Luxembourg-based Arcelor Mittal expects an expansion in global apparent steel consumption in 2020 of 1.0%-2.0% compared with 1.1% in 2019, after a “very tough year.”
“Although market conditions remain challenging, there are encouraging early signs of improvement particularly in our core markets of US, Europe and Brazil. With inventory levels having reached a very low level following a period of de-stocking, we are seeing customers return to the market, supporting an improved pricing environment.” Chairman and CEO Lakshmi Mittal, said.
In Europe, the company’s main core business, segment crude steel production decreased by 13.4% on the quarter to 9.0 million mt in the fourth quarter of 2019.
The 4.2 million mt of annualized flat steel production curtailments announced in May 2019 to bring supply in line with addressable demand were completed as scheduled in Q4.
In a call with journalists the president and CFO of ArcelorMittal and CEO of ArcelorMittal Europe, Aditya Mittal, said “all the operations are running.” He added that at ArcelorMittal Italia, the former Ilva, specifically all three blast furnaces are running and that although there are still issues at Pier Four that was shut down due to a fatal accident, creating problems with discharging raw materials, they are making progress and aim to be fully up and running by the end of Q1.
In its results statement, ArcelorMittal said it believed the coronavirus outbreak would likely have a small impact. “Absent a degradation of the situation and/or a further extension of the holiday period, we believe the effect of the coronavirus will likely have a short-term negative demand impact in China and to a lesser degree elsewhere. Our current view is that the vast majority of the impact on Q1 2020 demand is expected to be recovered throughout the remainder of the year. Our perspective on the fundamentals of the Chinese steel market remain unchanged”.
In China, ArcelorMittal said it expected overall demand in 2020 to grow within a range of zero to 1.0%, compared with estimated growth of 3.2% in 2019. The company has two mills in China that it continues to operate. In the call, Mittal said that “in January the two mills were running at a budget and tin February are working at a lower rate mainly due to the extension of the New Year festivities and the difficulties in moving the materials out”.
Overall, the steelmaker produced 89.8 million mt of crude steel in 2019, down 2.9% year on year.
Total steel shipments in Q4 were 2.3% lower on the quarter at 19.7 million mt primarily due to 4.2% lower steel shipments in Europe, the company’s core business, NAFTA (2.1%) and Brazil (3.3%), offset in part by a rise in of 9.8%, across Ukraine and Kazakhstan.
Overall the company swung to a net loss of $1.88 billion for the three months ended December 31, 2019 against a net profit of $1.19 billion from the same period a year earlier, the steelmaker said, citing lower shipment volumes and selling prices. “2019 was a very tough year, clearly reflected in our significantly reduced profitability,” Lakshmi Mittal said.
“Having now completed the acquisition of Essar Steel India in partnership with Nippon Steel, we have also secured a new opportunity for the group in the fast-growing Indian market. The asset is performing well and offers considerable brownfield potential aligned with the country’s ambition to triple crude steel production over the next 10 years,” he added.
The joint venture has a crude steel production capacity of 9.6 million mt/year centered in Hazira, Gujarat.
— Clement Choo