Outokumpu CFO says costs eat into gains from EU steel measures

July 30 (Reuters) - The European Union's trade measures are boosting demand for steelmakers in the region, but higher costs of scrap metal, freight and fuel are eating up that improvement for Outokumpu, its finance chief said on Thursday.

The Finnish stainless steel maker's European business reported an adjusted core profit of €17 million for the second quarter, recovering from a loss of €13 million in the first three months of 2026 but barely exceeding the €16 million it had earned a year ago.

Chief Financial Officer Marc-Simon Schaar told Reuters that increased demand for European production, supported by the EU measures, had also significantly raised demand for scrap, the main raw material used by local producers.

At the same time, subdued end-user demand has reduced scrap generation, restricting supply and pushing raw-material prices above last year's levels.

Inflation in freight, transport and fuel costs also weighed, while state aid to help with EU emissions-trading costs, worth around €35 million to €40 million annually, has ended, Schaar said.

Expectations for the EU measures may also have run ahead of their immediate impact.

Imports accounted for 17% of European steel consumption in April and May, up from 15% in the first quarter, and likely rose further in June ahead of the tighter safeguards taking effect on July 1, the CFO said.

After distributors restocked in the first quarter, they had become extremely cautious and careful amid the Middle East conflict and weak business sentiment, he added.

"At the moment, it's very difficult to say because no one is booking anything," Schaar said, adding that September remained "a bit open" from an order-book perspective.

Outokumpu expects third-quarter volumes to fall by up to 10%, but says realised prices and raw-material costs should offset the decline and keep adjusted core earnings broadly stable.

(Reporting by Jagoda Darlak, writing by Jesus Calero, editing by Milla Nissi-Prussak)