Weak construction demand makes Outokumpu Oyj declined trading

Tag : Steel Stainless
The shares of Outokumpu Oyj  fell as much as 20 percent after it said net income from continuingoperations declined 77 percent to 130 million euros ($204 million).That missed the 150 million-euro median of seven analyst estimatescompiled by Bloomberg.
Outokumpu forecast an operating loss for the current quarterbecause of a write-down of about 100 million euros on inventoriesof nickel, an ingredient used in steelmaking. Distributors aredelaying purchases of stainless steel, the company said today inits earnings statement.
Buyers of the alloy, used in buildings because of its resistance tocorrosion, have reduced purchases as construction slows. Spain'sAcerinox SA, the world's largest stainless-steel producer, saidyesterday a slump in the property market is eroding orders andprices.
Outokumpu declined 2.87 euros, or 15 percent, to 16.35 euros as of2:14 p.m. in Helsinki. Earlier it dropped as much as 3.86 euros to15.36 euros. A close at that price would be the biggest one-daydrop since at least February 1990, according to data compiled byBloomberg. The stock lost 23 percent this year.
``Volumes were clearly lower than expected,'' Erkki Vesola , an analyst at eQ bank in Helsinki, said today by telephone. ``Thebigger disappointment was the guidance for the third quarter. It'shard to see any positives.''
Delayed Purchases
The decline in demand for stainless steel is also partlyattributable to buyers delaying purchases in anticipation thatprices will track nickel even lower, according to John Kovacs , an analyst at London-based metals consulting company CRU Ltd.Nickel traded today in London at its lowest in more than two years.
The average price of stainless steel strips in the European Unionwas $1,874.15 a metric ton in the quarter, 36 percent lower than ayear earlier, according to Metal Bulletin data.
Outokumpu produces stainless steel at plants in Finland, the U.K.and the U.S.
Acerinox declined as much as 8.5 percent in Madrid, the biggestdrop since Sept. 11, 2001. Rautaruukki, Finland's biggest maker ofcarbon steel, slumped as much as 11 percent in Helsinki trading.
To contact the reporter on this story: Mark Herlihy in London at mherlihy1@bloomberg.net Last Updated: July 24, 2008 08:05 EDT