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SSAB swings to profit in Q1

Steel producer SSAB reported a quarterly profit of 83 million kronor ($11.34 million) on Tuesday, beating analyst expectations and a 215 million kronor loss in the same period last year. The company expects that demand for steel will remain strong in the second quarter.

Published: 4 May 2010 17:10 CEST

Sales amounted to 8.865 billion kronor compared with 8.035 billion kronor a year earlier. According to Reuters, analysts had on average expected a loss of 105 million kronor and turnover of 9.269 billion kronor.

After the announcement, SSAB shares rose sharply on the Stockholm Stock Exchange, getting an extra lift from forecasts for the company’s near future.

“Steel demand is expected to remain favourable in the second quarter,” said SSAB CEO Olof Faxander in the interim report.

In Latin America, Australia and Asia in particular, development is “very good,” said Faxander. Demand is also increasing in Europe and North America, but at a slower pace, he added.

Orders from the mining sector showed growth. “There is also an increase in heavy transport, but at a low level,” said Faxander.

SSAB has not yet signed a contract with its main supplier of iron ore, state-run Luossavaara-Kiirunavaara AB, better known as LKAB.

“Given the developments in the world market, however, we expect a significant price increase for iron ore starting in the second quarter,” said Faxander.

SSAB has raised its own prices and these increases are estimated to offset the increased raw material costs in the second quarter. The company estimates that its prices may rise even further in the third quarter.

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Derailment cuts off trains to northern Sweden

Six carriages ended up on their side. No injuries were reported, but freight traffic has been hard-hit. The cause of the accident is still unclear.

“We will have a meeting at 1pm and post new information on the site after 2pm,” Peter Behrman of the Swedish Transport Administration’s (Trafikverket) press office told The Local on Tuesday.

When asked how long the delays will be after the derailment, Behrman said, “Right now, we think several days, but we don’t know really. I hope it will be a bit clearer after 2pm.”

Work on the derailment in Jämtland was already under way on Tuesday morning. However, train service on the northern main line will be suspended for several days, with freight traffic coming to a grinding halt.

A freight train was traveling from Vännäs northeast of Umeå in northeastern Sweden to Skövde in central Sweden. It derailed at around 9.50pm on Tuesday evening in Grötinge, two stations north of Bräcke, in Jämtland.

The train was carrying paper products.

After the derailment, six cars lay on their side next to the track. The locomotive and the rear carriages remain on track, while both rail and overhead lines were damaged.

“Nearly 40 trains per day pass the site. And of those, 95 percent are freight trains,” said Denny Josefsson of the Trafikverket press office earlier on Tuesday.

It is not possible to divert the freight trains. Steel giant SSAB’s “steel commuter,” which transports steel materials from Luleå in northern Sweden on the east coast to the company’s plant in Borlänge in central Sweden, is affected by the derailment.

“We transport about 6,000 to 7,000 tonnes of steel per day to Borlänge, equal to about the same volume of steel as the Eiffel Tower. This will obviously impact us,” Stefan Enbom, site manager at SSAB in Luleå, told newspaper Norrländska Socialdemokraten (NSD) online on Tuesday.

According to Mats Hollander of Swedish rail logistics company Green Cargo’s press office, other companies, including paper products manufacturer SCA, Finnish steelmaker Outokumpu, Volvo and Ikea, also expect shipment delays.

“We are working frantically with our customer contacts now to see if we can transport the goods by other means, such as vehicle or boat, or if they can wait a few days,” said Hollander.

No passenger trains will run on Tuesday during the day on the route. Overnight, four passenger trains were affected by the derailment.

An estimated 50 to 100 passengers per train were shuttled by bus between Bräcke and Långsele west of Sollefteå in northern Sweden. It is unclear how long the delays were that they encountered.

On Tuesday night, another four passenger trains will be hit by the derailment. The trains will be replaced by bus service between Ånge south of Bräcke and Långsele.

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