ArcelorMittal, the world’s second-largest steelmaker, reported its first-quarter core earnings, which were above expectations on the back of improved results in North America, Brazil, Europe and India.
The Luxembourg-based company said its core profit (EBITDA) increased by 34.6 percent at $1.96 billion, higher than the average forecast in a company poll of $1.81 billion.
The improvement in operating income in 1Q2024 to $1.1 billion reflects higher steel shipments and a recovery in steel spreads (primarily due to an increase in steel prices), the company said in a release.
Sales in the first quarter were 11.9 percent higher at $16.3 billion compared to $14.6 billion in 4Q2023, reflecting higher average steel selling prices (increase of 4.8 percent) and higher steel shipment volumes (gain of 1.4 percent), it added.
Aditya Mittal, CEO, ArcelorMittal said, “On financial performance, the improved pricing environment combined with recovering volumes resulted in sequentially stronger quarterly results, which also now reflect the value contributed by our joint ventures. We have an exciting pipeline of growth projects underway, including the 1GW renewables project in India and Vega CMC in Brazil, both of which are expected to commence operations in the first half.”
The world’s second-largest steelmaker reiterated it expects global steel demand outside China to grow 3-4 percent this year as it reported first-quarter earnings ahead of analyst expectations.
“Although overall economic sentiment remains subdued, we expect apparent steel demand ex-China to grow between 3 percent and 4 percent this year and are well positioned to benefit from this improvement,” the CEO added.
Economic sentiment appears to have reached a floor and given the low inventories, particularly in Europe, as soon as real demand begins to gradually improve, apparent demand is expected to rebound, the company said in a statement.
The steel industry has been suffering from weaker construction activity in Europe and problems in the real estate sector in China, the world’s top consumer and producer of the metal. In the US, interest rate hikes have dented demand.
Steel demand in Europe, which has been challenged by high inflation and tighter monetary policy, is expected to show very modest growth this year before a 5.3 percent projected gain in 2025, the World Steel Association said last month.
AMNS India, a JV between ArcelorMittal and Nippon Steel, recorded 2.0 million tonnes of crude steel production in 1Q2024 reaching an 8.1 MT annual run rate in March 2024 (close to 8.6MT capacity debottlenecking target), the company said.
The India unit recorded 2.0MT of steel shipments in 1Q2024, an increase of 7.9 percent compared to 4Q2023, including higher exports. EBITDA during 1Q2024 declined by 37.5 percent to $312 million compared to $499 million in 4Q2023, driven by a negative price-cost effect, including a lower impact from natural gas hedges, offset in part by higher shipments, the company statement added.
