ArcelorMittal remains cautious over recovery after first-half difficulties

ArcelorMittal posted a first-half operating loss of over $600 million, commenting that the period was “…one of the most difficult in the history of the company.”

The group saw the Covid-19 pandemic impacting all areas of its business, with steelmaking affected more than the mining unit.

H1 sales reached almost $26 billion, down by over -30% year-on-year. Crude steel production was down by over 12 million tonnes y-o-y to 35.5mt globally, while iron ore production was less impacted, moving down by less than 1mt to 27.9mt.

Looking forward, the company sees some signs of recovery across markets, but it remains cautious. “There are now signs of activity picking up, especially in regions where lockdowns have ended, but clearly it is prudent to remain cautious about the outlook,” chairman Lakshmi Mittal says in a report seen by Kallanish. “Against this context, we are examining what structural changes might be required to ensure the company is well configured to prosper in the coming years as demand recovers.”

In Europe, ArcelorMittal’s largest market, operating losses more than doubled y-o-y in H1, reaching $655m against a loss of $290m in H1 2019. The results were impacted by significantly lower shipments as well as lower average steel selling prices, which declined from $716/tonne in H1 2019 to $636/t in H1 2020.

ArcelorMittal is continuing to adapt production levels to market demand, but maintains the flexibility to quickly restart hot idled capacity on a regional basis as demand improves, it says.

Nevertheless, the company notes that “…the experience of the last 4-5 months has forced the business to operate differently. It has shown that it is possible to operate with a leaner cost structure.” The group thus wants to identify and develop its options for further structural cost improvements. This will “…position the fixed cost base for the post-Covid-19 operating environment,” it says. More details on the new strategy are expected next year.