In connection with the move into a new phase in its strategy development towards the undisputed number one in stainless, Outokumpu has announced an EUR 550 million investment, over the next three years, in stainless steel special grades capacity in its Avesta Works in Sweden.
The investment will increase the finished products capacity of Avesta from the current 250 000 tons to some 650 000 tons with mainly duplex grades, starting in 2010. The return on capital employed from the expansion is estimated to be clearly higher than the Group's 13% target. Some 100 new jobs will be created in Avesta.
Demand for duplex grades grows faster than that of standard stainless grades. Annual growth is estimated to be over 20%. Duplex stainless steel is characterized with good corrosion resistance and high strength, as well as low nickel content. The high strength of the material enables the use of thinner gages in a variety of applications such as tanks, pressure vessels, piping, transportation, civil engineering and structures, thus bringing considerable savings in material costs. Outokumpu is a clear market leader in duplex grade stainless deliveries with a global market share of some 50%. Avesta Works has a long and successful track record in the demanding production process of duplex.
Outokumpu has developed and patented the Lean Duplex grade (LDX 2101®) which contains only 1.5% of nickel making its price less dependent of the volatility of the nickel price. The corrosion resistance of LDX is similar to that of the standard austenitic 304 grade, but its strength is about twice as high. Outokumpu's Lean Duplex was introduced in 2002 and has met with great success in demanding applications. To further facilitate the market penetration of Lean Duplex, Outokumpu has earlier this year awarded manufacturing licenses to two other stainless steel producers in Europe and Asia.
The investment in Avesta includes a new AOD converter, increase of the melt size from 100 to 125 tons and a new slab grinding line, increasing the melt shop capacity to some 750 000 tons from the current 500 000 tons. The investment further includes a new state-of-the-art 400 000 ton 2 meter wide annealing and pickling line with integrated edge trimming. The Avesta hot rolling is well suited to roll duplex grades and has the capacity to treat the expanded melt shop capacity. The finished product is annealed and pickled white hot strip and will be sold mainly to direct end-user and project customers.