Hard times

25 July 2012 By Kevin Allison

The Q2 results weren’t a disaster, but the steel giant sees little respite from weak demand. A 2 pct jump in ArcelorMittal’s shares suggests investors are taking comfort in a thwacked valuation, and progress reducing debt. But it would take nerves of steel to bet on a rally.

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ArcelorMittal said tough trading conditions in the steel market were likely to continue in 2012 as it reported second quarter results slightly ahead of expectations on July 25. Shares in the world’s biggest steelmaker rose more than 2 percent in early trading.
The result was helped by a one-off gain from the sale of a speciality steel business. Absent that gain, ArcelorMittal’s performance was broadly in line with the market’s already lowered expectations, with net income of $959 million, down about 38 percent from the year-ago quarter.
Lakshmi Mittal, the company’s chairman and chief executive, said market conditions had been “very challenging” in the first half of the year and were likely to remain “broadly similar” in the second.
Slowing demand for steel products in China and worries about broader economic fallout from the euro zone crisis have increased pressure on the industry’s producers, already struggling to gain pricing power amid a glut of global steelmaking capacity.

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