Sweden's SSAB sees 'fairly stable' Q2 steel demand, shares rise
Adds shares in 6th paragraph, analyst comments in paragraphs 7, 10, adds background in paragraph 11
By Marta Frackowiak
April 24 (Reuters) -Swedish steelmaker SSAB SSABa.ST said on Wednesday it expects underlying demand to be "fairly stable" in the second quarter after reporting better-than-expected first-quarter results even as prices and demand in Europe remained weak.
The group's adjusted operating result fell by a thirdto 3.16 billion Swedish crowns in the first quarter, from 4.73 billion a year earlier. This though beatthe 2.68 billion crowns expected by analysts on average, according to LSEG data.
SSAB was also affected by Finnish labour union strikes, which it warned in March would weaken first-quarter operating profit by 350 million Swedish crowns ($32.34 million).
CEO Martin Lindqvist told Reuters on Wednesday the company would book another 125 million in costs related to the strikes in the second quarter.
The results and outlook reassured investors that the market may be stabilising. Steels mills have struggled with weakening demand and brutal competition from cheaper Asian rivals as inflationary trends continue and higher spending for decarbonisation is required.
The stock were up 2.7% at 0732 GMT.
JP Morgan warned, however, that "record" China steel exports remain a headwind to European steel profitability.
The company, which operates steel businesses on both sides of the Atlantic, expects second-quarter shipments by its Special Steels and European divisions to rise by 5-10% from the previous quarter, while the Americas unit's shipments will be "somewhat higher", it said in a presentation.
Raw materials costs will be somewhat lower compared with prior quarter.
JP Morgan said medium-term cash flow is likely constrained by "materially higher" spending on decarbonisation.
SSAB sharesfell earlier this month after the company, Sweden's biggest emitter of carbon dioxide (CO2), announced it would spend as much as 4.5 billion euro on a fossil-free minimill.
($1 = 10.8225 Swedish crowns)
Reporting by Marta Frąckowiak in Gdansk;
Editing by Josephine Mason
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