In the first quarter, stainless steel market dynamics improved, driven by seasonality and the Carbon Border Adjustment Mechanism (CBAM) impacts in Europe. Since the introduction of CBAM in January, there is a clear carbon price on stainless steel imports at the EU border, which shifts demand towards European scrap-based production with a lower carbon footprint. Consequently, we have seen the share of cold-rolled stainless steel imports to the EU nearly halve. It is important to extend CBAM to downstream steel-intensive goods to ensure a level playing field for our customers and to prevent carbon leakage. We support the European Commission’s plan to expand CBAM to downstream customer segments. The European Commission, Parliament and Council have agreed on steel safeguard measures which will come into force on July 1, 2026, and protect the European steel industry from global overcapacity.
So far, the direct effects of the conflict in the Middle East on Outokumpu’s result have been limited and mainly related to higher freight costs, which are expected to increase further in the second quarter. On the energy side, our hedging and high share of Nordic low-carbon electricity help mitigate the impact. However, if the conflict were to prolong, it could weigh on economic growth, end-use demand for our products, and put upward pressure on energy costs.
In the first quarter, our adjusted EBITDA increased to EUR 65 million supported by 27% higher stainless steel delivery volumes compared to the fourth quarter. While profitability improved in business area Europe on the back of the higher delivery volumes, Outokumpu’s results continued to be negatively impacted by the backlog related to the implementation of the new supply-chain solution. Business area Americas achieved an excellent result, supported amongst other factors by a higher average stainless steel price. Business area Ferrochrome continued its solid performance thanks to its low-emission European offering. Deliveries increased by 17% compared to the previous quarter. The ferrochrome market remained balanced which supported prices. Group operating cash flow strengthened, mainly due to stronger result and working capital release.
We are advancing our EVOLVE growth strategy by developing higher-margin specialty products in our Ferrochrome business. These new products also broaden our customer portfolio outside stainless steel. During the quarter we progressed through successful production campaigns supplying both internal and external customers. The construction of our pilot plant in New Hampshire, U.S., to scale up proprietary technology for the production of low-CO₂ enriched ferrochrome and chromium metal, is progressing as planned and expected to be operational during the first half of 2027. Outokumpu also announced the launch of a circular economy ecosystem at the Kemi mine to support the utilization of mining side streams and resource efficiency. Further, our group-wide restructuring program will deliver EUR 100 million savings by the end of 2027, of which we expect to realize approximately half in 2026.
Outokumpu is committed to working towards zero safety incidents. In 2026, the safety roadmap focuses on safe management of contractors, the safest way to isolate work environments from hazardous energies, and the permit-to-work process. In Q1 2026, the total recordable incident frequency rate was 1.8 – slightly above our target of 1.5 for 2026, indicating improvement potential in preventive work such as risk identification.
Lastly, I want to thank our employees for their dedication and drive to advance our strategic goals, our customers for their loyalty and business, our suppliers for their valuable collaboration, and our shareholders for their continued confidence.