Acerinox CEO Velasquez says he’s ‘happy’ with American Economy
Company waiting for right time to expand Malaysian facilities
One of the world’s largest stainless steel producers says the rise of electric cars will boost demand for the alloy in auto manufacturing. The opportunity outweighs the challenge of competing for nickel supplies, used in many batteries and the most important raw material in making rust-free steel.
“Stainless steel is used to protect the batteries that equip hybrid cars, and overall this industry employs it more than the traditional one,” Bernardo Velazquez, chief executive of Acerinox SA, said in an interview in Madrid.
The company doesn’t fear an increase of the price of nickel as the use of pure nickel needed for batteries is “limited” in stainless steel production, said Velazquez. His company is using more and more recycled metal. “There will be no substantial change in our world,” he said.
Nickel prices will be the big winner from the electric vehicle revolution as and when millions of drivers switch away from internal combustion engines, Bank of America Merrill Lynch wrote this month. The bank expects global electric vehicle sales of 13.6 million in 2025 and forecasts nickel demand will increase by 690,000 metric tons by then. Current global production is 2 million tons a year.
For Madrid-based Acerinox, the fifth-largest world stainless steel producer, an electric car-driven increase in demand could revitalize a market struggling with Chinese overcapacity.
“Our biggest success has been escalating the Chinese problem to the point that it’s now being discussed by President Trump, but also at the World Trade Organization,” said Velazquez.
“Indians, Koreans, Taiwanese are all suffering the Chinese invasion, and so they’re coming to Europe and United States -- at the end it’s a truly global market”, said Velazquez. “As a group, we’re facing anti-dumping in most of our markets, experiencing a kind of neutral protectionism. We would prefer an open market, but we can compete with everybody, as long as everybody is playing with the same rules.”
The trend of Chinese production is also affecting Acerinox’s plans to upgrade its facilities. The company “is waiting for the right time, depending on when the Chinese overcapacity is more or less balanced” to invest in its Malaysian factory and turn it into a totally integrated stainless steel plant with a capacity of 1 million tonnes per year, said Velazquez.
Acerinox, which employs 6,800 workers and also operates plants in Spain, South Africa and the U.S., leads the American market with a 35 percent share through its unit North American Stainless.
“Today, we’re happy with the American economy the way it is, as the sectors in which stainless steel is employed are growing,” Velazquez says.
The company’s net income in the first half of 2017 rose to 151 million euros ($178.2 million) from 9 million euros a year earlier, beating all the full-year results of the last decade, the company said in a filing with regulators in July. Net revenue increased to 2.4 billion euros from 1.9 billion euros as steel prices recovered.