Publications
Partners
Brussels - ArcelorMittal, the parent of ArcelorMittal SA [JSE:ACL], the world's largest steelmaker, will face questions about its response to the sharp global downturn on Friday at its first business review since last month's stock market crash.
The Luxembourg-based company hosts an investor day in a far less buoyant environment than when it said at the end of July that it saw no repeat of last year's sharp second-half slowdown.
The group has since revealed plans to idle three blast furnaces in Europe - in Belgium, France and Germany - because of low demand. Further end user weakness, lower steel prices and destocking could force more capacity cuts in the weeks ahead.
It cut production by about half in the depths of the 2008/2009 downturn and, while few expect such a radical measure for now, analysts say the company is likely to focus on its cost savings plan, which has not been a central feature of presentations so far this year.
In July, ArcelorMittal said a continued recovery of underlying demand meant steel shipments in the second half should be higher than a year earlier. That may now be too optimistic.
Global growth expectations have been cut sharply in the past two months. The International Monetary Fund (IMF) cut its forecast for global economic expansion to 4.0% this year and next from respectively 4.3% and 4.5%, and warned Europe and the United States could slip into recession in 2012.
Current market consensus expectations are for ArcelorMittal to produce a core profit (Ebitda) at the upper end of the company's own $2.4bn to $2.8bn guidance range in the third quarter and for the same figure in the fourth, Thomson Reuters I/B/E/S data show.
However, customer destocking and a possible margin squeeze could yield a weaker final three months.
Hot-rolled steel cord prices in Europe continued their steady rise in August, but have come off 3% in the past two weeks, according to Steel Business Briefing. However, iron ore prices are up 2% in the same period, Metal Bulletin data show.
ArcelorMittal shares have plunged 50% in the past two months, with the STOXX 600 index down 20% and the index's basic resource components 30% lower.
Some analysts say this is pricing in a recession, which may be a step too far - at least for now.
The Luxembourg-based company hosts an investor day in a far less buoyant environment than when it said at the end of July that it saw no repeat of last year's sharp second-half slowdown.
The group has since revealed plans to idle three blast furnaces in Europe - in Belgium, France and Germany - because of low demand. Further end user weakness, lower steel prices and destocking could force more capacity cuts in the weeks ahead.
It cut production by about half in the depths of the 2008/2009 downturn and, while few expect such a radical measure for now, analysts say the company is likely to focus on its cost savings plan, which has not been a central feature of presentations so far this year.
In July, ArcelorMittal said a continued recovery of underlying demand meant steel shipments in the second half should be higher than a year earlier. That may now be too optimistic.
Global growth expectations have been cut sharply in the past two months. The International Monetary Fund (IMF) cut its forecast for global economic expansion to 4.0% this year and next from respectively 4.3% and 4.5%, and warned Europe and the United States could slip into recession in 2012.
Current market consensus expectations are for ArcelorMittal to produce a core profit (Ebitda) at the upper end of the company's own $2.4bn to $2.8bn guidance range in the third quarter and for the same figure in the fourth, Thomson Reuters I/B/E/S data show.
However, customer destocking and a possible margin squeeze could yield a weaker final three months.
Hot-rolled steel cord prices in Europe continued their steady rise in August, but have come off 3% in the past two weeks, according to Steel Business Briefing. However, iron ore prices are up 2% in the same period, Metal Bulletin data show.
ArcelorMittal shares have plunged 50% in the past two months, with the STOXX 600 index down 20% and the index's basic resource components 30% lower.
Some analysts say this is pricing in a recession, which may be a step too far - at least for now.
