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[Ferro-Alloys.com] Ferroglobe's second-quarter silicon and manganese product shipments fell 39% year on year to 142,653 mt as the economic impact of the coronavirus pandemic slashed customer demand in the aluminum and steel end-markets, the company said Sept. 1.
By product category, Ferroglobe reported the sharpest Q2 sales decline in silicon-based alloys, down 50.2% at 39,479 mt, and manganese-based alloys, down 44.5% at 55,290 mt, as orders were impacted by lower production and temporary shutdowns in the steel market.
"The steel sector has continued to run at low utilization rate following significant curtailments at the beginning of the year," Ferroglobe CEO Marco Levi said during a call with analysts. "The foundry business is being impacted by the same dynamics relating to the auto industries in both the US and Europe."
Levi said silicon metal shipments in Q2 fell 11.5% year on year to 47,884 mt as production and demand in the aluminum industry slowed due to vehicle manufacturer curtailments.
"Based on the current buying behavior of our customers, we anticipate that end-market weakness is likely to continue," Levi said. "We have seen early signs of recovery from the North American auto industry in July with demand near pre-COVID levels. In Europe, however, the auto business remains sluggish."
Ferroglobe's silicon sales to the photovoltaic market have continued to suffer as well, though demand has been stronger in the chemical industry, Levi added.
"Overall, it is difficult to know whether the activity level for silicon demand is attributable to changes in real demand for our customers' products or if it is more inventory management of silicon stock by our customers," Levi said.
"While we are in regular dialogues with our customers, there are mixed signals given the lack of visibility for all participants along the value chain."
The London-listed metal and alloy producer posted a net loss of $14 million on sales of $250 million in Q2, compared with a net loss of $43.7 million on sales of $409.5 million in the same period last year.
Strategic plan update
Ferroglobe said it was continuing its strategic plan to return to profitability amid the shifting economic environment.
Among the many initiatives under the plan, Levi said Ferroglobe will aim to optimize its operations by reviewing capacity at its plants to allow quicker responses to demand shifts.
"The goal is to identify how we can maintain our capacity footprint by optimizing production to the most competitive plants and furnaces," Levi said. "For example, this may mean that we end up shutting down one or more furnaces in plants which have several furnaces."
The operational optimization would not necessarily translate into full plant shutdowns, he added.
"By focusing on the most efficient and productive assets and right-sizing the facility cost structure accordingly, we effectively create smaller but more profitable plants, while maintaining the optionality to scale back up once market conditions improve."
Source: S&P Platt Global
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