Reuters reports Outokumpu said it expected to report a significant operating loss in its final quarter as weak demand and prices continued to hit margins forcing the stainless steel maker to cut up to 1,300 jobs in an effort to reduce costs after brought on by the declining value of its raw material inventories.
While Europe’s woes have been well-documented, the Finnish multinational’s announcement is further evidence of a changing dynamic in the iron ore and steel market. On Tuesday Chinese steel mills forced the world’s number one iron ore producer Vale to bend over contract pricing after falls in the spot iron ore price.
Reuters reports the Finnish company said it would cut up to one in six jobs across its business units to reduce annual costs by 100 million euros ($138 million) by the end of 2012.
Bloomberg reports Europe’s sovereign-debt crisis and lower metal prices hurt demand for stainless steel, leading expected delivery volumes to fall this quarter below third-quarter levels, Outokumpu said.
MINING.com reported on Tuesday Vale is considering shifting from iron ore pricing based on the previous quarter’s prices to levels more aligned with the spot price and renegotiate contracts after more Chinese steel mills seek to postpone shipments or default on contracts as spot iron ore prices drop from historic highs above $170 to levels around $150.
Outokumpu operates in the 30 countries. Image of Tornio facility courtesy of the company.
