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The board of directors of Outokumpu, a Finland-based stainless steel manufacturer, has approved the purchase of Inoxum, ThyssenKrupp AG’s stainless steel group. Outokumpu says the combination of the two companies will control about 14 percent of the annual stainless steel cold rolling capacity, about 3.5 million tons.
Following completion of the transaction, Outokumpu says it expects to have the scale and financial strength to take advantage of a range of global growth opportunities. The opportunities include an expansion in the United States through its Calvert, Ala., production facility that is scheduled to be fully commissioned in December 2012 with a 1 million metric ton meltshop and a 350,000 metric ton cold rolling mill.
The transaction also will allow Outokumpu to expand its existing presence in China, one of the fastest-growing regions in the stainless steel industry. At the same time, Outokumpu will continue the upstream integration at its Tornio, Finland, facility, doubling its in-house production of ferrochrome by 2015, which is expected to provide a considerable profit opportunity for the combined business.
Outokumpu adds that the transaction is designed to enable a strategic optimization of production capacities, production locations and supply routes, which would permit higher usage rates at its two mills in Tornio, Finland and Terni, Italy. In addition, the combined entity is planning to expand cold rolling capacity in Krefeld, Germany, to ensure high quality and short lead times for deliveries in Europe.
The combined company also plans to reduce its melting capacity by about 1.4 million metric tons. Planned closures include the company’s Krefeld meltshop, which will be shut down by end of 2013 and the company’s meltshop in Bochumiv, Germany, to be closed by end of 2016.
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Furthermore, the combined entity plans to reduce its thin cold rolling capacity in Sweden in 2014.
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