Reduced purchases
The majority of Outokumpu's costs are associated with the purchase of raw materials. The primary raw materials used in stainless steel production – nickel, ferrochrome, recycled stainless and carbon steel, – are purchased on the open market, but a proportion of the Group's ferrochrome needs are sourced internally. The economic downturn and consequently low demand for stainless steel meant that raw material prices remained at a low level in 2009 – the average nickel price was 14 655 USD/tonne, 31% lower than in 2008. As demand for stainless steel was weak, the volumes of raw material purchased by Outokumpu in 2009 were reduced in order to avoid excessive inventories. The reduction in purchases and the low raw material prices reduced the economic value we added for our suppliers. The cost of goods and services purchased in 2009 declined by 51% to EUR 2 388 million.
Since we recognise our responsibilities towards such businesses and the communities in which we operate, our objective is that no single supplier should be too dependent on its business partnership with Outokumpu. The actual number of our raw material suppliers is quite low and most of the Group's raw materials are sourced globally rather than locally. This makes our procurement processes more efficient. Read more about responsible sourcing here.
| € million | 2009 | 2008 | 2007 |
| Raw material and merchandise | 1 522 | 3 602 | 4 556 |
| Fuels and supplies | 245 | 364 | 325 |
| Energy expenses | 161 | 221 | 189 |
| Freights | 133 | 192 | 187 |
| Maintenance | 75 | 113 | 106 |
| Hire processing | 27 | 38 | 48 |
| Rents and leases | 25 | 26 | 24 |
| Other expenses | 200 | 271 | 229 |
| Total | 2 388 | 4 826 | 5 662 |