Outokumpu Oyj (OUT1V) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to Outokumpu Pre-Silent Conference Call for Quarter First 2021. [Operator Instructions] I would now like to hand the conference over to your speaker today, Linda Hakkila. Please go ahead, ma'am. Your line is open.

Thank you, operator. Good afternoon all, and welcome to Outokumpu's Q1 2022 Pre-Silent Conference Call. My name is Linda Hakkila, and I'm the Head of Investor Relations here at Outokumpu. With me today, we have our CFO, Pia Aaltonen-Forsell, and she will be the main speaker today. Today, we will first start with a short commentary. And after that, we are happy to take your questions from the line. And with that said, I will hand over to Pia.

Thank you, Linda. And ladies and gentlemen, dear friends, so again, 1 quarter has come to an end. And what a quarter, I would say. There's a number of topics we could easily deep dive into today, the geopolitics war in Ukraine, nickel pricing, et cetera. But I would still start from some of the basics of our business that we were also talking about in our guidance for the quarter. And I'll start right off first with a bit of information really from sort of almost COVID perspective. If you recall, when we talked about the volume development for the quarter, we were a bit cautious saying that COVID is actually spreading quite a lot. We have a lot of absenteeism at our sites and wanted to be a little bit careful with that, that could have some negative impact for the volume in the quarter. However, by now, it's 1st of April, and I can say even though we have seen high absenteeism rates for sure, it's almost a shocking number at times at individual sites, and typically absenteeism over and beyond 10% during several weeks, however, our own mitigation has been successful, and we don't think that this has really caused trouble that we were cautiously talking about. So quite the contrary, we have been able to operate at very high capacity utilization rates throughout the quarter. And that's a good starting point, obviously, on the back of the market sentiment that is still strong, especially maybe given there a bit of first sort of positive statement also looking into Americas, and just want to say that sort of from a macroeconomic perspective, it really seems that the economy is having sort of a very good sentiment at the moment and also then from demand perspective, staying very robust. And especially in this geopolitical situation, I just want to say, we are very pleased that we have this strong presence in the Americas and in the U.S., as we speak. And it is looking mighty good on that side than on the Atlantic. Also the market situation in Europe is robust. There is indeed still a strong sentiment around any discussions with end users. Distribution side has been maybe a bit more cautious, especially as the nickel price has been so volatile at points, sort of even visible to the point in the order intake. However, we still have the strong order book far into Q3 at this point. Then maybe a few words about nickel. That has certainly been one of the really turbulent events, especially of March. And without going into all of the sad details around what has happened in LME nickel trading, I just want to say that, obviously, this also had sort of a temporary impact on customer behavior with a lot of questions, with a lot of inquiries on what this whole thing means. I think by now, we have the alloy surcharge out there for the month. And I think we have been able to respond to the question that were arising. And somehow, it seems that the situation is still manageable or sort of rebalancing after that sort of very turbulent peak there. And of course, that turbulent situation on LME nickel trading also had some impact vis-à-vis, for example, hedging. So you know our hedging policy is really there to balance our profit and sort of balancing out or offsetting with timing. Now I think what will happen with this sort of change really late in the quarter, it's most likely that we will have a bit higher hedging mostly than what we will see timing gains. And then obviously, if the nickel continues at an elevated level, then those timing gains will be more visible later, for example, during Q2. But for Q1, then probably a bit higher hedging losses than timing things. And finally, maybe still on the energy prices, that was quite a big talking point when we published our Q4. Relating to Q1, I think the situation has remained sort of well controlled. There is no significant increase in electricity or energy. I'm sure we can still come back to the details. But I do think that our hedging policy, especially for electricity, has been very successful and has helped to keep the cost on a stable level. And as you all know, we also do have the main part of the electricity consumption in the Nordic countries, particularly in Finland. And observing also the tight curve, the price increases overall in the market have not been taking it to any sort of -- to such elevated levels as, for example, in Southern Europe. Then the situation with the war in Ukraine has obviously brought a lot of turbulence. It is, overall, a very sad situation seeing more in Europe. And from Outokumpu's side, we have also taken a lot of measures to make sure that we discontinue business, a very minor business, I would say, from the sales perspective. But obviously, from a sourcing perspective, from our sort of operational sourcing perspective, Russia has indeed been one source of, for example, the highest nickel metal as well as, for example, ferrosilicon, coke and anthracite. So we are putting a lot of efforts into looking for alternative sources. If anything, I want to say that, that is work that we take very seriously. But probably, it will take some time to redirect some of the supply chains there. And I think for the first quarter, for the second quarter, we have a good plan in place. But there still remains work to really ensure that we are able to sort of fully redirect the sourcing. But we are doing our utmost. And as you know, obviously, scrap, being the most important source of raw materials, when it comes to scrap, we have discontinued any, even minor, sourcing from Russia that we may have had earlier. And then finally, I still sort of circulate a bit back to other sort of aspects of the Ukraine war being then, for example, access to gas, energy more broadly but particularly gas. And obviously, even though our purchasing come directly from, for example, Finnish or German companies, we all understand that in the background, indirectly, we may very well be consuming gas also of Russian origin. And in that context, obviously, we have to have a very tight dialogue with our suppliers and also asking there for alternatives. But with that said, I think summarizing the sort of first quarter and both sort of operationally and from a market perspective, I think we are still just completing a quarter that has been very much along the lines that we were foreseeing and operationally then even avoiding those challenges or mitigating the challenges with COVID. And obviously then, when it comes to sort of further outlook for Q2, that we will come back to in our Q1 report in early May. So with that said, operator, we would be ready for questions, please.

[Operator Instructions] The first question, from Luke Nelson from JPMorgan.

Just firstly, on costs, your comments around sort of qualitatively indicating strong control of costs quarter-on-quarter at least in Q1, can you maybe just give a bit more quantitative color around what, if any, sequential cost increase is coming through in -- from power, natural gas, and I think you previously also talked about ferrosilicon as well? I'll start there.

Indeed. Luke, thank you very much. And yes, indeed. So the language that I used earlier was to say, on the energy side, we had even a sort of EUR 14 million to EUR 15 million increase quarter-on-quarter from Q3 to Q4. And then I did say that it could become even double in the first quarter. I think with sort of the most recent view that I have, obviously I don't have the accounts ready but just sort of observing the price curves and then our hedging results, I would say it's probably a little bit more sort of modest than that. So I think, overall, less of a sort of price pressure from electricity and natural gas. But obviously, there is still a bit of sort of increase compared with Q4 but maybe not as high as I was foreseeing earlier. Then on the ferrosilicon, I think it's pretty much that order of magnitude that we were thinking. So it is EUR 15 million, EUR 20 million, that sort of quarter-on-quarter increase. And if that was sort of the energy and the ferrosilicon, then I would still say that, of course, there is sort of generally a very inflationary environment out there. So whatever sort of consumables or especially anything we are looking at, I mean, there are price increases coming up. I think that's also something that we will continue to see sort of through the year, to some extent in 2021. Even though prices started somewhat to increase later in the year, we were still protected by contracts, et cetera. And some of them, indeed, are renewing now. And maybe Q1, we still have a bit of buffer from, can I call it, just sort of inventories still being consumed sort of with oil prices, et cetera. So inflationary pressure indeed is there. I just don't want to sort of over-interpret that for the first quarter.

Okay. Great. And I suppose then just circling that back to your guidance, which was similar to higher levels, and a part of that was obviously the COVID potential issues, which you talked about maybe being less of an issue in the quarter. And it also seems like energy is not as much of an issue as previously indicated. So is it fair to say that, clearly, that lower or similar part within the Q1 EBITDA guidance is now off the table, and we should be thinking sort of towards the upper end, if not above? Is that a fair comment, given the moving parts that we've talked through?

Yes. Luke, I think what is really fair to say is that some of those risks that we were foreseeing did not materialize. But then I would feel in this context, as you ask a very direct question, I just need to bring along the sort of turmoil that there was with the LME trading and then still the situation that we have sort of overall then with the sort of combined timing and hedging impact, which I now know, or obviously don't have the accounts yet, but just based on where nickel traded yesterday and what happened during March, we know that we will incur some hedging losses. So I just want to say that out loud, I have no intention to change the guidance that we have given before. And I think that, indeed, some things went sort of good where we were foreseeing risk or went well where we were foreseeing risks. But the hedging losses will be there a bit sort of as a negative. Can I call it a surprise? Because obviously, what happened was fairly unprecedented. At least to my knowledge, I have not really seen these sort of movements before.

No, that's very clear. And then maybe a final question, and I'll hop back in the queue. But looking further still into Q2, Q3, just given what you see at the moment, can you maybe sort of touch on the key moving parts of how profitability could move based on your order book, what you see from power, ferrosilica and those types of effects and pricing? Just trying to get a sense of the key building blocks.

And thanks. And I think, obviously, in the first quarter, we were very clearly indicating that what we see orally from our order book, we know that prices -- I would say higher sales price on our side will more than offset the inflationary pressure. And I guess, that's really sort of, without now giving the guidance for Q2 and Q3, I think the elements to consider is really this continued strong order book that we have for the second quarter, obviously also know that those orders have been taken still in kind of a positive market environment. But then at the same time, inflation will push in bigger. I think the ferrosilicon, for example, pressure is going absolutely nowhere. And for most of consumables, et cetera, we will also see pressure upwards. But can the inflationary pressure be sort of, on a full year basis, if we think about more like conversion cost, how big could that be? Well, still looking at the overall margin, could there then go throughout the year be maybe sort of EUR 100 per tonne increase if really everything is pushing up? That's certainly possible before we sort of get to the end of the year. But there are also kind of moving elements within that. So I just think that the order of magnitude of the cost inflationary pressure from the various conversion costs could still be something to really sort of take in the calculation. But at the same time, we have still been, until now, seeing this market environment continuing as positive. So I'm not as much worried about that balance. But I think that the overall macro environment and having now experienced 1 month of war, what are the sort of consequences of that when we look a little bit more into the autumn? I guess, we would all like to know, and we simply don't know yet. So just giving one example that our sort of overall tendency or trend already for a really long period of time, for example, nickel has been upward, upward, upward. And when is then the point in time when that will change? So I think much more about that kind of sort of changes and elements sort of worth considering. I think the sort of logic in the margin development otherwise has been sound.

And sorry, just to follow up on the ferrosilica, which you mentioned sort of still in line with the prior guidance of EUR 15 million to EUR 20 million sequentially, if that's the base in Q1, as things stay, would that fully reflect sort of pricing where it is at the moment? Or would that -- would there be additional step-up in costs from that in Q2 relative to Q1?

Yes. As far as I can see, there could still be a little bit of increase into Q2. But I think the sort of -- from what I know right now, it seems that, that sort of level change has happened. But it is still an area where these changes then happened really quickly, so we'll have to see.

The next question from Carsten Riek from Credit Suisse.

I have more a question on the demand side right now. Because what we see is that, especially the austenitic rates are getting quite high price-wise. Do you see, Pia, a change in the customer patterns asking for more ferritic rates already austenitic, given the price differences? Or is it still a level that we don't see the switch coming yet? That's the first question. And the second one, just on the inflation. In your opinion, is the inflation which we see right now, which probably causes also higher interest rate? Could that be a potential negative factor for the global stainless demand going forward?

Very good question. Thank you, Carsten. So first, I think I could give sort of the short answer. If we don't yet see a move from austenitic to ferritic, but obviously, it means to the high nickel price, I do think that there have been historical periods before, at least in 2007, when there was sort of a clear shift happening then. But let's not forget that then we were sort of $50,000 per tonne nickel for a long period of time or sort of raising to that level also over several months and then staying at that level for some months. So obviously, we are not sort of in that level yet. And we are also not sort of long duration there yet. So we do not see that yet. Then I think your question on inflation is so interesting. Because it could somehow, of course, make sense that from a sort of consumers' perspective, there will come a point in time where money is just sort of falling into the basic essentials of everyday life. And there could, of course, be a theory saying that, that would then impact demand for, I don't know, appliances, for example, or for automotive or other sort of end-user applications. But I have some hesitations to that statement. And I base that on, let's say, fact both of sort of consumer savings, especially in the U.S. So it's actually things based on some steps that I was reviewing very recently that people from the sort of bottom 10% to 20% of income-earners actually are better off now than before COVID. And the savings rates are still pretty good, so -- and in Europe, of course, COVID was overcome by a lot of support also from the states. So it does seem that before the war in Ukraine, we were, both in terms of sort of European and U.S. economy, really in a sort of rather strong position with sort of a kind of a good savings rates and sort of cash amply available also for the lower income-earners. So I think it may be sort of too early to draw a conclusion yet. And we certainly don't see that from, let's say, the contacts that we have into, I don't know, appliances, et cetera, customers, so -- but the theory, of course, to be that if the inflation then really is here to stay and it really also goes into areas where it's difficult to increase productivity, if we talk, for example, I don't know, more about sort of services, et cetera, and if the inflation gets persistent also kind of through those segments, maybe there then is a risk that we go into situation where interest rates will be just sort of even more elevated than maybe the sort of 2% to 3% that I think could be in the cards now. But this is maybe more sort of just -- yes, enjoying the question, I think it's a really sort of interesting one. And you might be on to something. But I don't think we are there yet. And probably, we are sort of pretty well positioned as economies to at least sort withstand the first stroke and not go sort of directly down the drain, so to say, with demand.

The next question, from Bastian Synagowitz from Deutsche Bank.

I just want to follow up on your point on hedging. I know that's probably the most difficult part of your accounting to work out, I guess, the effect between timing and hedging. But can you give us any quantitative steer in terms of what the number could look like? Is this more like a negative minus -- say, [ minus 20% to minus 30% ]? Could it be higher than that? We've had obviously very extreme moves. So I guess, it's going to be difficult to say. But if you could give us maybe a bit of quantitative steer at this point, that will be great.

Yes. Thank you, Bastian. And indeed, it is very difficult. I mean, we spent a good part of the day yesterday sort of looking at the closing price, $32,000, around that for nickel and then kind of doing a bit of sort of tentative calculations and -- and I think your -- this is still, at this point, not sort of a solid figure. But I guess, that the net impact of the small -- the timing rates that we get, but they are not so huge because the nickel price really only was higher sort of clearly in March so that doesn't flow through that much yet. And then at the same time, we are already taking some of the hedging hit. Obviously, if nickel stays this high, there could be some more negative from hedging also in Q2. Because for a part of the hedging, we apply hedge account that will kind of better match the cash flow and the hedging result. But for a part, we do not. And then we have the mark-to-market at the end of the quarter. So I mean, I can easily foresee an order of magnitude where the net of timing and hedging is exactly as you said, maybe [ 25% ], maybe [ 30% ], maybe it could even be [ 35% ]. And that's still now a figure that we'll need a bit more diligence before we are ready sort of closing on the books.

Okay. Excellent, that's great. Great color. And then just on the volume side, I mean, the picture you're drawing on volumes seems to be still very, very constructive. So basically, what you've been saying, I guess, is that you have been seeing another increase in shipment volumes in the first quarter versus the fourth quarter. That is correct, right? So in terms of volumes, you've been really on that uptrend.

Yes, I do think we were sort of able to overcome those challenges. So yes, indeed. I mean, it could have been also kind of ending up at a fairly sort of neutral development. But I think we're overcoming those challenges. Again, there's sort of -- there's a bit sort of a leaning to the positive side.

Okay. Understood. And then just again to frame the situation into the second quarter, I guess, again also what you said on margins, I mean, it seems to be fairly constructive. It seems to me that the main risk is volumes. You have a very like decent order book. The question is, obviously, will customers really take off those orders? Maybe potentially walk away, we don't know, could obviously happen. But is this the way you would look at it at this point, i.e., like overall margin environment still continues to be good, even net of cost, but then the main risk obviously is volumes?

I do think that's sort of the headlines there. And then obviously, just looking into particularly development in the first quarter, I think there is the sort of -- I don't want to call it one-time impact, but the sort of unique annual impact of also the annual contracts repricing in the first quarter. So obviously, that sort of change vis-à-vis the previous quarter cannot happen again in Q2 kind of caused by the annual contracts. But even having said that, I do think there is still kind of a constructive environment for the margin. And what I really will be observing is more that there is really an unprecedentedly difficult geopolitical situation again. And with the [indiscernible], I really think that the higher risk is then on if we would take situations where customers would not be taking their orders. I think I have commented this in earlier calls. And I've said that, "Hey, we have a very good sort of contractual framework. I think we are sort of pretty certain that we have all the rights to deliver." But even saying that, it's clear that we are here for the long term with our customers, and we would always be sort of -- yes, we would always try to sort of find a constructive solution. So that is one of the things to sort of have an eye on and kind of almost, I would say, with a reflection on what's happening more broadly in the whole society.

Okay. Great. And then my very last question is on the market supply situation and mostly on the trade balance. So over the last couple of months, we obviously have seen again another trend on the import side. I guess, one could say that could be driven by probably three sectors. I guess, the arb, the arbitration possibility obviously is significant, given the price differential. The European market, obviously, has been very strong. And maybe there has been an element of anticipating maybe also the, I guess, the additional trade measures in terms of antidumping and countervailing duties, which now have been announced, the trade data we all receive, obviously, we all get that with a lot of time. Like have you seen any -- from your market sources, any indications whether there has been any early changes to how the trade side has developed? The price differential obviously continues to be very, very large. But have you maybe seen any changes nevertheless?

Well, I think the January stats were showing a lot of imports, really over 40%. But it seems that, that's kind of a typical monthly pattern as well within the quarter. So it's probably sort of -- yes, there's really not any sort of conclusions that we could draw based on that. But I do think that the high nickel price obviously makes it sort of arbitration for the price differential quite meaningful at this point in time. I always believe that it is, of course, this sort of price differential, but it's also logistics, availability of logistics, then it's the trade measures and then it's, of course, domestic demand in, for example, China. And with all of those, is there sort of an opportunity for more goods to flow into Europe? I'm not sure if it's sort of yet the time. But at this point, I mean, we are observing the statistics a lot. And I think with distributors being sort of very careful with how to place orders in this nickel environment, I am sure that they are looking into kind of what's the opportunity with the imports from Asia. That is sort of the other side of the coin.

We have the next question from Faisal Qureshi from Jefferies.

Maybe this has already been covered before, so apologies in advance. So I think maybe you mentioned about the timing gains that were going to be seen in Q1. Could you perhaps comment on that again? And I mean, I guess, the other question I had was, given how fast energy costs have increased over the quarter, I mean, do you think that you would also see some timing-related squeeze? Or are you able to pass through these costs to customers?

Well, thank you very much. Maybe I start with the energy costs. And you are, of course, sort of right that there are some markets where the energy cost increase has been super high. So if I look at, for example, U.K. in our portfolio, they have been more brutal than in some other countries where we operate. And we have had to sort of find mechanisms to pass that through to our customers as well. I think that's given when the increases are so high. But then when you kind of look at Outokumpu overall, then obviously U.K. is sort of a very small part of the portfolio. More relevant is what is happening in Finland particularly but also, for example, in Sweden and U.S., of course, for that matter. But I would say that observing the kind of absolute levels of particularly electricity cost, that's kind of -- that's really the big bucket, of course, here. And also the changes, I think we have been, in this quarter, successful with our hedging and contracting measures as well as then not really seeing those peaks so enormous or so aggressive in the Nordic market. So I still continue to have sort of a really tight eye on this topic. But I think that the sort of raise quarter-on-quarter probably is a bit smaller than I thought initially. And it's not sort of the main topic from our perspective, even though it might be from someone else's, but not from ours. So I'm not particularly worried. But when I initially said that it would be even sort of double sort of sequential cost increase compared with what we saw from Q3 to Q4, now I just want to say there will be a cost increase, but it's not going to be as high as double that I thought earlier. So Q3 to Q4, we saw this, I think it was EUR 14 million increase. So that's maybe about the energy. And then when I talked about the timing gains, I mean, we would see that, of course, when nickel price goes up, that it kind of delivers also positive for us because obviously we have some inventories, where we can then see this gain when we are selling. So indeed, there will be a timing gain. But there's really not so much that we can materialize just sort of during the late part of March. And we will see more of the sort of hedging losses pan through for the same period. So our hedging policy on nickel basically is there to offset this sort of inventory-related timing gains and losses. And we really sort of want to look in margins and protect ourselves from this volatility. I think we've been fairly successful in the last 8, 9 quarters or so. But this quarter, sort of there will be a bigger move or a bigger shift. So I cannot tell you the exact amount because it is still sort of being calculated. But there will be a net impact of both somewhere, as I said earlier, probably between [ 25% ] and [ 35% ] negative, net impact of both. But really, I say that figure a bit in brackets because it's really quite complicated accounting before we have all the impacts on paper.

We have the next question from Luke Nelson from JPMorgan.

Just one from me on working capital, and apologies if you did touch on this in your opening remarks. But can you maybe just talk through how we should be thinking about that? Obviously, Q1 is typically seasonally weak. But given raw material pricing is where it is, can you maybe just give a bit more of a quantitative framework around that? And also, I mean, have you been proactively taking advantage of any inventories during the dislocations in Russia and Ukraine that would, I suppose, exacerbate any working capital build?

Indeed, we have. But let me just sort of frame that a bit first. And thanks for raising this question, maybe I didn't really cover it in my opening because usually, of course, the pattern is that Q1 is seasonally burdened with an increase or investment in the working capital. That's typical sort of going from the volumes keeping in good demand situation and now really then looking at the very high price levels, raw material, sales prices, et cetera. That, of course, even adds sort of a certain flavor to that. So I think, overall, all this, without any disruption from Russia, we would have been looking at a fairly substantial increase in working capital during the first quarter. Obviously then, sort of overall cash flow perspective, again predominantly supported by good margins, good results and then some investment in working capital really offsetting that to some extent. And now what we will see in addition is, I say approximately, but I think maybe about EUR 100 million, where there have been maybe not only that we sort of took some inventories early because of this disruption that the war in Ukraine has led to, but also just simply because we had to redirect some supply chains. We had to change some vendors. Maybe there were some old contracts that were really advantageous also in terms of, I don't know, consignment inventory or long payment terms, et cetera. And now in order to adjust to this situation, we have had to make some concessions. So I would say it's sort of my best estimate that this sort of extraordinary measures is really because of the war probably increases working capital with around EUR 100 million in the quarter.

So sorry, just to be clear, that is the normal seasonal Q1 build and then EUR 100 million on top of that?

EUR 100 million on top of that, which I would really say is the sort of war -- war-related because there have really been quite significant sort of changes in how to sort of -- how to source certain metals, for example.

The next question, from Harri Taittonen from Nordea.

Just on the -- just wondering if you can sort of give some color on that. You have had the kind of competitive advantage in the sort of very high usage of scrap. And -- but now I mean, just wondering how watertight is the link between nickel and scrap prices and how that kind of works operationally? And also like thinking of the scrap, obviously, there's quite a lot of cost element related to collection and logistics and those costs have been going up as well. So just wondering what is the kind of the relative attractiveness of scrap versus nickel in this kind of environment. Is it sort of changing in any meaningful way?

Harri, thank you very much. There are so good and intriguing questions today. I think that's a very good estimation. I would say, particularly on the point also of the cost of collections, logistics, et cetera, obviously, kind of with the overall inflation, those are also increasing. There is still today sort of a very clear correlation or a very tight sort of correlation between the LME nickel pricing and then the scrap or for the nickel component in the scrap. And I think that's sort of the -- that is -- the fact of the matter that is sort of paper trade of nickel in LME, even though it's only a fraction of nickel traded really in real terms in the world, it feels very meaningful in terms of sort of price calibration mechanisms. And it still works that way. And you can maybe appreciate that there's also been the link to sort of margin management, both at producers' end like for us, but I'm sure also for the scrap dealers, that sort of timing aspect here. In a functioning LME market, they can be managed because you can hedge and you can take a position to sort of lock in your margins. And so that has really been sort of the setup. And I don't think that we have yet seen sort of that being disruptive. But of course, it has been questioned now that with this sort of extremely turbulent movements in the LME nickel price that what is sort of left, what is the benefit left here? But it's kind of the wholesalers' industry is very linked as well as also then other industries, who take sort of the hint to the pricing from the LME nickel. So there is still sort of a tight mechanism around that. So I think the benefits of scrap are undoubtedly there when it comes to just the whole sort of heart of the recycling, the low CO2, the sustainability. So there are so many sort of strong benefits that we need to find sort of ways of just managing the situation now, also this turbulent situation. And we all know that we also need some nickel in other formats. I mean, sometimes it's ferronickel, sometimes it's cathodes or briquettes that are needed there to really sort of ensure the exact right content and qualities and properties needed. But still, I mean, that is the base and so it will remain.

The next question, from Anssi Raussi from SEB.

It's Anssi Raussi from SEB. I have a couple of questions. And to start with, about the mix, have you seen any significant changes in your product mix because of the current conditions and availability regarding grade 1 nickel, for example? That is the first one.

Yes. Thank you, Anssi. So the short answer is that the availability of nickel has not impacted our customers' behavior in any way. So I don't see a link there. But what I do see is that we still have an increasing sort of share of the pro grades and of the value-added grades in our order intake. And I think it's sort of typical also of how the cycle goes. So we are now later in the cycle. We started off with sort of typical items closer to the consumer. And now we are getting to the more sort of investment-driven demand. So not yet that substantial change in the actual, but really in the order intake, I think we can now say that we really see this sort of return of the investment cycle.

Okay. And maybe I continue on demand side, and I know that this could be a bit difficult question. But have you heard or do you see that the demand is currently strong because end user customers are fulfilling their last contracts and then the demand will cool down? Or is the underlying demand really that strong as it looks like right now? Because I'm just thinking that many industry players have been commenting some demand problems and consumer confidence has plummeted recently. So have you heard anything about this?

Yes, indeed. I do think, looking at some of the statistics out there, indeed, consumer confidence has plummeted. And what we are doing, obviously, is having a tight contact with sort of a fairly large group of our key customers. And they are still signaling at this point that they still have long order books and really sort of wanting to ensure that they are not stranded with nonexistent or very low inventory as maybe happened during COVID. So maybe this is really sort of emptying of the supply chains in COVID. And then the difficulty of really sort of benefiting from the growth when it is hitting the gain has somehow also made everyone really conscious of this that not driving inventory too low. So I still have to say that the signals that we get from our customers, from our end-use customers, they are still talking about a very robust demand. But you may believe that we are following this extremely tightly because some of the sort of macro indicators indeed seem to talk about sort of something being a bit broken on the consumer side now.

Okay. And the last one for me is that do you think that you have possibly gained any market share because of some uncertainties regarding your competitors being able to keep their mills running with high energy costs?

Anssi, it's a really good question because obviously the news flow has been really sort of talking about extreme problems in some other areas of Europe, et cetera. But still, I think it would be premature to say that, one reason being that statistics are always quite late. So anything that is happening right now, we would see a couple of months from now in the statistics. So there, I really honestly don't know. And then I also think that as we have been having this order book still for Q2 and bookings in the third quarter, it's still -- what is happening here and now, if it's then impacting order intake, then we would see that in the deliveries only in several months' time. So also, that leads to a situation where I really cannot answer the question yet.

Yes. And of course, talking about order intake side here.

Thank you for your questions. There are no further questions at the moment. I will hand back the conference to you, Pia Aaltonen.

Thank you very much, operator. Thank you all for super interesting and good questions. And I just want to say I've also personally experienced now what it's like to have COVID, along with so many others, I'm sure, on the line and throughout the world. So I think it's just reassuring to be out on the other side. I hope that there is some sort of more positive news and sentiments coming across our way in the next weeks and months. However, now we are sort of entering the silent period and then we will talk again when we publish our Q1 results. So thank you very much, and please stay safe and take care of yourself. Bye now.

That concludes the conference for today. Thank you for participating. You may all disconnect.