ArcelorMittal Says Steel Remains the Material of Choice for Automotive

“Our view remains that steel remains the material of choice for automotive and that the solutions we have developed and continue to develop offer the auto producers the most competitive route to achieve their light weighting requirements,” said Mittal.

AM/NS Calvert had a positive EBITDA in March which is in line with expectations of an EBITDA positive 2014.  Positive free cash flow is expected in year two. Calvert’s production utilization rate is at 80 percent.

ArcelorMittal has been monitoring the Ukraine crisis but has not experienced significant supply chain disruptions.  Domestic demand, however, is weakening in the Ukraine and Russia but markets in North Africa and the Middle East are strengthening and able to take ArcelorMittal surplus.  The weaker Ukraine currency, down by 40-45 percent, is helping AM improve competitiveness said Mittal.  

“As far as Europe is concerned, I see that there is a very little impact — there should be very little impact of this Ukrainian crisis because we were not shipping to Europe. And at the same time, I do not see that in Europe, unless the crisis turns into some kind of a gas problem, which means that the gas supply reduce and the gas prices go up, which could disturb the European economy.”

CFO Aditya Mittal was asked if the goal of reaching $8 billion EBITDA for the fiscal year was dependent on iron ore remaining at $120/ton:

“At the end of the day, our assumption for iron ore remains $120, and that’s the basis for our guidance. If iron ore is not $120, what happens to steel margins is really the question. And I think it’s at best speculation to say what would happen to steel margins, how much they will expand in 2014 if iron ore remains at current levels.”

The ArcelorMittal executives were asked if the resolving production disruptions and the inflow of imports into the market will challenge steel prices going forward. Louis Schorsch, Chief Technology Officer of Research and Development tackled the question:

“Yes, I think as we discussed, most of our operations are, in fact, in the part of the U.S. that was most heavily hit by the severe weather. And that disrupted not only our operations, but the flow of materials to our customers. So we did lose some shipments in the U.S. relative to where we were in the previous quarter, where we’d expect it to be. And typically, when that happens, then you’re focused more on serving the contract customers, where you have commitments to those customers versus the spot. So I think any time you see the shipments being down a bit, in a company like ours that does have a very substantial involvement in those OEM markets and customer bases, then the — what’s cut back is, in fact, the spot business.”