Acerinox Calls For More Protectionist Measures Against Asian Overcapacity

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Acerinox CEO, Bernardo Velázquez, warned yesterday of the risks inherent in Europe’s determination to take the lead in reducing global emissions, like closing factories on the continent which mean that Chinese steel arrives by boat, increasing contamination by 50%. Velázquez said he expects the company’s 2017 results to be significantly higher than those of 2016, driven by the recovery in prices and in demand, which boosted Acerinox’s earnings in Q1’17. That said, Velázquez flagged that the big factor which could be prejudicial for the company would be a slowdown in the Chinese economy and its subsequent impact on raw materials. He said, however, that there are no clear symptoms of this scenario happening.

As far as Spain is concerned, Velázquez stressed the importance of cutting energy prices, given they are 40% higher than the US, to incrase competitiveness. He highlighted that over 50% of the electricity bill is made up of taxes and tolls. According to Link Securities, these declarations “clearly reflect” the claims the European steel sector:

 They have been making for years, given that the arrival of steel from China is detrimental to their interests. If these kind of environmental measures are not implemented in every country at the same time, they hurt the local industry.

Acerinox held its AGM on Thursday, during which the board of directors proposed distributing a cash dividend to shareholders again, of 0,45 euros per share.

Acerinox is the sector leader in the US. As a matter of fact, the company has a market share of 35-40% there. It has invested 130 million dollars in its factory in Kentucky, as a result of which it hopes to grow 10% in its main market. Furthermore, 50% of the steel which is smelted in the US comes from its subsidiary North American Steel.


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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.