ArcelorMittal Trims Steel Outlook After Earnings Slumped on Lower Steel Prices — Update

By Pierre Bertrand

ArcelorMittal trimmed its global steel consumption outlook after steel price declines and lower shipments weighed on second-quarter earnings.

The Luxembourg-based steelmaker said that it expected world steel consumption excluding China to grow by 2.5% to 3% on year in 2024, compared with 3% to 4% growth expected previously.

The downgrade comes as ArcelorMittal said that overall economic sentiment was still subdued and that customers were not yet restocking inventories.

The company also trimmed its steel consumption growth expectations for the U.S., while raising them for Brazil and India, and lowered its demand growth expectation in Europe. Steel consumption is expected to be relatively stable in China, the company said.

That said, the company expects demand to recover and be higher in the second half of 2024 than it was in the second half of last year.

"As absolute inventory levels remain low, particularly in Europe, the Company remains optimistic that restocking activity will occur once real demand begins to recover," the company said.

ArcelorMittal added, however, that current market conditions are unsustainable. China's excess production of steel has led to lower domestic profit margins, while steel prices in both Europe and U.S. are lower than the production cost.

Average steel selling prices declined 7.5% in the first six months of the year, while steel shipments in the second quarter decreased 2% on year to 13.9 million metric tons. Steel production stayed flat on year at 14.7 million tons.

ArcelorMittal, which in May said customers were taking a wait-and-see approach amid subdued economic sentiment, said its performance in the second quarter was broadly similar to the first quarter's.

By the end of 2026, however, ArcelorMittal's projects in Brazil, India, Liberia, the U.S. and France are estimated to add $1.8 billion to the group's earnings potential.

Net profit for the three months to the end of June fell to $504 million from $1.86 billion a year ago, dragged by sales that fell 13% on year to $16.25 billion.

Earnings before interest taxes depreciation and amortization fell by 38% to $1.86 billion.

Write to Pierre Bertrand at pierre.bertrand@wsj.com

(END) Dow Jones Newswires

August 01, 2024 06:19 ET (10:19 GMT)

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