Tuesday, October 26,
ArcelorMittal, the world’s largest steelmaker, forecast extended softness for the sector on Tuesday with muted demand and a margin squeeze set to depress profit at the end of 2010 after a weak third quarter.
Analysts were expecting a marginal overall improvement from the July-September period when slowing growth in China combined with weak construction in the United States and thin demand in southern Europe.
“Clearly this is the big news of this call, how the demand remains muted into the fourth quarter of this year,” Chief Financial Officer Aditya Mittal told a conference call.
The company, whose output is more than double that of its nearest rival, said its shipments would pick up slightly in the final three months, average steel prices would be lower than in the third quarter and iron ore and coal costs would be higher.
“Our outlook for the fourth quarter remains cautious because higher costs due to raw materials are still working their way through… There are some regional differences, but overall the demand picture remains muted on a global basis,” he said.
He added ArcelorMittal expected global demand to rise by 6 percent next year, in line with the forecast of the World Steel Association, an easing from the 13 percent expansion this year.
ArcelorMittal said that capacity utilisation dropped to 71 percent in the third quarter from 78 percent in the second and would remain at around that level in the final three months, albeit with slightly higher shipments.
Source: Reuters
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