ArcelorMittal’s first-quarter earnings results confirm the growing challenges faced by global steelmakers due to the coronavirus pandemic. The company posted an operating loss of $353 million for the quarter and issued a bleak outlook for Q2 steel shipments, Kallanish notes.
At its steel plants globally, ArcelorMittal produced 21.1 million tonnes of crude steel in Q1, down 3mt year-on-year but above the 19.8mt produced in Q4 2019. The impact of pandemic-induced plant closures was mainly seen from March onwards, meaning further reductions are expected in Q2 production, Kallanish understands.
Steel shipments reached 19.5mt in Q1, but the outlook for Q2 is for these to drop to 13.5-14.5mt, marking a potential decline of over 10mt y-o-y during the April-June quarter.
“The remainder of this year will be challenging, but I am confident that ArcelorMittal has the experience and inherent resilience, to manage through these difficult times,” Lakshmi Mittal says. The company did not publish its apparent steel demand outlook, but confirmed this will be significantly lower versus 2019 levels.
As for iron ore production, the company’s output in Q1 reached 14.4mt, up 0.3mt y-o-y and only slightly below the record level registered in Q4 2019.
“The impact of the Covid-19 pandemic on the group’s mining operations has to date been largely at ArcelorMittal Mines Canada,” the company explains. “The unit has now resumed normal operations. Nevertheless, it is not expected to be possible to recover all the volumes that have been impacted and accordingly market-priced iron ore shipments for 2020 are now expected to be 5-10% lower as compared to 2019.” This compares to previous guidance of stable year-on-year.