War, slowing demand hit ArcelorMittal performance

The steelmaker reports $2.95 billion in net profits over the first six months of the year, down from $8.05 bn last year

• Chandrashekar Bhat
• 27 July, 2023

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By: Chandrashekar Bhat

STEELMAKER ArcelorMittal said on Thursday (27) its net profit sank in the first half of the year, as prices for the metal fell from the peaks reached at the start of the Ukraine war.

Higher interest rates, which were raised by central banks to combat inflation, also weighed on demand for steel.

Russia’s invasion of Ukraine in February 2022 sent prices of commodities such as oil, gas, steel and food soaring, but they have eased since then.

Luxembourg-based ArcelorMittal, the world’s second-largest steelmaker, said it earned $2.95 billion in net profits over the first six months of the year, down from $8.05 bn last year.

Steel shipments fell by 3.6 percent to 28.7 million metric tonnes, while sales tumbled 15.6 percent to $37.1 bn due to a 14.7 percent drop in prices.

Going forward, the company is confident that it will not experience a sharp drop in demand like it did last year when clients burned through the stocks they built up after the start of the war.

“We are not going to have a repeat of the destock that we saw last year,” said chief financial officer Genuino Christino in a conference call with journalists.

“Some markets are performing well, automotive is strong,” he added.

But the company lowered its forecast for global steel demand excluding China this year to one to two per cent, down from its previous projection of two to three per cent.

In the United States, with construction slowing due to higher interest rates, demand could fall by as much as two per cent, when ArcelorMittal had previously expected demand to rise by 1.5 to 3.5 per cent.

Demand is also seen as dropping in Europe, between 0.5 and 1.5 per cent. ArcelorMittal previously expected growth of 0.5 to 2.5 per cent.

The company left unchanged its demand forecast for China, where it expects steel demand to remain steady, and for India, where it sees an increase of six to eight per cent.

(AFP)