Outokumpu

Sensitivity

As a general rule, currencies in which stainless steel products are priced are determined by the market areas: euros in Europe and US dollars in the US and Asia.

Price levels in Europe, the US and Asia may differ. Outokumpu is exposed to fluctuations in currency exchange rates primarily because of sales to the Asian and US markets and the Group's own ferrochrome production, which is priced in us dollars. Exchange rates may also impact the relative competitiveness of stainless steel producers on different continents. For the most part, Outokumpu's production costs are in euros, Swedish crowns and British pounds. Prices of raw materials are determined primarily in us dollars, the alloy surcharge mechanism transfers changes in exchange rates to the euro price in Europe.

The table below shows the approximate sensitivity of Outokumpu's operating profit in 2009 to changes in stainless steel base prices, in ferrochrome prices and in exchange rates between the main currencies and the euro. These sensitivities have been calculated on the basis of the average exchange rates in 2008 and highest achieved delivery volumes.


Outokumpu's sensitivity -  effect of sustained
change on annual operating profit


€ million
Stainless steel base price 180
Ferrochrome price +5USc/lb   10
USD/EUR +10%   30
SEK/EUR +10%  -50
GBP/EUR +10%  -15
Source: CRU and Outokumpu



The figures are estimates and they do not take into
account the impact of holding. They have been
calculated on the basis of the average exchange
rates in 2008 and highest achieved delivery volumes.