term agreements, however, where the impact of higher costs will lag “about a quarter,” ATI’s future earnings could be affected, he said.

The CEO also said he expected the company’s customers to rethink global supply chains and reallocate some of their demand for raw materials – especially titanium – to western suppliers.

ATI reported net income of $30.9 million on $834.1 million in sales in the first quarter, reversing the $29.8-million loss on $765.4 million in sales reported in the fourth quarter of 2021. The first-quarter results also mark an improvement from a loss of $7.9 million on $692.5 million in sales in the first quarter of 2021.

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