ArcelorMittal sees apparent demand declining significantly in Europe this year, while the impact in the US will be bigger than earlier forecast. On an annualised basis, the firm has curtailed 6 million tonnes of production in the fourth quarter, in line with addressable demand, it says.
In Europe, the region most affected by capacity cuts, inflation headwinds are leading to slower – but still positive – real consumption growth in 2022. However, the impact of destocking is significant, particularly in the second half of the year, and expected to lead to a contraction of apparent consumption by up to 7% this year, ArcelorMittal observes. In the US, destocking will have a bigger impact than previously thought, reducing apparent consumption by 1%, Kallanish notes.
Impacts on apparent consumption have been exacerbated by rapid supply chain destocking, which has seen steel prices decline at a faster rate than raw materials, leading to compression of spreads. European spot hot rolled coil prices are not covering fixed costs of marginal producers, while China spreads are anomalously low, the group observes.
The firm, which idled capacity in Q4 to address deteriorating market conditions and cut European gas consumption by 30%, expects apparent demand to improve once the current destocking phase reaches maturity.
The group’s steel shipments fell 7% on-year in Q3 to 13.6 million tonnes, while crude steel production was down 13% to 14.9mt (see separate story). Q3 sales fell 6% to $18.98 billion and net income attributable to equity holders of the parent was down a whopping 79% to $993 million.
Adam Smith Poland
