ArcelorMittal Changes Forecasts, Predicts Lower Steel Consumption in '22

“Market conditions are currently strong although we are now anticipating apparent steel consumption to contract slightly this year compared with 2021,” ArcelorMittal CEO Aditya Mittal said in a statement released along with earnings data on Thursday, May 5.

The downward revision stems in large part from the war in Ukraine and severe Covid lockdowns in China, the company said.

ArcelorMittal’s steel consumption forecast for the Commonwealth of Independent States (CIS) region, which includes embattled Ukraine, took the biggest hit. It plunged to -10% from prior guidance of 2% growth.

In Europe, hammered by inflation because of the war in Ukraine, the company forecast 2022 steel consumption to fall 2-4%. It had previously forecast consumption growth of as much as 2%.

And in China, ArcelorMittal expects consumption to drop as much as 2% because of Covid-related restrictions. Before the lockdowns in China, Chinese consumption was expected to be roughly flat.

The US was among the few bright spots, with 2022 steel consumption expected to grow 1-3%, in line with prior forecasts.

As for first quarter earnings results, ArcelorMittal reported net income of $4.13 billion this year, up 80% from $2.29 billion in the first quarter of 2021 on sales that increased 35% to $21.84 billion over the same period.

The massive financial gains came despite lower shipment volumes. ArcelorMittal shipped 15.3 million metric tons in the first quarter of this year, down 7.3% from 16.5 million tons in the first quarter of last year.

“It is clear that the longer-term fundamental outlook for steel is positive,” Mittal said. “China’s focus on decarbonization and removal of VAT-rebates on steel exports are encouraging; so too are the actions taken by governments to protect against the threats of unfair trade.”

Results from ArcelorMittal’s North American operations were solid. The North American division posted earnings before interest, taxes, depreciation, and amortization (ebitda) of $1.15 billion in the first quarter of 2022, more than triple ebitda of $332 million in the first quarter of 2021 on sales that rose 48% to $3.76 billion over the same period.

But shipments slipped to 2.46 million tons in the first quarter of 2022, down 2% from 2.51 million tons in the year-ago quarter. ArcelorMittal said the decline was in part the result of a strike at its long products mill in Canada.

Average steel selling prices also dipped in North America in the first quarter of 2022 compared to the fourth quarter of last year. The drop happened even though automotive contract prices reset higher, the company said.

On the operations side, ArcelorMittal said it was studying a second EAF at its AM/NS Calvert joint venture in Alabama, as SMU reported here.

The company also said that its new hot strip mill in Mexico, which started up in December of last year, continues to ramp up as planned – with the facility on track to reach 60% of its capacity by the second half of this year.

Quality from the new the hot-strip mill has been better than expected. And a new push-pull pickling line at the plant is also proceeding as planned, with its first pickled and oiled (P&O) coils slated for the second half of 2024.

By Michael Cowden, Michael@SteelMarketUpdate.com