ArcelorMittal, the world's largest steelmaker, cut its forecast for earnings this year after lower than anticipated iron ore prices ate into the profit of its mining business, sending its shares down nearly 6%. The company said it now expected yearly core profit to be in excess ssof $7 billion.It previously gave a figure of about $8 billion.
CFO Aditya Mittal told a conference call lower iron ore prices were the result of weaker than anticipated demand from China and increased supply this year.
ArcelorMittal said it had adjusted its assumption for iron ore prices to $105 per tonne from $120 per tonne before and implying a second-half average of $100.
The group nevertheless said its steel business was faring well and it had increased demand forecasts for Europe and the US. “We remain cautiously optimistic about the global economy, and in particular the outlook for the developed world,” Mittal said.
The US, he said, was benefiting from strong automotive and machinery sector demand. US manufacturing output rose 6.7% in the second quarter, while in Europe, car registrations rose 6.5% in the first half. And the construction sector, which uses about half of the world's steel, was slightly improving.
The company retained its forecast that global steel consumption would rise by between 3.0 and 3.5%, with slightly lower growth in
China, a modest decline seen in Brazil and a drop for
Russia and surrounding states.