Iron ore price rises on firmer steel outlook, but trade tensions cap gains
Lower Chinese steel product inventory driven by robust exports also supported iron ore prices above $100/t.
Stocks at the world’s top steelmaker by sales, ArcelorMittal (NYSE:MT), were down 1.71% at 10:09 am ET this morning after the company announced Wednesday a $3.7 billion net loss for 2012, triggered by the falling demand from Europe and the slowdown in China.
The steel producer has had a tough couple of months, booking a multibillion-euro charge to revalue its assets. It was also forced to close down plants in France and Belgium, which have sparked some violent clashes between workers and police, such as yesterday’s scuffles outside the European Parliament (EP) in France’s eastern city Strasbourg (pictured).
But Lakshmi Mittal, the Luxembourg-based firm’s chairman, chief executive and main owner, remains optimistic, assuring that there are a few “positive indicators” for the global economy this year.
ArcelorMittal expects its steel shipments to rise 2-3% this year to about 86 million tonnes, after a 2.3% fall in 2012, with iron ore sales at market prices to rise by 20%.
“Although we expect the challenges to continue in 2013, largely due to the fragility of the European economy, we have recently seen some more positive indicators,” Mittal said. These, along with the steps taken to focus on the company’s most competitive assets and reduce its net debt “are expected to support an improvement in the profitability of our steel business this year.”
ArcelorMittal also said that its net debt fell by $1.4 billion over the fourth quarter, owing to improved cash flow, to stand at $21.8 billion at the end of the year.
The company is aiming to raise $3.5 billion in stock and sub-ordinated notes to reduce its massive debt, which ratings agencies have warned threatened to break bank loan agreements.
(Photo courtesy of EuroNews TV)
