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ArcelorMittal Wants Trade Measures to Tackle Chinese Exports

Sparks fly from molten iron flowing from the only operational blast furnace at the ArcelorMittal SA steel plant in Kryvyi Rih, Ukraine, on Wednesday, June 29, 2022. ArcelorMittal's Kryvyi Rih steel plant is running just the smallest of its four gas and coke-fired blast furnaces to make pig iron, as a result some mines and coking plants that feed the plant also must remain dormant, "Without the ports, it doesn't work." said Deputy Chief Executive Artem Filipyev. Photographer: Julia Kochetova/Bloomberg (Julia Kochetova/Bloomberg)

(Bloomberg) -- ArcelorMittal SA called for stronger trade measures to address a flood of Chinese steel exports that it says are making the market unsustainable, with prices in Europe well below marginal costs.

Steelmakers have struggled to deal with a wave of cheap imports from China, where an anemic construction sector has weighed on prices. China produces well over half the world’s output, but there’s too much steel and too little demand in its domestic market. 

Steel exports from China in October hit the highest level since 2015, as the rest of the world risks becoming a dumping ground for excess production. That’s creating friction with trade partners, just as Donald Trumps election victory raises speculation about a fresh round of protectionism.

“The increased level of imports into Europe is a concern and stronger trade measures are urgently required to address this,” ArcelorMittal Chief Executive Officer Aditya Mittal said in a statement on Thursday.

In the US, where lower prices squeezed ArcelorMittal’s third-quarter earnings, major steelmakers surged on Wednesday as investors bet that Trump’s election could be bullish for the industry.

It wasn’t immediately clear what actions Trump may take on steel imports, given the existing 25% tariffs that have remained in effect since he imposed them in 2018.

ArcelorMittal, the world’s biggest steelmaker outside of China, also said it’s more optimistic about the second half of 2024 than a year earlier. 

“Apparent demand is expected to be stronger in the second half of this year compared with 2023, and inventory levels are low, indicating that re-stocking will occur when real demand recovers,” the CEO said.

ArcelorMittal rose as much as 5.1% in Amsterdam trading, leaving the shares down 5.8% this year.

ArcelorMittal reported third-quarter earnings before interest, taxes, depreciation and amortization of $1.58 billion, beating analysts’ estimates of $1.47 billion.

What Bloomberg Intelligence Says

“ArcelorMittal’s 6% Ebitda beat was driven by a counter-cyclical earnings uplift in Brazil and relatively resilient European earnings, though with market conditions depressed, few signs of customer restocking and high Chinese exports, this may not translate into significant positive consensus earnings revisions. Earnings call comments related to the impact of the Trump win will be closely followed.”

— Alon Olsha, BI metals and mining analyst

Click here to read the full research note

(Updates with Chinese steel exports in third paragraph)

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