Steel prices in Europe and the US are below
the marginal cost of production and excess output from China has resulted in
very low domestic steel spreads and aggressive exports
ArcelorMittal, the world's No. 2 steelmaker, reported second-quarter core
profit tumbled 38 per cent on low steel prices but the result was somewhat
better than expected as shipments picked up from the previous quarter.
Steel prices in
Europe and the US are below the marginal cost of production and excess output
from China has resulted in "very low domestic steel spreads and aggressive
exports," Arcelor said in a statement.
It shipped some
13.9 million tonnes of steel in the quarter, down 2 per cent from the same
period a year earlier but up 3.2 per cent from the first quarter.
Earnings before interest, taxes, depreciation and amortization (EBITDA) came in
at $1.86 billion during the quarter, 5 per cent higher than a company-compiled
consensus. The results were also helped by lower costs, it said Net profit,
however, came in some 20 per cent below consensus at $504 million due to a
lower valuation for its stake in steel tube company Vallourec that it acquired
this year.
In a downbeat
note, the Luxembourg-based company cut its annual apparent global steel demand
outside China to a range of 2.5 per cent to 3 per cent growth from the 3 per
cent-4 per cent it forecast in February.
