ArcelorMittal’s profit drops by half compared to the same period of 2018

The global steel industry has been affected by overcapacity and the increase in the price of iron ore, an essential component in production. This increase occurred after the disaster of the collapse of the dam in Brumadinho stopped the mining of the resource in Brazil.

Profits at the world’s biggest steelmaker, ArcelorMittal, fell by about half in the second quarter after the group was hit by falling sales prices and higher raw material costs.

Chief executive Lakshmi Mittal called for tougher safeguards to help European steelmakers. For them to compete against imports. But he also said that American tariffs on metal imports pushed domestic production above demand, putting pressure on prices.

Europe and the global steel industry

Last year, President Trump announced a 25% tariff on steel imports. The European Union retaliated with protective measures against the steel that was diverted from the US to Europe.

„All these pressures [in Europe] have created an unsustainable situation that we have not seen for many years,” he said in an interview. Mr. Mittal mentioned that European and Chinese steel prices are at approximately the same level for the first time. A sign of unfavorable conditions for Europe.

However, the company promised a debt reduction. And asset sales of approximately 2 billion dollars in the next two years. Earnings before interest, taxes, depreciation and amortization were USD 1.6 billion. In the second quarter of 2019, half compared to the similar period in 2018. Sales totaled $19.28 billion, down from $20 billion a year earlier, the company said.

The Luxembourg-based company said there are signs of improvement in the US. But demand in the European market is expected to remain weak.

Article source: https://www.wsj.com/articles/steel-giant-arcelormittal-swings-to-loss-11564649223