ArcelorMittal cuts 2022 global steel consumption outlook because of Ukrainian war

ArcelorMittal expects 2022 global steel consumption to contract 0%-1% as Russia’s military invasion of Ukraine disrupts supply chains, stoking inflation, while China’s COVID-19 lockdowns dampen economic activity, the world’s second biggest steelmaker said.

The company had previously estimated 2022 global steel consumption to rise 0%-1%. Long-term steel market fundamentals remain positive, ArcelorMittal said, after posting first-quarter results that beat analysts’ estimates on high steel prices.

“Our first quarter performance was overshadowed by the war in Ukraine,” ArcelorMittal CEO Aditya Mittal said. “Notwithstanding this backdrop, further aggravated by rising inflationary pressures across the world, ArcelorMittal produced a strong first quarter performance. This is testimony to the resilience of our business model, characterized by diversity of geography, product category and vertical integration.”

ArcelorMittal expects steel consumption in Europe — where the company has its main assets — to decline 2%-4% in 2022, compared with its prior outlook for a 0%-2% growth, due to the negative impact of rising inflation.

The company is forecasting demand in the Commonwealth of Independent States, which include Ukraine, to slump 10% during the year, compared with a prior estimate of 0%-2% growth.

ArcelorMittal has estimated China’s full-year demand toward the bottom end of its previous forecast of 0%-2% growth because of stringent coronavirus-led lockdowns in the country. The company continues to expect India to grow at 6%-8% in 2022, the US at 1%-3%, and Brazil to contract by 8%-10%.

China’s focus on decarbonization and removal of value added tax rebates on steel exports were encouraging, ArcelorMittal said, adding that steel would play a critical role in the transition to a decarbonized and circular economy. ArcelorMittal’s Q1 sales rose 34.8% year on year and 5% quarter on quarter to $21.8 billion, due to higher average steel selling prices, which climbed 7.5% year on year supported by positive automotive contract resets. The company’s quarterly EBITDA of $5.08 billion handily beat analysts’ average estimate of $4.57 billion.

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