ArcelorMittal Europe slashes third-quarter shipments amid cuts

ArcelorMittal Europe saw steel shipments slashed by 6% and 11% on-year and on-quarter respectively in the third quarter to 7.08 million tonnes due to weaker demand, Kallanish notes.

Crude steel production was down 12% on-year to 8mt due to significantly lower apparent demand and curtailed production in light of higher energy prices. It was also down 3% on-quarter.

Given the weaker macroeconomic conditions and order book, high energy and carbon costs and rising imports, the company announced further, more significant, production curtailments commencing in Q4 – in France, Spain, Germany and Poland. These are designed to bring supply in line with addressable demand, it says.

The European unit reduced gas consumption by 30% in Q3. It says that at current spot levels, natural gas cost per tonne is expected to be lower in Q4.

The firm notes European spot hot rolled coil prices not covering the fixed costs of marginal producers. The impact of destocking in Europe is significant, particularly in the second half of the year, and expected to lead to a contraction of apparent consumption by up to 7% in 2022.

The reduced shipments contributed to a drop of 5% and 20% on-year and on-quarter respectively in Q3 sales to $10.69 billion, while operating income was only $158 million versus $1.93 billion in Q3 2021 and $2.06 billion in Q2 2022.

Ebitda plunged 61% on-quarter to $931m due to the impacts of lower steel shipments, negative price-cost effect, higher energy costs (approximately $0.3 billion higher compared to Q2, with higher market prices partially offset by hedges in place) and negative forex translation impact ($0.1 billion). It was also down 58% on-year.

Average steel selling price fell 11% on-quarter but actually rose 5% on-year in Q3 to $1,150/tonne.

Adam Smith Poland