SSAB Ab

CO2 allowances coming active in Q2. Also clearly higher cost for logistics, as already mentioned, and also some raw material costs were higher. The consumption cost is here taking into account and to remind that there is a lag in the purchase price and consumption cost. Ab Ab Ab Ab Ab Ab Fixed cost, typical seasonal development compared to quarters. And also here we have impact of salary index increase that we pay in Q2 onwards, but also retroactively for the first quarter. Of course, the summer workers also shown here to push up their fixed cost. And also the activity level was higher, so we had some higher IT and repair related cost. Ab Ab And then we have a look at the operating result this year compared to previous year. This year 2.7 and compared to previous year which was 2.1. Similar trend compared to previous year as was previous quarter. Positive impact from prices and volumes which were offsetting on total the variable and fixed cost increase and also positive from the higher activity level as capacity utilization is contributing positively Prices year-on-year on group level were 2% higher. And here we have opposite FX impact, so FX is impacting prices slightly negatively. But Europe division contributing 300, Americas 265, and Special Steel division plus 15. Ruki Construction in this analysis has a negative impact, but that's mainly due to a shifted business mix compared to previous year. Volumes, as already mentioned, 52 kilotons higher. Special steels contributing 220, Europe 120 and Americas 35. Ruki Construction also had higher volumes this year compared to previous year. Variable cost impact negative, but less than what it was quarter on quarter. In iron ore, the raw material consumption cost is actually lower this year compared to previous year. However, then the coal price is higher. Alloys already mentioned was higher. CO2 emission cost was higher and the logistic costs were also higher. Fixed cost higher than last year and here we have majority related to salary index increase. Only some higher manning and higher IT related activities. And capacity utilization positive 155. So improvement in operating result compared to previous year and previous quarter. Then continue with the cash flow analysis. Strong performance during Q2. If we compare with the previous year, we have higher EBITDA level contributing positively. We have also positive impact from change in working capital. But if we then look at the running rate, this is a typical first half of the year development. First half of the year tends to be negative, which is turning then towards more positive going forward. Maintenance capex, a really similar trend compared to last year. And then the other line, which is mainly related to CO2 emission allowance transactions. We had quite a few of them during Q2, and we will continue doing the hedging going forward. If we then jump to the strategic expenditures line here, we see that the trend was lower than last year and the running rate compared to last year, we see that it's on the same level. This will naturally pick up towards second half of the year. And the biggest deviation here is actually delayed payments that we have done in the Oxelösund project, but those are mainly related to vendor performance rather than any actual delays. Acquisition of shares. This is related to Ovako Metals transaction, Timnodit in Finland during Q2. And then the dividend payout just below 2 billion also took place in Q2. Really good performance and compared to previous year, the first half of the year was better and deviation mainly from earnings, lower dividends and good working capital performance. This will then lead to a net cash position, end of Q2, 8.6 billion. And as already mentioned, the dividend payout took place during Q2. The gearing ratio is still well in line with our financial targets, plus minus 20. End of Q2, it was minus 12. And we are really, really pleased also to mention that Moody's gave a credit rating for SSAB during this week. BAA2 investment grade with the outlook of stable. We have had good discussions with Moody's and they are understanding the steel industry really well. And they are supporting our strategy and trusting our financial capabilities. More information on that you can find on our website. Raw material already briefly discussed, but here we can see the development of iron ore price and this is purchase price. It has gone down compared to previous year and it was also contributing positively in the BRITS analysis. However, the cost of iron ore has increased quarter on quarter slightly. Coking coal prices we can see that have started to develop upwards already during Q1, continued during Q2. And to bear in mind that in the coking coal, the logistics also plays important element. And as they were going up, it will also impact the cost of consumption going forward. Scrap prices in US, as the graph is illustrating, they were higher than previous year during the second quarter. And as this is the purchase price, the consumption cost comes with the lag. And we saw minor increase in the scrap cost in Q2 compared to Q1. However, then the outlook is that Q3, the scrap cost consumption cost should be somewhat lower. We already mentioned also the alloys cost that has climbed up during this year and it was higher in Q2 also compared to Q1 and already mentioned higher logistics costs and also the cost related to CO2 emission allowances we have seen that is impacting the variable cost. Good to remember that Q3 we have a lot of maintenance activities starting and ongoing. All steel divisions will have maintenance activities and then the estimated total impact on the result is this around 800 million SEK. Fairly similar trend cost-wise, the full year cost-wise compared to previous year. CapEx guidance, no changes compared to what we have been informing previously. We are still sticking to this annual CapEx plan. Maintenance CapEx will be on a similar level as last year, around 3 billion. Ab Ab We have also indicated that the emission allowance related transactions that took place last year will be on the same level this year. So the estimated purchases is on around 700 million SEK as it was last year. And no changes either on the IT-related cost estimate. The biggest projects, of course, are related to Luleå Minimil investment and preparation for their ERP system. And the estimate for the full year operating expense compared to previous year is around 200 million higher. So this we have kept also the same. And I end my part here and give floor back to Jonny.

Thank you very much, Lena. So then we move on with some outlook and summary. Last time we spoke about the regionalization that happens both in the United States as well as in Europe. And I think it's worth mentioning that and also highlighting that. We see clear signals of the Section 232 impact on the market, which is strengthening our position. We have less imports coming into the United States. And as it is right now in the plate industry, there's a big problem. Bigger demand and supply, hence forcing customers to use sheet steel instead of maybe using plates. So it is beneficial. And also, as I said last time, derivatives are included in this section 232. That means even if you bring in a bucket, it's made of steel. That means it will be subjected to a tariff. When it comes to the trade measures in Europe, We have these safeguards implemented from the 1st of July. That was also sort of announced last time. We've seen prices moving up because of this, but we've also seen a lot of imports coming into Europe, and then prices have dropped a little bit. We believe that as soon as these inventories are gone, prices probably will be moving up again. On top of this, we have the CBAM. The CBAM was implemented from 1st of January, making it a little bit difficult to bring material into Europe for administrative reasons. The tax itself maybe is not as high, but the administrative things around it will make it more difficult. Then there was a new proposal from the European Commission on the ETS structure. You know, they remember that the ETS structure we've had, it was implemented 2005 and it's been there for quite some time and now it's being revised. Ab Ab Ab Ab Ab electricity and so on. So I understand that this change was made and it's going to have a very little impact on SSAB. And then there were some highlights to it as well. I think one of the highlights was that they're linking the free allocation to the investments done in transforming your production into more fossil free production. And then those are the ability or possibility to get the Ab Ab Ab Ab Now, when it comes to the outlook, we are just like Lena said, Q3 is the quarter where we do a lot of maintenance. Hence, we will not be able to ship out the volumes that we normally do like in Q2. So our ability to produce will be limited. But the demand is still there. I think prices will continue to move up. Ab Ab Ab Ab Ab Ab Ab And then looking at the prices, it will continue to go up. We know that. And here we're guiding for somewhat higher. It's between 0% to 5%, I guess. Maybe it will be closer to 5%. But yeah, it's remaining to be seen. But that's what we anticipate at least. I think that is all for the outlook. And just to summarize this presentation, we have to remember that we do have still a lot of geopolitical turbulence. The Middle East situation is not over yet. It hasn't had a negative impact on our variable costs. We're hoping that this will be over, that it will be stabilized. But now things are as they are, makes it a little bit more difficult to predict. I think also our transformation projects, they are on plan still, and I think they are very important for us. And we have to remember now that it's going to be almost impossible to have production in Europe after 2040. So this is necessary, and I think it's a good plan that we have. We also made the decision to invest in another quenching line, which is in line with our strategy. I think that's also a very important step for us going forward. And we see profitability earnings improvements both in Europe as well as in Americas. And we also see prices are going up and will continue to go up. And then that our shipments will be somewhat lower in Q3 because of the maintenance that we have in Q3. But all in all, I would say that it's a stable quarter. I think that we performed. We were sort of taking a little bit off guards with the higher variable costs, but still we came out on a decent level. I have high expectations going forward. I think that we are present in the most important Ab Ab Ab Ab Ab

Yes, thank you, John. Thank you, Lena. Now we can prepare for the Q&A. And I would suggest initially in the first round that we limit to two questions to get as many people as possible the chance to ask some questions. And as usual, please ask the questions one by one to give time to answer in between to make the process smoother. So by that, please operate the present instructions for the Q&A.

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. Thank you. We will now go to our first question. One moment, please. And your first question today comes from the line of Andrew Jones from UBS. Please go ahead.

Hi all, thanks for taking questions. So just firstly on VETS, your response to it was actually pretty negative, I guess. I mean, you gave some initial thoughts on that. I'm curious where you can potentially benefit from this. Is there any scope for maybe some more CAPEX support for the new layer project? Or I would guess that VAHE would qualify at this stage. Is that possible? And also on price hikes, I mean, as you noted, maybe it is a bit conservative here. And I guess there's lags that impact on the 3Q guidance. But I saw that MITA was aggressively hiking HRC prices already in response to the quota cuts. I'm curious if you see potential for HRC to sort of get into the high 700s in the not too distant future. Or do you think the summer... seasonality is going to negatively impact the ability to achieve those price increases.

Thanks. All right. So if we start with the ETS, I think that our initial stand is that we don't want any changes because we made our business case based on the existing ETS system and uncertainty is not good. Now when we've seen the proposal and we have to remember it's still a proposal, we don't think it's that bad. I think linking the free allocations to the investment ability, but also giving the market a chance to get funding both in the sense of loans, but as well as getting real grants. I think these are good things. A lot of details need to be worked out. We also need to look at the timing, but I think Ab Ab Ab Ab Ab And then to your questions regarding the pricing, it is, you know, the safeguards implemented first of July will help the market and will help the prices to go up. We are certain of that. But then, as I said before, we saw a lot of coming into Europe, inventories went up. But we also believe we have a rough idea of what kind of volumes we're talking about here. And we have a rough idea of how much time it will take before these inventories are sold out. We think at the end of Q3, these stocks will be sold out and then prices will start moving up again. So what happens now is that we are negotiating quarterly contracts, half year contracts, etc. Here we have a good idea of what the market is expecting. So hence, we know that prices will be moving up. But Since the way we work now, we can't guide for any higher price increases because the model makes it such that it's a slow progress for us. We're not selling so much spot on the spot market. I think the spot market prices will move up in the end of Q3. And to your question, is it going to be above 700? I guess your guess is as good as mine. But there is some likelihood that that would be the case. But prices will be moving up. And you say that, are we conservative? I'm saying, like we said last time, we have a lag in the system. We are negotiating prices now. And some of the contracts will be higher and so on. It's just somewhat higher. But in average, maybe it will be 4% to 6% or something like that in average. It's hard to say. But in that frame, in that ballpark.

Yeah, okay. That's clear. Just one quick follow-up. On the CapEx guidance, you've maintained it despite obviously having the safety stoppages as a result of issues that will do that. I mean, was there a reason why that wasn't maybe deferred partly to next year because of the delays? Why was it maintained rather than cut?

As Jonny was referring, in the Luleå project we have different sort of streams. Engineering has continued and will continue, and also the procurement stream has continued and will continue. The standstill was mainly related to the ground preparation work. And then we are now sort of rescheduling that. But there is, of course, room to reschedule and catch up. And so far, we haven't updated our budget or schedule. So we are sticking to the CAPEX guidance as we presented.

Okay, that's clear. Thank you.

Thank you. Your next question today comes from the line of Caleb Soloran from SEB. Please go ahead.

hi guys and thank you for taking my questions maybe starting off with inventory levels in Europe they're still somewhat high having sort of continued to build up ahead of the new quotas in July but first did I hear you right and then saying that you expect that to be normalized by end of Q3 and sort of as a follow-up to that have you or do you sort of expect to see any impact on the demand side as a result of the sort of positive price development in Europe given the just general economic climate, especially if they, as you sort of said earlier, continue to move up after inventories normalize. So just interesting to hear your reasoning on that part.

I mean, the underlying demand is what it is. I don't think that's going to increase or improve in Europe in the second half of this year. It's just a rebalancing. That means of this Ab Ab Ab Ab And to your initial comment, our assumptions are that those inventories that was built up prior to 1st of July, looking at the volumes, it's likely that they will be sold out at the end of Q3. That's what we are anticipating at least.

Okay, that's clear, thank you. And just a second on Oxelösund. You're expecting to start production in Q2 next year. Can you give some color on roughly how long you expect that ramp-up to take before reaching some sort of satisfactory utilization level? And as a sort of second question, will you be providing any sort of guidance on what the ramp-up cost will be for that period as we get closer to that date?

Mm-hmm. Yeah, so in Oxelösund, we are only replacing the blast furnace with electric arc furnace. The rest will be the same. So as long as you have the right chemistry from the primary production, you will have the same quality through the rest of the operations. We have a rather large product portfolio in Oxelösund, which means that each product needs to be sort of qualified in a way. But this will probably go pretty fast. We have A very good experience from this. We've done it in the United States with Electric Arc Furnace and some of these operators will be moved over to Sweden during the ramp up phase. So we believe it's going to take less than six months and some of the grades will be available through the Fossa 3 route already after two months. Not the whole portfolio, but some of them will be available already after two months. And then we will continue the qualification. But six months is what we're anticipating. And then regarding the costs, Lena, could you help me out here?

Well, we haven't really calculated that. And of course, it's difficult to calculate. I would say that there is already some higher manning working with the pro-tech and that will sort of continue, but then level out eventually. And then maybe to remind that we do have blast furnace functioning while we are doing the ramp up. So we most likely see some higher slab inventories as a preparation for the startup. So All in all, in big picture, the ramp-up impact should be rather modest, I would say. But we will get back to that when we have a bit better plans at the later stage.

I can second what you said. I think that those costs will be rather modest. And when I saw some figures myself, I was surprised that they were as low as they were actually. Exactly.

But we will get back to that a bit later.

Okay, that's very helpful. Thank you.

Thank you. Your next question today comes from the line of Alain Gabriel from Morgan Stanley. Please go ahead.

Thank you. And thank you for taking my questions. And good morning to everyone. A couple of questions from my side. First, on the U.S. plate or the Americas business, the typical one-quarter lag suggests a low teens ASP for steel Americas as we head into Q3. Yoni, how do you explain the somewhat lower guide than the light spot market would suggest? And more broadly, and if we look past Q3, where do you see the most exciting end markets for the U.S. plate business? That's my first question.

Yeah, so related to the price, I emphasized it last time. We have a lag in our system. It takes a little bit longer for us to implement price increases. But it is happening and we see it happening. And we had a price increase of 7% in 2020. Ab Ab Ab CRU is indicating and that we are a little bit behind. But we will have significant price increases in Q3. And I guess, you know, looking at the guidance that we gave, we were higher than previous guidance. And it could be the case that we end up here this time as well. But from what we know right now, I think that we're, you know, between 4% to 6%. And that gives us a somewhat lower, sorry, somewhat higher price increase. Thank you for reminding me of that. I think it's very much similar to what I said last time last quarter. It is the industrial segments, everything which is related to energy is growing transmission towers and If you look at this server halls that's being erected pretty much everywhere, we don't sell maybe so much steel into those service halls. But the transmission of electricity to those service halls, they need transmission towers. There we sell a lot too. And then you have wind power. We have oil and gas. We have pipes, tubes. We sell a lot into this. And that demand is still very, very strong. We see some also improvements in the rail cars production. Crane business is also improving. We see Mexican capacity moving back to the United States. That's just reallocating because we were still selling. Let's say John Deere as an example. We were selling most of what they consumed in Mexico. They will still consume even though they moved their manufacturing to the United States. But we see some improvements there as well. But in general, those are the segments that we mainly are focusing on.

Thank you. And a follow-up on that question is on the lead times for plate. Typically, you've always got it for a quarter lead time. Is the current stretch lead times, does it mean that the lag will hit your P&L much later than what they have done in the past? That's a follow-up on that question. And my second question is on the costs. which seem to have come through a bit higher than what you had initially thought when you've given your guidance for Q2 and you've singled out the logistics and alloy prices. How much visibility do you have into Q3 and how confident are you that your cost guidance on these aspects on logistics and alloys is in the right place today? Thank you.

I guess maybe, Lea, you can answer on that.

Maybe I start with the cost guidance. Of course, we know that the raw material consumption cost is, I assume it's not going down. It's continuing on a stable level. As you saw, the US scrap cost or the consumption cost, however, will be slightly lower during Q3 versus Q2. But all in all, all these much higher logistic costs high alloys cost and and also the elevated cost for CO2 emission allowances that will be visible in in our figures for Q3 and not to underestimate the cost related to the maintenance so that's good to also bear in mind that that cost we don't see a big drop that's my my view for going forward rather stable

And I guess for the first question, you know, what's the lag, you know, between us and the market price? And I would say it's at least a quarter because we negotiate, you know, majority of what we negotiate is quarterly contracts. And then we have half year contracts. And sometimes we have yearly contracts. That means that we should be, you know, half, sorry, one quarter behind the And if you backtrack where we are now compared to the first quarter, you can see that we are one quarter behind. So it's likely that will be the case in Q3 as well.

Thank you. Thanks.

Thank you. Your next question today comes from the line of Tristan Gresser from BNP Paribas. Please go ahead.

Yes. Hi. Thank you. Just a A quick follow-up on the Q3 guidance. You flagged that you have those higher prices offsetting higher costs. You guide for raw material costs, and you touched on a little bit on energy alloys and logistics. You implied it's relatively steady, not increasing, not falling. But when you say higher prices mitigate higher costs in Q3, that includes both raw material costs And other costs. Right. So it is kind of a neutral margin outlook for Q3. And is that valid for both Europe and special steel alike? Or there are differences by divisions?

So my assumption is that in the United States, the price increases will for sure cover for all the cost increases. For Europe, I think it's a little bit more uncertain, especially when we talk about energy as well as when we talk about transportation costs. But the way we see it, it will be covering the costs more. I guess, Liana, if you have any other comments on that.

No, but then to remind that then we have the maintenance cost impacting the results. So in relative terms, of course, we always try to compensate with the pricing. Now we had this sort of the lag and mix in Q2, but going forward, it should be sort of more compensating. But reminding the maintenance cost will definitely hit the Q3.

just a final comment to that I think it's important maybe to say that when it comes to special steels they are much lower when it comes to price adjustments both when it goes prices goes down but also when it goes up so if if Some were surprised to see the lower price increase in special steel. This is the way it is. It takes time. Significantly longer time than it takes for SSAB Americas or Europe. I guess it's even two quarters instead of one quarter.

Okay. That's clear. And maybe just a quick question on Lulea. So you started construction works again. Just to confirm, so there's no cost impact at all from some remediation, some work you would need to solve the situation.

And if you are now referring to Q3, we see that there is very limited cost for that standstill that we have now started also in phases to get back to the construction site. The cost related to Q2, when we had also a pause in the construction work, that was also relatively small, ended up being around 60 million SEK that we had to took as OPEX and not capitalise. But in big picture, that's still a small amount all in all. But we don't foresee for Q3, as far as we know now, that would have an impact on the cost base.

Okay, perfect. Thank you.

Thank you. Your next question comes from the line of Dominic O'Kane from JP Morgan. Please go ahead.

Hi, I have two questions. So I think the broad consensus view is as we get towards Q4 and we work through the inventories, we'll obviously start to see a tighter and higher pricing environment. So In the context of that, could you maybe just talk to us about what your order book currently looks like for Q4? Is it open yet? And how much is available to be filled for Q4 as we start to think about the trajectory into that higher pricing environment? My second question is for Q2, the Middle East clearly looks like a drag on certain components. But as we look forward to Does the Middle East become an opportunity for you in terms of new addressable markets and new sources of demand? So could you just maybe talk to us about if there are obvious opportunities that will potentially present themselves in the Middle East?

All right. We start with the first question regarding Q4 and our order book. So the way we do it now is that we all for the American market, we open up month by month. And as soon as we open up a month, we're Ab Ab Ab And they are eager to buy even more. So for the SSA business, I'm not concerned. We can open up the order book tomorrow and then we will fill it up. The reason why we only take it step by step, because we believe prices will move up even further. So we want to sort of utilize that opportunity. And that's why we take it step by step. When it comes to Europe then and the order book, Special Steals and Oxygen has been sold out and will be sold out for the rest of the year. When it comes to SAB Europe, they still have capacity left. So for Q4, their order book hasn't been filled up, not near. I think it's just there's a lot of room still. So that's hard to... Ab Ab Ab Ab Ab I guess that would be related to the energy segment. Could be some potential there, but it's not super clear how that would bring a new market for us. It's quite a limited market as it is today. And we have to remember now that for special steel, most of their capacity is sold out. For America, it's been sold out, especially for the United States. It's Europe where we still have some capacity left. And I'm pretty sure that we will be able to sell that in Europe. So right now, we don't really need a Middle East market, to be fair. And I'm not so sure that's going to be an opportunity for us either going forward.

Thank you. That's helpful.

Thank you. Your next question today comes from the line of Reinhard van der Waals from Bank of America. Please go ahead.

Morning, Joni and Leah. Thanks for taking my question. I just want to go back to the point around costs. Could you just break down for us to the extent you can where you saw most cost inflation and kind of how we can translate that into a sort of sec per tonne inflation figure or maybe percentage inflation figure. And if we can just understand how things like energy costs will maybe evolve into 3Q based on what you're seeing right now.

If we do the comparison now, Q2 versus Q1, we can clearly see that the logistic cost is a big impact here, and also the CO2 emission allowances went up. As you know, the system with CO2 allowances changed going forward from Q2. Ab Ab And then in all the raw material categories, we saw the increase. And I don't have a percentage split to give you, but we saw increasing consumption cost, especially with coking coal. And here also the logistic import freight has an important role when it has gone up. Alloys, definitely we see increase in nickel and ferromolybdenum. compared to previous year, we also see that sink and paint has gone up. So a lot of increase here and there. The percentage splits, unfortunately, I don't have to give. And the guidance for Q3 is also a bit uncertain. But as I said, the cost level will not go down. Only exception, perhaps, the... the scrap consumption cost in US, but also there the reduction is minor or modest. But different elements, definitely the biggest element, CO2 logistics and then the rest between different raw materials. So that's the most I can give you at this stage.

Okay, no, that's good. Thank you. And I just want to check on Tidnoro. There was a pretty big increase in earnings there, a large part being driven by inventories. Can you separate out for us maybe how much was inventory driven? And can you give us any comments around what's happening in the end markets for that business?

The inventory valuation in Tipno's case is done based on the latest market price valuation. So they definitely have a positive impact. And I believe that versus Q1, the positive impact was around 30 million SEK. So that's sort of the scale that the impact was.

And what was the second question?

Just some commentary around the end markets in the Tibnur business and how conditions are.

So the end market for Tim Noir is very much related to construction as well as in the industry. They are a distributor covering a lot of different grades from stainless to our products, etc. One stop shop concept. They're moving into doing more processing now and doing solutions for the customers. And I think what they've been working on now lately is to optimize their portfolio, sort of reducing the nonprofit business and then also increasing prices in areas where they can, when there's room to increase prices. And they have this price and excellence program running to optimize the portfolio and their profitability.

Excellent. Thank you very much.

Thank you. Your next question today comes from the line of Adrian Dillani from ABG Sundal Collier. Please go ahead.

Yes, hello. First of all, just to follow up on the previous questions. In Luleå, there have been several starts and stops recently to the construction. I guess how certain are you now that all the issues are resolved and that this won't be paused again?

So for us, safety is our key priority and the safety of the workers is extremely important. We're never going to jeopardize the health for the workers. When we now had, we detected very, very small amounts of hydrogen cyanide. And due to that, we needed to update the routines. So the contractors had to send back to us how they would secure the safety of their workers with new routines. And then we need to approve it. And then we continue the production. I guess now with everything that we've been through, we have now gas measurements all over the site. We also have a procedure for protecting the workers for most of what they can be subjected to when it comes to gases or dust or whatever. So it's more likely that we will not have any interference compared to how it was before. But I cannot guarantee, but it's more likely that we will not have any disturbances.

Okay, I understand that. The second one, you've talked quite a bit about distributor levels in Europe or inventory levels in Europe. Can you just talk about what the similar situation is in the U.S. on the plate market? Do you think that part of the strong price trend we've seen recently is driven by some restocking, or is it fully explained by improving market conditions?

No, I think it's more the first thing. The stock market is... Ab Ab Ab Ab Ab Because they don't have the sort of availability that they should have. And now they have to buy from a market that doesn't have capacity available for them. Hence, they are now forced to look into increasing the imports at a much higher cost. So that's the situation. Then the question is, for how long will this maintain? But it's not the underlying demand. It is more the availability among the distributors and the stockists.

understand that. And just as a follow up, do you have any similar time projection as you do in Europe for when these inventory levels could become normalized?

Well, they are not restocking at the pace that they were hoping for. We know that for a fact. And hence the reason why they're starting to import. But because the cost of imported material is much higher, they're only importing small quantities to have some availability. So I think, and this is just a guess, I think it's going to take longer for them to replenish the stocks, maybe up to half a year, depending on what happens to the market.

Okay, that's very helpful. Thank you.

Yes, operator, sorry to break in, but time is running. We have time now for one more question.

Thank you. We will now take your final question. And your final question for today comes from the line of Boris Bordet from Kepler-Shiver. Please go ahead.

Hi, thank you for taking my question. It's a strategic question on Europe. It seems like now Europe is a better place to be for steelmakers. And at the same time, there is an increased support from authorities to protect the industry. Do you think this provides some recipe for some consolidation in the sector?

Yeah, I think... Most companies are looking into it all the time. It is likely that there will be some consolidations going forward. But that's all I can say. I mean, it's hard to guess, you know, who's going to look into what company and so on. But I wouldn't be surprised if something will be announced within the next half year.

Okay, very good. And maybe a very quick technical one, but you seem to be a bit behind budget in terms of the cost in the other segments. Like you've guided for 1.4 billion, I think, for the full year, and you're running slightly short of 0.6. So is this guidance still valid or do you see some upside here, some downside?

The guidance is still very much valid. Of course, we have a bit of a sort of a timing issue with invoices. And also in the other, we do have this internal inventory elimination, which is going up and down. So that is deviating depending on the quarter. But the guidance definitely still valid.

Very good. Thank you very much.

Thank you. That was our final question for today. I will now hand the call back for closing remarks.