* Second quarter core profits beat expectations
* Sees weak economy compounding seasonally lower Q3
* Confident of pick-up of steel prices in second half
BRUSSELS, July 24 Stainless steel maker Aperam
forecast weaker earnings in the third quarter with the
economic slowdown compounding a traditional summer slowdown, but
said it was confident prices would pick up during the final
quarter of 2012.
The Luxembourg-based company reported a fourth consecutive
quarterly net loss on Tuesday and second-quarter core profit in
line with that of the first three months, as it had forecast.
The company, floated by ArcelorMittal early last
year, said it had kept on track due to cost savings, a good
performance in Brazil and a better product mix in alloys.
Stagnant consumption and cheaper imports from Asia have left
Europe with a capacity glut, prompting industry consolidation
such as Outokumpu's takeover of the stainless steel
business of ThyssenKrupp earlier this year.
The industry has also suffered steadily falling nickel
prices since early 2011, with an early 2012 recovery now wiped
out. Distributors stock up when prices rise, and hold off when
they fall in the hope of even cheaper prices in the future.
Benchmark nickel prices on the London Metal Exchange
have dropped by more than 25 percent since early February.
Aperam said it was confident prices would rise in the second
"The confidence comes because the nickel price is very low.
There is a consensus that it is at a low and might go up," Chief
Executive Philippe Darmayan told a conference call. "When they
go up, the market goes up."
Core profit in the second quarter was $65 million, in line
with the first quarter and ahead of the average $58 million
forecast in a Reuters poll.
Aperam said the figure would be lower in the third quarter,
a traditionally weak quarter, compounded by the poor economy.
Darmayan said its cost cutting plan had produced $231
million of annual savings. It is targeting $350 million by 2013.
He said he was also encouraged by recent weakness in the
euro and the Brazilian real to the dollar. Aperam's operations
are in Europe and Brazil.
(Reporting by Philip Blenkinsop; Editing by Louise Ireland)