Inflation slows demand, gas shortages threaten Europe: ArcelorMittal

ArcelorMittal says building inflationary pressure is hampering consumer and business confidence, leading to a slowdown in real demand, which has been exacerbated by destocking activity. Potential energy supply restrictions present a clear but still uncertain risk to European economic activity.

The slowdown has resulted in apparent demand falling below real demand levels, with customers in wait-and-see mode ahead of a seasonally weak Q3. Steel prices have meanwhile declined faster than raw materials, leading to a normalisation of spreads, the steelmaking group observes.

The gas supply risks and Covid-19 lockdowns in China present downside risks to ArcelorMittal’s forecasts published in Q1, Kallanish notes. The firm says it is in a strong position to navigate the gas situation given its predominantly blast furnace-based capacity across multiple sites in nine EU countries.

ArcelorMittal saw steel shipments fall 11% on-year in the second quarter to 14.4 million tonnes. These were also down 6% on Q1. This was primarily due to the impact of the Ukraine war and weaker European demand (see separate story).

Adam Smith Poland