ArcelorMittal cries foul on steel exports from China – ET Infra

ArcelorMittal SA said exports from China had left the steel market in an “unsustainable” position, as it reported a drop in quarterly profit.

Steelmakers in the US and Europe are being squeezed between a fresh wave of cheap imports and anemic demand that’s pushing prices lower. ArcelorMittal, the biggest producer among Western nations, cut its forecast for consumption outside China — a key barometer of the world economy.

“China’s excess production relative to demand is resulting in very low domestic steel spreads and aggressive exports,” the company said in a statement on Thursday. “Steel prices in both Europe and US are below the marginal cost.”

A surge in exports from Asia — and especially China — has the potential to become a political flashpoint in America and Europe and was a key campaign issue when Donald Trump first ran for the US presidency.

China’s economy has performed unevenly this year, with manufacturing at times a bright spot while consumption has been weighed down by a prolonged real estate crisis. That’s propelled its trade surplus to a record as exports jumped.

“Current market conditions are unsustainable,” ArcelorMittal said in the statement. The company fell 4.5% in Amsterdam trading, the lowest close since March 2021.

Trade Barriers
The US and European Union — two of China’s biggest export markets — are erecting new trader barriers after accusing Beijing of using state subsidies to build excess industrial capacity.While Europe has deployed tariffs to target Chinese exports, the global steel trade is often seen as a game of whack-a-mole. If shipments are blocked in one market, the action shifts elsewhere, dragging down prices across the board.

The increase in exports has come as steel use is growing more slowly than ArcelorMittal had expected. The producer lowered its forecast for apparent consumption outside China to between 2.5% and 3% this year. It had originally projected demand to rise as much as 4%.

Consumption inside China could even contract, according to the company, which reduced its 2024 forecast to a range of -1% to +1%.

ArcelorMittal reported second-quarter earnings before interest, taxes, depreciation and amortization of $1.86 billion, down from both the first quarter and the same period last year, but ahead of analysts’ estimates.

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