The tariffs imposed by Trump bring profit for ArcelorMittal

Lakshmi N. Mittal, the chairman and chief executive of ArcelorMittal, the world’s largest steel producer, is one of the few leaders who applauds President Trump’s protectionist approach to the steel trade.

For Mittal, the tariffs imposed by the White House on steel imported into the United States caused the increase in prices. Which, together with the strong global demand, have brought the best results to his company since 2011 until now. ArcelorMittal said profit rose to $1.9 billion in the second quarter. A 41% increase compared to the same period last year, with sales of 20 billion dollars.

The remarks and gains are in stark contrast to the fears expressed by companies and analysts in the United States and elsewhere about this protectionist policy. The White House has imposed steel and aluminum tariffs on a significant number of countries, and while it has withdrawn its threat of even more aggressive tariffs on some allies in recent weeks, several companies have pointed to trade uncertainty as hurting business.

„The industry has changed quite a bit,” Mittal said in an interview after ArcelorMittal reported its results. „Commercial actions from different countries have really contributed to the structural change of the landscape of the steel industry”.

If in recent years the company’s profitability has been affected by a combination of weak global demand and overcapacity in China. Which now represents approximately half of the steel production capacity worldwide.

Protectionist measures are profitable for ArcelorMittal largest steel producer

Currently, protectionist measures in the United States combined with strong global demand are proving profitable for ArcelorMittal and other steel producers.

Much higher prices for its products were an important reason for the good results, the company said. Prices rose as customers around the world „scrambled” to secure supplies. Because the impact of the 25 percent that Mr. Trump imposed them on the steel market this year.

The average price that ArcelorMittal received for steel in North America. For example, it increased by 12% per year to 853 dollars per ton. Europe also became a protected area. Because the steel producers convinced the authorities in the region to apply the so-called „safeguard” protections. European prices rose nearly 15%, ArcelorMittal reported.

„ArcelorMittal is enjoying a dream combination of strong demand and high prices,” said Seth Rosenfeld, an analyst at Jefferies, an investment bank, in an interview.

Analysts say these good times could continue for some time. Global demand appears to be strong, and steelmakers could get additional price gains when contracts under which they supply steel to major customers, such as automakers, come up for negotiation. Approximately 40% of the steel delivered by ArcelorMittal in the United States is sold under such contracts.

Article source: https://www.nytimes.com/2018/08/01/business/trump-steel-tariffs-arcelor-mittal.html