ArcelorMittal Cautious on Short-Term Outlook as it Posts Q2 Results

As it released its second quarter results, the Luxembourg-based company said the period was “overshadowed by the outbreak of war in Ukraine,” where it maintains steel and mining operations. “Globally the conflict is impacting growth and adding further inflationary pressure, which is spilling over into weakening of demand,” CEO Aditya Mittal said.

“Despite the more uncertain global macro outlook, our business is well positioned to effectively manage through the cycle. The long-term outlook for steel demand also remains positive, underpinned by the scale of opportunity related to the energy transition and the continuing growth of developing economies,” he said.

Globally, ArcelorMittal posted Q2 net income of $3.92 billion, down from $4.15 million in Q1 and down from $4.01 billion in Q2 of 2021.

Q2 sales were $22.14 billion, 1.4% higher than Q1 and 14% higher year-on-year (YoY). The sales gains came despite Q2 steel shipments falling to 14.4 million metric tons, down 6% from Q1.

During Q2, the company’s AM/NS Calvert joint venture in Alabama—jointly owned by ArcelorMittal and Japan’s Nippon Steel—saw relatively stable production but declining shipments and EBITDA.

AM/NS Calvert’s production reached 1.13 million metric tons in Q2. This was flat from the prior quarter but an 8.7% YoY decline. Steel shipments of 1.12 million metric tons were down 4% sequentially and 3% YoY due to weaker demand. The mill’s EBITDA dropped 20% from Q1 and 3% from Q2 2021 to $261 million, primarily due to lower CRU index prices in February and March impacting non-contract volumes during Q2, the company said.

Q2 sales within ArcelorMittal’s NAFTA segment—which includes flats, longs, and tubular operations in Canada and Mexico, as well as mining operations in Mexico—were down 2.8% from Q1 to $3.7 billion, but showed a 13% year-on-year rise due to higher selling prices, which were partially offset by lower shipments. Total NAFTA steel shipments of 2.45 million metric tons were stable from Q1 to Q2 but were down 5.3% from Q2 2021.

During Q2, ArcelorMittal completed its acquisition of an 80% interest in Voestalpine’s $1 billion, 2-million-metric-tons-per-year HBI plant near Corpus Christi, Texas. Concurrently, the company signed a long-term offtake agreement with Voestalpine to supply an annual volume of HBI equivalent to Voestalpine’s equity stake. The remaining production will be sold to third parties and to the AM/NS Calvert mill once its 1.5-million-metrict-ton-per-year EAF is completed in the first half of 2023. ArcelorMittal Dofasco’s EAF is transforming to fully DRI while the EAF in Mexico is already using DRI.

During the first half of 2022, ArcelorMittal completed a hot strip mill modernization project at its Dofasco mill in Hamilton, Ontario, replacing three existing end-of-life coilers with two brand new coilers and runout tables. All equipment is now fully operational, and the company estimates the project will add more than $25 million of EBITDA post ramp-up.

The first coil from ArcelorMittal Dofasco’s new aluminum silicon (AluSi®) line is planned for the second half of this year. The 160,000-metric-ton-per-year AluSi® line replaces the #5 hot-dip galvanizing line galvanneal coating capabilities at the plant. Post ramp-up, the project is estimated to add more than $40 million of EBITDA.

By Laura Miller, Laura@SteelMarketUpdate.com