Steel Mills

ArcelorMittal Results Affected by Declining Iron Ore Price and Imports

May 7, 2015

ArcelorMittal reported a net loss of $728 million in first quarter 2015 compared to a loss of $955 million in fourth quarter 2014. EBITDA was $1.4 billion. Steel shipments were up 3 percent year over year to 21.6 million tonnes. Iron ore shipments rose 5 percent to 9.4 million tonnes. Total sales for the company were $17.1 billion.

“We faced a number of headwinds in the first quarter, including a declining iron-ore price, a stronger dollar and surge of imports in the United States,” commented Chairman and CEO Lakshmi Mittal in the earnings report. “As a result of which EBITDA declined to US$1.4 billion, although the underlying performance of our steel business remained similar to the first quarter of 2014. The performance in Europe was of particular note, with EBITDA improving 15% year-on-year. Offsetting the impact of these headwinds is a priority and we are focused on achieving a 15% reduction in mining costs and improving the competitive position of our US operations. Importantly, we still expect to remain free cash flow positive and further reduce net debt over the course of the year.”

The NAFTA region, which includes the U.S. and Mexico, posted underlying EBITDA of $259 million that included a negative $76 million provision related to an onerous annual tin plate contract at Weirton.

NAFTA steel shipment volumes declined by 5.9 percent q/q to 5.5 million tonnes, driven by a 7.9 percent decline in flat product shipments. The decline was due to weaker demand and strong de-stocking. The average steel selling price for Q1 was $840/tonne. Average selling price for flat products fell 3.1 percent and long products dropped 8 .0 percent.

Crude steel production for the region fell 3.8 percent q/q to 5.9 million tonnes as production was adjusted to align with weaker demand.

In the guidance for FY 2015 ArcelorMittal said it expects company steel shipments to increase by 3-5 percent compared to 2014. Low iron ore prices and a weaker US market are expected to cause headwinds for FY 2015 results.

ArcelorMittal forecasts a 0.5 percent to 1.5 percent increase in global apparent steel consumption for 2015. The regional breakdown is:

• +0.5% to +1.5% in China
• -2.0% to -3.0% in US
• +1.5% to +2.5% in EU28
• -5.0% to -7.0% in Brazil, and
• -5.0% to -7.0% in CIS

AM/NS Calvert has been approved on 157 of 1823 identified automotive qualification packages and is targeting 20 more approvals during 2015. ArcelorMittal Mexico,Tubarao and ArcelorMittal USA are continuing to provide slab for AM/NS Calvert. Qualifications are continuing in the structural, OCTG and line pipe segment with significant progress. The continuous coating line upgrade to aluminize line #4 was completed during first quarter. The slab yard expansion is scheduled to be completed by the second half of 2016.

ArcelorMittal Dofasco produced its first commercial coil on the new #6 heavy gauge galvanizing line in April.