ArcelorMittal Wants to Raise Flat Rolled Steel Spot Prices by 10%
According to their earnings conference call ArcelorMittal Wants 10% Spot Price Increase on flat rolled (on all steel products) to recoup their higher raw material cost.
During the ArcelorMittal conference call earlier this week, Lakshmi Mittal, CEO of the company made a comment which the Wall Street Journal jumped on in their coverage this morning. The company told those on their earnings call of their intention of increasing spot steel prices during the third quarter by 10%.
Mr. Mittal stated, “I think in terms of steel prices, the comment is that we would have similar margins second quarter i.e. similarly for ton If we were to drive spot prices up by 10% from where they are today. That just gives you a sense of the cost pressures that we are facing as we move up. Judging by some of the positive news that we have seen in the last few weeks there is some expectations that there should be some price increase in the steel industry from September the challenge remains to make it a 10% price increase and clearly there will be some improvement in prices. We are not sure whether it will be the full 10%.”
The transcript of the conference call does not clearly identify whether Mr. Mittal was speaking of the world spot prices or just those in North America. However, it is clear business is declining in China and Europe.
This leaves the Americas where demand has improved (according to Mr. Mittal) to the point where AMUSA is bringing back one of its idled blast furnaces in Indiana on Sunday.
Just at a time when most in the steel industry believe there is too much capacity already running.
Adding more capacity at a time when AMUSA will be trying to garner higher spot prices will prove to be a challenge.
Steel Market Update addresses the issue of pricing and just “how close” we might be to the bottom in tonight’s SMU newsletter.
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