Outokumpu has decided not to invest in cold rolling capacity expansion in the U.S. at this point of time

Rhea-AI Summary

Outokumpu (OUTKY) has announced its decision not to proceed with cold rolling capacity expansion in the U.S., following an extensive feasibility study. The company remains focused on its target to increase cold rolling capacity in business area Americas by 80 kilotons through de-bottlenecking investments and productivity improvements by the end of 2025, having already achieved a 65 kiloton increase by end of 2024.

The decision comes amid unpredictable market conditions and significantly increased imports. The company will assess the impact of newly introduced 25% import tariffs on steel and derivatives in the U.S. Outokumpu maintains approximately 900 kilotons of melting and hot rolling capacity and 600 kilotons of cold rolling capacity in the Americas, split between U.S. (350 kilotons) and Mexico (250 kilotons).

Positive

• Already achieved 65 kiloton increase in cold rolling capacity through efficiency improvements
• On track to reach 80 kiloton capacity increase target by end of 2025
• New 25% import tariffs may reduce competitive pressure from imports

Negative

• Cancellation of planned cold rolling capacity expansion in U.S.
• Nearly doubled import penetration from Asia in North American market over past five years
• Unpredictable market environment affecting investment decisions

Outokumpu Corporation Press release/Investor News February 13, 2025 at 8.50 am EET

HELSINKI, Feb. 13, 2025 /PRNewswire/ -- On August 3, 2023, Outokumpu communicated that in the next strategy phase, commencing in 2026, the focus will be on strengthening the company's market position further and developing more globally diversified operations. As part of that, the company announced it was seeking to increase its existing cold rolling capacity.

Based on an extensive feasibility study, Outokumpu has decided not to invest in the expansion of its cold rolling capacity in the U.S. at this point of time. However, in line with earlier communication, the company has set a target to increase its cold rolling capacity in business area Americas by 80 kilotons through focused de-bottlenecking investments and productivity improvements by the end of 2025. Outokumpu remains well on track to reach this target, having achieved a total 65 kiloton increase at the end of 2024.

Impact of the newly introduced tariffs to be assessed – U.S. is an attractive market to Outokumpu

The February 10, 2025, proclamations expanding the 25% import tariffs on steel and certain steel derivatives imported into the U.S. may materially impact the analysis conducted prior to those announcements. Outokumpu remains committed to the U.S. market and will follow closely the impact of the expanded tariff action, and in the meanwhile focus on improving efficiency.

"We have a strong position in the U.S., and we continue to see it as an attractive and robust market for Outokumpu in the long-term and aim to further strengthen our position there. Given the current unpredictable market environment with significantly increased imports in the recent years, the result of our feasibility study did not support making a capital-intensive investment in additional cold rolling capacity for the time being. This allows us to direct our capital into other areas as we are currently evaluating the long-term strategic options to grow and develop our business further, including in the U.S," states Kati ter Horst, President and CEO at Outokumpu.

"Import penetration, mainly from Asia, into the North American market has nearly doubled during the past five years, and this has clearly impacted our decision not to increase our production capacity at this point. Now, as the newly introduced tariffs may decrease import pressure, we will follow the situation closely. We support free trade, but it is crucial to ensure a level playing field both in the U.S. and Europe," Kati ter Horst continues.

Outokumpu has integrated stainless steel operations, including melt shop, hot rolling operations* and cold rolling operations in Alabama, U.S. and cold rolling operations in San Luis Potosi, Mexico. In business area Americas, the company has approximately 900 kilotons of melting and hot rolling capacity and approximately 600 kilotons of cold rolling capacity, of which 350 kilotons in the U.S. and 250 kilotons in Mexico.**

_{* Hot rolling mill owned and operated by AM/NS, tolling contract in place until 2051
** All capacity numbers are name plate capacities.}

For more information:

Investors: Linda Häkkilä, Head of Investor Relations, tel. +358 40 071 9669

Media: Päivi Allenius, SVP – Communications and Brand, tel. +358 40 753 7374 or Outokumpu media phone +358 40 351 9840 / e-mail media(at)outokumpu.com 

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Outokumpu cold rolling mill in Calvert

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SOURCE Outokumpu Oyj

FAQ

Why did Outokumpu (OUTKY) cancel its U.S. cold rolling capacity expansion plans?

Outokumpu canceled the expansion due to unpredictable market conditions and significantly increased imports, particularly from Asia, which have nearly doubled in the past five years.

What is Outokumpu's (OUTKY) current cold rolling capacity in the Americas?

Outokumpu has approximately 600 kilotons of cold rolling capacity in the Americas, with 350 kilotons in the U.S. and 250 kilotons in Mexico.

How will the new 25% U.S. steel tariffs affect Outokumpu (OUTKY)?

The impact is currently being assessed, but the tariffs may reduce import pressure and create a more favorable market environment for Outokumpu's U.S. operations.

What is Outokumpu's (OUTKY) capacity increase target for 2025?

Outokumpu aims to increase its cold rolling capacity in business area Americas by 80 kilotons through de-bottlenecking investments and productivity improvements by the end of 2025.