ArcelorMittal expects modest pickup after wretched 2012

ArcelorMittal, the world's largest steelmaker, said it expected improvement this year after a wretched 2012 in which a slump of demand in Europe pushed it into a loss.

The Luxembourg-based company said on Wednesday that the global steel consumption would grow by 3 per cent this year after a 2 per cent increase last year, with accelerating growth in China and Brazil while Europe would not be as weak as before.

The company said it expected its own steel shipments would rise by between 2 and 3 per cent in 2013 and margins per tonne would improve slightly over the course of the year due to a cost savings plan. Iron ore shipments from its expanding mining operations would increase by 20 per cent, with a ramp-up of production in Canada.

Overall, core profit would be higher this year than the $7.08 billion of 2012, the second lowest level since the company was formed in 2006.

Chief executive Lakshmi Mittal said that 2012 was a difficult year for steel, particularly in Europe, where the demand had fallen by 8.8 per cent, prompting a number of steps to reduce the capacity and cut debt.

ArcelorMittal made a net loss of $3.73 billion for the year, largely the result of a $4.3 billion hit in the fourth quarter from writing down the value of its European steel business and $1.3 billion related to the idling and closure of plants.

Investors already knew that ArcelorMittal had slashed its proposed dividend, sold assets and raised $4 billion in shares and convertibles to cut debt after losing its investment grade status. Steel industry body Eurofer believes European steel demand is likely to fall further this year after a sharp drop in 2012, according to its quarterly survey published on Tuesday.

ArcelorMittal forecast European consumption would be 1 per cent lower this year than last. However, the Chinese market would grow by 3 per cent from 2 per cent in 2012 and Brazilian growth would accelerate to 5 per cent from 1 per cent.

The $500 billion a year steel industry, a gauge of the global economy, slowed sharply last year as a moderation in Chinese growth compounded weak demand in austerity-hit Europe.

World number three POSCO reported a slump in quarterly profit last week and warned of a 10 per cent drop in sales this year.

Copyright @ Thomson Reuters 2013