ArcelorMittal, the world's largest steelmaker, has upgraded its 2019 global apparent steel consumption growth outlook to 1.0%-1.5% from 0.5%-1.0%, it said Thursday.
The rosier outlook appears predominantly driven by China, where ArcelorMittal now expects overall demand to increase by between zero and 1.0% in 2019 (up from a previous forecast for demand to fall between 0.5% and 1.5%) as economic stimulus measures and real estate demand surprised to the upside.
In its first-quarter earnings statement released Thursday, ArcelorMittal lowered its forecast for Europe and Brazil, and reiterated its previous views on the US and the CIS region.
In Europe, where the company has most of its production, demand is now expected to contract by up to 1.0% (from previous expectations of a slight growth of up to 1.0%), due to a weak manufacturing sector and declining auto production.
Overall, ArcelorMittal's Q1 crude steel production totaled 24.1 million mt, up from 22.8 million mt in Q4 2018 and 23.3 million mt in Q1 2018.
Sales were unchanged year on year at $19.2 billion, with the impact of lower steel prices offset by greater shipments and higher iron ore prices.
Total Q1 steel shipments rose 2.2% year on year to 21.8 million mt, primarily on higher steel shipments in Europe (up 8.0%) due in part to the acquisition of ArcelorMittal Italia, and in Brazil (up 16.0%) due in part to the impact of the Votorantim acquisition following its consolidation as of April 2018, offset in part by lower steel shipments in the NAFTA countries (down 4.3%) and ACIS (down 12.1%) which was affected by operational issues at Temirtau, Kazakhstan.
Excluding the effects of the ArcelorMittal Italia and Votorantim acquisitions, steel shipments were 3.6% lower year on year.
The Luxembourg-based group's Q1 EBITDA was $1.65 billion, more than one-third lower year on year. The fall in profitability was a reflection of weaker economic activity and the problem of excess overall overcapacity.
"Our first-quarter results reflect the challenging operating environment the industry has faced in recent months," Lakshmi Mittal, ArcelorMittal Chairman and CEO said.
"Profitability has been impacted by lower steel pricing due to weaker economic activity and continued global overcapacity, as well as rising raw material costs as a result of supply-side developments in Brazil."
Mittal said the company continues to face the challenge of high levels of imports.
"...particularly in Europe, where safeguard measures introduced by the European Commission have not been fully effective. Although we are somewhat encouraged by the firmer price environment in China, this is not being reflected in Europe."
As consequence, at the beginning of this week ArcelorMittal said it would temporarily reduce its crude steel production by 3 million mt/year.
Source: S&P Platts
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