Annual report 2014


The ELG division increased both its output tonnage and operating profit significantly in 2014. The company benefited primarily from increasing demand for scrap in the stainless steel market segment and the higher price level of nickel, a key raw material for ELG. ELG also achieved encouraging gains in the successfully expanded superalloys business, to which business combinations in the previous year also contributed.


In spite of an increasing slowdown as a result of geopolitical crises in the second half of the year, the global economy grew at a similar rate in 2014 compared with the preceding year. The demand for production of stainless steel increased significantly in this general economic environment, which was positive overall. The production of stainless steel increased accordingly, in particular in China and the US where, above all, the ramp-up of a new stainless steel mill contributed to the increase. Following negative growth in recent years, production in Europe also increased slightly. This growth in the US and Europe resulted in stronger demand for stainless steel scrap, which had an overall positive effect on ELG’s output tonnage. The stainless steel market segment was again characterised by high competitive pressure in 2014, not least due to the significant increase in demand. Dealers in both the European and the US markets contended with strong competition for the limited stainless steel scrap available. By contrast, the increase in Chinese production did not lead to an increased demand for stainless steel scrap. Companies in China primarily use a substitute known as nickel pig iron rather than stainless steel scrap to produce stainless steel.

The stainless steel market segment also benefited from rising prices for nickel, the most valuable element in the stainless steel scrap processed by ELG. In the first months of the financial year, the price of nickel rose steadily to USD 21,000 per tonne, and subsequently ranged around a level of USD 19,000 per tonne until mid-September. This is attributable above all to market participants expecting a significant shortage of nickel after Indonesia imposed export restrictions on nickel ore, which is used in the production of nickel pig iron, at the beginning of the year. As a result of inventory levels of nickel pig iron in China still exceeding expectations and the uncertainties due to the geopolitical crises, nickel prices plateaued at year’s end at approximately USD 15,000 per tonne – the same price level as at the beginning of the year. Despite this, the price averaged USD 16,900 per tonne in 2014, 12 per cent higher than the previous year’s price. In contrast, the prices for chrome and iron – the other significant components in stainless steel scrap – declined during the course of the year due to high supply.



The superalloys market segment was characterised by stronger demand compared to the previous year – over the entire course of 2014. Companies in the aviation industry in particular had increased demand for superalloys scraps, which in turn had a positive impact on ELG’s output tonnage. The prices of the commodities significant for ELG’s superalloys business, such as nickel, titanium, tungsten and cobalt, also developed positively. For example, the price level for titanium was approximately 30 per cent higher than that of the previous year.


ELG took advantage of the significantly improved environment in the stainless steel market segment to increase its output tonnage for stainless steel scrap by 15 per cent year on year. Including the acquisitions of ABS Industrial Resources and Metals Management Aerospace in this market segment in 2013, ELG’s superalloys business increased tonnage by 38 per cent. Both new companies displayed encouraging development in 2014. This has allowed ELG to significantly expand its superalloys business as an additional pillar. By diversifying its operating activities, ELG has strengthened its foundation for sustainable growth. Even adjusted for the two business combinations, ELG increased output tonnage by 16 per cent year on year as a result of the strong demand for superalloys.

ELG boosted revenue by 18 per cent to EUR 2,213 million in 2014 thanks to the higher output tonnage and price increases for nickel and titanium. Despite the improved demand for scrap, ELG’s margins in the stainless steel scrap business declined slightly, above all as a result of higher procurement prices. On the other hand, the sharp increase in demand and the limited recycling capacity for superalloys resulted in higher margins at ELG.

ELG’s operating profit also experienced significant growth, increasing from EUR 47 million in the previous year to EUR 59 million in 2014. Positive effects in this regard were attributable to the increase in revenue and the expansion of the high-margin superalloys business. It should also be noted that 2013 operating profit was affected positively by non-recurring items totalling EUR 7 million. This non-recurring income was primarily attributable to the sale of a receivable written down in previous years as well as to insurance payments.