Gluts in natural resources, the product of history’s biggest credit bubble, are now moving up the supply chain to finished goods, in this case steel. From Thomas Biesheuvel at bloomberg.com
Full-year Ebitda forecast reduced to $5.2 billion-$5.4 billion
Third-quarter profit declines 29% from a year earlier
ArcelorMittal is taking the latest knock from record Chinese steel exports hurting producers across the globe.
The world’s biggest steelmaker on Friday cut its full-year profit target and suspended its dividend, putting the blame on the flood of cheap steel from China’s loss-making mills. The market is being overwhelmed with material coming from the nation’s state-owned and state-supported producers, a collection of industry associations said Thursday.
“It is obvious that we are operating in a very challenging market,” Chief Financial Officer Aditya Mittal said on a call with reporters. “This is essentially the result of very low export prices out of China that are impacting prices worldwide.”
The steel industry has been roiled by the slowest economic growth in two decades in China, the biggest consumer. The flood of cheap exports from the nation has drawn complaints from Europe and the U.S. that the shipments are unfair. Bloomberg Intelligence estimates Chinese steel shipments overseas will exceed 100 million metric tons this year, more than the combined output of Europe’s top four producing countries.
While demand for steel in the company’s largest markets of the U.S. and Europe is recovering, producers’ profits are being hit by slumping prices because China has been pushing excess supply onto the world market as its economy slows.
To continue reading: ArcelorMittal Is Latest Victim of China’s Steel-Export Glut
