The stainless steel industry is not directly comparable to the traditional steel industry, but it is not without its own challenges. Outokumpu, the Finnish stainless steel producer, has posted four consecutive quarters of losses.

The Finns, who acquired the stainless steel business from Thyssenkrupp in 2013, and thus became the largest stainless steel manufacturer in Europe, have already previously taken capacity out of the market. „But what's the point if five times the capacity is being built up in Asia at the same time?“, asks Marc-Simon Schaar, who became CFO of Outokumpu in June.

The influx of imports from Asia, particularly from China and Indonesia, is creating significant price pressure. Meanwhile, energy costs have risen for European manufacturers. „We now face tariffs and increased transport costs – yet the import ratio has remaines stable“, notes Schaar, suggesting that the imported steel might be subsidised.

For example, Indonesia – where stainless steel producers are primarily of Chinese origin – has a smelting capacity of 5.5 million tons, while domestic demand is only 200,000 tons. „We have no problem with competition, but it should be fair“, says Schaar.

A similar phenomenon is observed in the United States. „Despite higher trade barriers, the import quota remains around 30%“, Schaar points out. The ongoing expansion of capacity in China, coupled with a significant decline in domestic demand, has intensified the pressure. Furthermore, China is increasingly losing its viability as an export market.

Years ago, Outokumpu closed its smelting operations in Bochum and Krefeld. In Krefeld, Outokumpu's German headquarters, stainless steel is now only further processed. At the same time, consolidation continues, with production in the Advanced Materials sector being concentrated at the Dillenburg site.

Marc-Simon Schaar has been responsible for the finance department at Outokumpu since June. The native of Wuppertal has been with the company for over twelve years. Although he joined Outokumpu in late 2012 following the acquisition of Thyssenkrupp’s stainless steel division, he was never associated with Thyssenkrupp. Rather, the former EY consultant joined Thyssenkrupp after the decision to sell the stainless steel business had already been made. Schaar's track record at Outokumpu includes leading the balance sheet restructuring in 2013/14, and a debt reduction programme since 2020.

„To defend our market position, we need to produce more cost-effectively“, says Schaar. The most cost-efficient plant is in Tornio, Finland, which also houses Europe’s only chromium mine, owned by Outokumpu. The plant is fully integrated, providing cost advantages.

However, this is of little use if demand is lacking. Overall the company's plants are currently under- utilised. In such market conditions, there is a need to maximize Tornio’s output. Consequently, flexibility in the cost structure in Germany is essential.

The focus is not on job cuts but on variable costs, which are significantly higher in Germany compared to Finland. „It goes without saying that we have done ourselves a disservice regarding energy costs in Germany“, says Schaar, noting that electricity and gas are about half the price in Finland.

Despite this, Schaar remains optimistic: „The German market is very important to us, if not the most important market in Europe – I believe in the future of the location.," he says. Nevertheless, he acknowledges a structural issue – overcapacity.

The EU is attempting to address this issue with the Carbon Border Adjustment Mechanism (CBAM). „From our perspective, it is the right approach. At least an attempt“, says Schaar. But there are many areas for improvement. „It doesn’t help our customers if climate-damaging stainless steel is used in white goods and then imported“, he explains. Climate tariffs are only applied to cement, iron, steel, aluminum, fertilisers, electricity, and hydrogen, not to end products.

„We have structural problems, but carbon steel faces even greater challenges due to the green transformation“, states Schaar. „Outokumpu began its green transformation some time ago. We are proud of that“, he adds. The company's CO2 footprint per ton of stainless steel is under 1.5 tons of CO2.

This places the company 75% below the global industry average. In comparison, China and Indonesia together produce 9 tons of CO2 per ton of stainless steel. Additionally, the Finns have the highest recycling rate in production, with over 95%. „Most CO2 emissions come not from scrap but from primary raw materials like nickel and chromium. We aim to make a difference there“, Schaar points out. „Sustainability is our license to operate.“

For a year, Outokumpu has offered a certified green product. „Circle Green has a CO2 footprint 93% lower than the industry average“, explains Schaar. The product is sold at a green premium, but many customers are unwilling to pay the higher price. There is some demand, but brisk sales are a different story.

Nevertheless, Outokumpu remains committed to its direction: „We hope to set an example for our competitors," says Schaar. "However, creating equal competitive conditions is crucial.“