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Kallanish Kallanish

Knowledge matters Knowledge matters

June, 23rd 2021

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MAY 06

ArcelorMittal profitability soars, foresees higher consumption, ore shipments


ArcelorMittal says 2021 apparent steel consumption growth will be at or above the top end of the 4.5-5.5% range it previously forecasted, following a strong first quarter. A favourable supply/demand balance and low inventory environment, following a period of prolonged destocking, supported increased utilisation levels and healthy steel spreads in Q1, Kallanish notes.

Given order book and contract lags, this was only partially reflected in Q1 results and will be more fully reflected in Q2, the firm says.

Steel shipments dropped 15% on-year in Q1 to 16.5 million tonnes. They were also down 5% from Q4 2020, but were 6.5% higher when excluding ArcelorMittal USA which was sold in December to Cleveland Cliffs. All geographical segments saw on-quarter shipment growth on this basis.

Crude steel production fell 17% on-year and 6% on-quarter to 17.6mt, due to the divestment of ArcelorMittal USA.

Ebitda soared 235% on-year and 88% on-quarter in Q1 to $3.2 billion, the strongest quarterly result in a decade.

ArcelorMittal chief executive Aditya Mittal says the firm has been steadily bringing back production in-line with the demand recovery, which is supported by low inventory levels through the value chain.

Consolidated sales rose 9% on-year in Q1 to $16.19 billion and the firm turned to a net income attributable to equity holders of the parent of $2.29 billion versus a year-earlier loss of $1.12 billion. Average steel selling prices were 24.8% higher, while seaborne iron ore reference prices surged 86%.

Earnings were boosted by improved results at AMNS India, AMNS Calvert and other European investees. Additionally, Q1 includes dividend income from Erdemir of $89 million.

Merchant iron ore shipments increased 14% on-year in Q1 to 9.8mt but fell 7.6% on-quarter due to lower shipments in Liberia and a seasonal decline at ArcelorMittal Mines Canada (AMMC). Market-priced iron ore shipments are expected to increase to around 39mt in 2021.

Primary responsibility for captive mining operations will be moved to the Steel segments. The Mining segment will retain primary responsibility for the operation of the seaborne oriented operations AMMC and Liberia, and will continue to provide technical support to all mining operations within the Group.

Following the formation of a public-private partnership with Invitalia, ArcelorMittal Italia will be deconsolidated as of Q2. The new company, Acciaierie d’Italia, will operate independently, with its own funding plans (see Kallanish passim).

Adam Smith Germany