Steel Mills
ArcelorMittal Narrows Losses in Q1
Written by Sandy Williams
May 8, 2016
ArcelorMittal narrowed its losses in first quarter 2015 to $416 million from $728 million a year ago. Total steel shipments for the company were 21.5 million tonnes.
“Clearly, the market conditions have improved since we reported full year results in early February. Rising steel prices in China have supported prices globally and this has been further supported by the rebound in iron ore and the steel scrap prices. In terms of the short-term demand outlook, for our core markets, this remains positive,” said CEO Lakshmi Mittal.
Mittal went on to say that despite a positive momentum the steel price environment remains fragile due to excess steel capacity in China.
Demand for steel has improved said Mittal. The forecast for apparent steel consumption in Europe and the U.S. remains unchanged but the ongoing recession in Brazil prompted ArcelorMittal to downwardly adjust their forecast for apparent steel consumption in Brazil to 10-12 percent for 2016. Demand in China is expected to be flat relative to 2015.
In the company outlook, AM expects FY 2016 EBITDA to exceed $4.5 billion. The improving steel spreads are expected to be fully reflected in results for the second half of the year.
ArcelorMittal recently sold its U.S. long products division that included Vinton and LaPlace.
The joint venture at Calvert is going well. The slab yard expansions of Bay 4 and Bay 5 are completed which will increase coil production up to 4.6 million tonnes per year. Calvert is receiving slabs from operations in Mexico, Tubarao (Brazil), and Indiana Harbor.
Shipments were up 25 percent from fourth quarter. The hotmill throughput rate increased by 22 percent from fourth quarter to first quarter.
The company plans to increase auto shipments by 62 percent this year, and is ahead of schedule on approval of automotive qualifications at Calvert. So far 216 of 227 submitted qualifications have been approved. ArcelorMittal says it is confident that steel will remain the material of choice for automotive
Ratification of the labor agreements with the United Steelworkers at U.S. operations are expected to occur within three or four weeks. Throughout the negotiation process, ArcelorMittal has included the USW on optimizations plans for the U.S. facilities.
On global pricing, CFO Aditya Mittal said: “We see in our own business, the strongest impact of the price rises occur first in the Asia’s business and then in the long business, and then in the flat business in Europe and in North America, and that’s because the contract business tends to be sticky. It also helps us in downturns because the prices don’t come down as much. And clearly as prices move up rapidly it takes time to for that to work through the contract business. So I would characterize that as more lag effects, fundamentally in the medium-to-long run the benefit of a contract business is that you are getting more revenue per tonne because you’re providing franchised products.”
Sandy Williams
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