Acerinox says economic concerns cloud steel demand recovery in Europe
Says demand remains soft in Europe
Q2 EBITDA slumps 47% on strike impact, slow Europe
Expects Q3 EBITDA to be similar to Q2
Recasts with comments on slow market recovery, adds CEO quotes in paragraphs 3, 4, 7, analyst comment in paragraph 9
By Matteo Allievi and Javier West
July 24 (Reuters) -Spanish steelmaker Acerinox ACX.MC said on Wednesday that visibility would remain poor across the European steel markets in the third quarter, as economic uncertainty translates into slower than expected demand recovery.
European steelmakers are struggling to recover after a severe reduction of their inventories, as they need to tackle swings in prices of raw materials and cooling global demand, coupled with cheaper Asian steel imports.
"With inventories at such low levels, there is little confidence in the economy. This is more pronounced in Europe than in the U.S.," CEO Bernardo Velazquez told Reuters in an interview.
"Many investments are waiting for interest rates to fall, and when this happens, it may lead to an improvement in confidence and in consumption," Velazquez said.
The group's core profit (EBITDA) slumped by 47% to 125 million euros ($135.55 million) in the second quarter, including a 28 million euro hit from a five-month strike at its Cadiz steel mill in Spain.
Acerinox, which specialises in stainless steel, said it expected its third-quarter core earnings to be similar to those in the second quarter, as demand in Europe remains soft.
"There is a slowdown in all sectors in general, which could also pick up after the summer if there is any sign of more confidence," Velazquez said, naming automotive, construction and household appliance industries among those affected.
However, the company's shares were 3.6% higher by 1136 GMT, after it said demand in the U.S. was stable, supported by its high-performance alloys division.
"The commentary on the US was supportive enough for stable demand and especially pricing, despite softer macro indicators and clear signs of weakness ... in the carbon steel market," Barclays analyst Tom Zhang said.
Swedish peer SSAB SSABa.ST warned on Wednesday of a steeper than usual steel demand decline in the third quarter, mainly affecting its Special Steels and Europe business areas.
($1 = 0.9222 euros)
Reporting by Matteo Allievi and Javi West Larrañaga; editing by Milla Nissi and David Evans
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