ArcelorMittal’s first-quarter earnings beat forecasts but the steelmaker said it expected global steel consumption to contract this year as the war in Ukraine and Covid-19 restrictions in China slowed the rebound from the pandemic.
The world’s second-largest steelmaker predicted demand for steel would fall as much as 1 per cent this year. The forecast compares with a previous expectation for slight growth of up to 1 per cent before the Ukraine war.
“We are now anticipating apparent steel consumption to contract slightly this year compared with 2021,” Aditya Mittal, chief executive, said in a statement on Thursday. “Nevertheless, it is clear that the longer-term fundamental outlook for steel is positive.”
The company said it expected demand in Ukraine and Russia to dip sharply, while rising inflationary pressures in Europe would also curb demand in the region. Chinese demand would contract at the bottom end of the company’s previous forecast given what it said was the “temporary economic weakness caused by Covid-19 restrictions”.
ArcelorMittal said that after temporarily suspending operations in Ukraine, it was now operating one of three of its blast furnaces. Iron ore production was running at about 50 to 60 per cent capacity.
The gloomier forecast comes as the company reported a strong start to the year. It said earnings before interest, tax, depreciation and amortisation were $5.08bn, against the average forecast of $4.57bn. It announced a second $1bn share buyback programme for 2022.
The group’s shares have declined about 4 per cent in Amsterdam trading this year.
