CBAM and the EU’s incoming trade regime have “structurally reset” the European steel industry outlook, with lower imports expected to result in higher capacity utilisation and profitability, says ArcelorMittal. The firm expects the materially improved global pricing environment observed over recent months to be reflected from second-quarter performance onwards.
Policies are reinforcing the shift towards regionalised steel markets, as a result of stronger trade protection in response to excess capacity in China. This favours ArcelorMittal’s business model which is built around local production to serve local customer demand, the firm notes.
With the start of the phasing in of CBAM and phaseout of free ETS allowances, increased carbon costs are being reflected in European steel prices. With CBAM in place, the additional CO2 cost is expected to be recovered via steel prices from Q2 onwards, the group says.
The new trade regime is seen reducing imports by 13 million tonnes versus 2025, with the “melt & pour” requirement to improve traceability, limit circumvention and strengthen supply-chain transparency, it adds.
Consolidated steel shipments fell 6% on-year in Q1 to 12.8 million tonnes, with crude steel production down 10% to 13.3mt. Sales nevertheless rose 4% to $15.5 billion but adjusted net income fell 29% to $575 million. Ebitda rose 6% to $1.68 billion.
“Performance in the first quarter was resilient despite the unsettled backdrop in the Middle East with profitability of $131/t Ebitda reflecting the benefits of our global diversified asset portfolio and the consistent application of our strategy,” ArcelorMittal chief executive Aditya Mittal says in the group’s latest earnings report seen by Kallanish.
On the policy-driven upside in Europe, “ArcelorMittal is well positioned to capture this upside through existing capacity and by re-starting idled capacity. In Europe, this will result in higher domestic capacity utilisation and restore profitability and ROCE to healthy, sustainable levels,” he adds.
The firm restarted its Dabrowa Gornicza blast furnace no.3 in Poland earlier this week.
Author: Adam Smith
