Elkem achieved high capacity utilisation and good sales volumes in the second quarter of 2020 despite very challenging market conditions. The strong operational performance reflects Elkem’s good market and cost positions.
Ferrosilicon low demand driving prices down
- Market prices for ferrosilicon (FeSi) have dropped significantly in the second quarter
- Weak ferrosilicon demand impacted by low steel consumption, which has been largely driven by weakness in automotive and construction
- Low European price level for ferrosilicon limits the incentives for imports, lowering the risk for a further price decline
Carbon lower demand, but stable prices
- Lower demand for electrodes and carbon material due to weakness in automotive and construction markets
- Uncertain development due to Covid-19 impact on global industry production
Elkem is one of the world’s leading suppliers of silicon-based advanced materials with operations throughout the value chain from quartz to specialty silicones, as well as attractive market positions in specialty ferrosilicon alloys and carbon materials.
Elkem is a publicly listed company on the Oslo Stock Exchange (ticker code: ELK) and is headquartered in Oslo, Norway. The company has more than 6,700 employees with 31 production sites and an extensive network of sales offices worldwide.
“Covid-19 continues to impact global markets with negative effects on demand and sales prices. Despite these challenging market conditions, Elkem achieved strong sales volumes and stable results in the second quarter. This reflects Elkem’s strong competitive position,” says Elkem’s CEO, Michael Koenig.
Compared to the corresponding quarter last year, Elkem’s Silicones division reported higher operating revenue, mainly driven by good sales volumes. The result was however negatively impacted by lower sales prices. Silicon Materials and Carbon reported higher results in challenging markets, while Foundry Products delivered in line the corresponding quarter last year.
“Throughout the quarter, we also continued to develop Elkem for the future in line with our strategy. We have changed our corporate structure to accelerate specialisation, gain synergies and further improve operational excellence. We have progressed our productivity improvement programme, which is currently ahead of plan. We have also established Digital Office, Battery Materials and BioCarbon as new special focus areas reporting to the CEO. This enables us to further enhance the speed with which we address opportunities in digitalisation and sustainability, to support profitable growth,” says Koenig.
Elkem has merged its Silicon Materials division and Foundry Products division into the new Silicon Products division with effect from 1 July 2020. The changes will be reflected in the segments for Elkem’s financial reporting from the third quarter 2020.
Digital Office is a new team set up to drive the digital transformation across Elkem’s divisions and plants worldwide. Battery Materials aims to accelerate Elkem’s activities in graphite and silicon-based anode materials for the fast-growing battery market. BioCarbon will lead Elkem’s activities within sustainable carbon sources, with the long-term goal of achieving carbon-neutral metal production.
Going forward, the markets continue to be characterised by low visibility due to the Covid-19 effects. Silicones demand in China is good, driven by government incentives, but sales prices may be volatile. Demand for silicones outside of China is weak, which is negatively impacting the sales of specialty products.
Silicon and ferrosilicon prices are substantially down due to weak demand from automotive and construction. Lower industrial activity is also expected to reduce demand for Carbon materials.