The steel industry is at the heart of trade tensions between the US and China, which have engaged in a tit-for-tat with tariffs on a wide range of goods following President Donald Trump’s imposition of heavy duties on metal imports last year.
Against mounting fears about potential negative impacts on economic activity from the actions, ArcelorMittal achieved earnings of $10.3bn before interest, taxes, depreciation and amortisation last year.
This was an increase of 22 per cent and its best showing since 2009. Revenue climbed 10.7 per cent to $76bn.
But the results were accompanied by the prediction that worldwide apparent steel consumption, which is different to real consumption because it does not recognise changes in stock levels, would be 0.5 to 1 per cent in 2019, versus 2.8 per cent last year.
Most of this forecast decline was down to China, the largest producer responsible for roughly half of total output and which has a pivotal influence on market dynamics.
The anticipated slowdown follows sliding prices for the commodity that have taken the shine off steel stocks in recent months.
Aditya Mittal, president of ArcelorMittal, said that a number of investments and measures planned by the company showed its confidence.
“In terms of the outlook, our forecast is growth in each of [our] core markets,” said Mr Mittal. “If you strip out China, you will see apparent steel consumption growth in 2019 is about 2-3 per cent, which isn’t so different from 2018.”
Goldman Sachs analysts said: “Overall, we view the results as positive. The expectation of lower steel demand growth [year-on-year] is a small negative however.”
ArcelorMittal’s shares shed 3 per cent on Thursday to change hands at €20.64. Analysts have pencilled in a drop in ebitda, the standard profit metric in the steel industry, to about $9bn in 2019, according to data from S&P Capital IQ.
Adding to concerns that clouds may be forming over the sector, the Austrian steel and engineering group Voestalpine on Thursday said that demand had peaked in the consumer goods and electrical industries.
“There are some factors influencing our business [and] some geopolitical uncertainties dampening the economic climate,” said chief executive Wolfgang Eder. “Nobody at the moment expects any major downturns, but more pressure in general on volumes and prices.”
Shares in Voestalpine fell 4.5 per cent on Thursday.
Despite its strong performance, ArcelorMittal said the results “could and should have been better”.
The Luxembourg-based group, which also runs iron ore and coal mines, shipped fewer tonnes of steel compared with 2017 following production disruptions at a number of its operations.
The company regained its investment grade credit rating with the three major rating agencies throughout the year and proposed an increase to its base dividend. Net income was up 12.7 per cent to $5.1bn in 2018.
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