Steel Mills

ArcelorMittal Seeks Discount from Suppliers

July 16, 2019

Perhaps taking a page from automakers’ playbook, ArcelorMittal USA reportedly sent a letter to its suppliers last week stating that it planned to implement a 10 percent price reduction on all existing purchase agreements, effective July 31.

S&P Global Platts reported that ArcelorMittal is calling on suppliers to help it cut costs as it works through a period of oversupply and weak demand for the steel industry.

ArcelorMittal did not respond to Steel Market Update’s request for comment this afternoon and may be in a quiet period ahead of its upcoming earnings report.

“The domestic U.S. steel industry has entered into a very difficult period, driven by oversupply, uncertainty in the markets and continuing inventory reductions at manufacturers and service centers,” stated the letter. “In addition to rapidly declining demand, prices have plummeted from 2018 levels. As one of our valued suppliers, we are asking for your help in dealing with this decline.”

As of SMU’s deadline today, it was unclear what types and how many suppliers received ArcelorMittal’s request/demand for a discount and what the consequences could be for noncompliance.