ArcelorMittal mining arm courts external customers

Thu Oct 13, 2011

PARIS Oct 13 (Reuters) - The mining division of ArcelorMittal is aiming to increase raw material sales to other steelmakers as part of its new role as a standalone business within the world's largest steel group, a company executive said on Thursday.

ArcelorMittal has stepped up mining investments in an effort to secure raw material supply, and the company published for the first time separate results for its mining operations as part of its first-quarter earnings statement this year.

"It's no longer where mining is a cost centre or a cost support, mining is a profit driver going forward, just as the steel side is," Simon Wandke, ArcelorMittal's chief commercial officer for mining, said.

"We don't have to supply all our tonnes to ArcelorMittal Steel," he told the annual World Steel Association conference. "We have contracts with global steel companies, a number of our customers are in the room today."

ArcelorMittal was taking a "portfolio approach" to mining assets, using a mix of acquisitions and partnerships to secure specific types of metal ore, he said, citing the takeover of Canadian miner Baffinland this year as giving access to high-quality iron ore amid declining global quality.

ArcelorMittal is aiming to raise its iron ore production by 10 percent this year and its output of coking coal -- another raw material used in making steel -- by 20 percent.

Mining activities have attracted increasing attention from industrial users as high commodity prices linked to booming Chinese demand have shifted some profitability upstream.

Wandke said his division was selling raw materials to external customers through separate commercial operations.

"Our growth is global and not just internal. So we have offices for mining around the world that have a different front door from steel."

He declined to give details about steel customers or pricing levels when asked by Reuters on the sidelines of the conference.

Mining major BHP Billiton told the conference mining projects should allow iron ore supply growth to outpace demand this decade after a period of undersupply that has stoked prices.

Wandke said that this rebalancing of supply and demand would take some time while projects come onstream.

"We think the market is going to remain pretty tight for a number of years."

(sourced Reuters)

SSAB Q2 beats forecast, sees growing demand

Fri Jul 22, 2011 | By Reuters

* EBIT 1.3 bln SEK vs consensus 1.1 bln
* Sees weaker Q3 than Q2 but recovery continuing
* Shares up 7 pct

STOCKHOLM, July 22 (Reuters) - Swedish specialty steelmaker SSAB (SSABa.ST: Quote) posted a better-than-expected second-quarter operating profit on Friday and said the recovery was continuing.

Operating profit at the company, which bought North American steel maker IPSCO in 2007, grew to 1.3 billion crowns ($203 million) from 708 million the same period last year, against an expected profit of 1.1 billion in a Reuters poll.

Operating profit was boosted by good demand at the beginning of the second quarter, a trend that slowed down towards the end of the quarter, SSAB said.

SSAB's shares rose 6.9 percent at 0702 GMT, outperforming the STOXX Europe 600 Basic Resources Index which was up 0.75 percent .

Several planned maintenance stops, continued price pressure, together with higher raw materials costs and uncertainty about Europe indicate that the third quarter will be weaker than the second, the company said.

"However, the recovery is continuing and demand is expected to be stronger than in 2010," Chief Executive Martin Lindqvist said in the report.

Extended maintenance work in Sweden will affect operating profit negatively by 100 million to 150 million crowns during the third quarter. A longer outage in Montpelier, Iowa in the third and fourth quarter will hit operating profit by 350 million to 400 million crowns, of which roughly 25 percent will be in the third quarter.

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ArcelorMittal forecast post-crisis peak in Q2

Wednesday 11 May 2011, 11:26 AM
By Philip Blenkinsop

BRUSSELS (Reuters) - ArcelorMittal, the world's largest steelmaker, forecast strong prices and shipments that would propel earnings to a post-crisis high in the second quarter following a sharp rebound at the start of the year.

The group, which makes 6 to 7 percent of global steel, reported first-quarter earnings above expectations, after steel prices caught up with a spike in iron ore and coking coal costs and demand steadily grew from the auto and engineering sectors.

The Luxembourg-based company said core profit should be between $3 billion and $3.5 billion in the second quarter, the highest level since third quarter of 2008, just before the global steel sector went into freefall.

"As anticipated, we have seen a stronger start to the year, with an increase in both shipments and selling prices," Chief Executive Lakshmi Mittal said in a statement.

"This is expected to further improve in the second quarter as the underlying demand recovery continues. We remain confident that 2011 will be a stronger year than 2010."

ArcelorMittal said its blast furnaces would be running at 80 percent of capacity in the second quarter, up from 75 percent in the first three months.

Core profit (EBITDA) in the first quarter was $2.58 billion, higher than the $2.40 billion average forecast in a Reuters poll of 17 banks and brokers.

That represented a 39 percent improvement from the final three months of 2010, when a raw material price spike squeezed margins.

From mid-July to mid-November 2010, Metal Bulletin's MBIO index of Chinese iron ore prices rose some 37 percent, while steel prices in Europe dropped 7 percent.

From then until the end of March, steel prices have shot up 32 percent, while iron ore only made up 10 percent, according to Metal Bulletin, although this positive sector price trend reversed in April.

Many steel contracts for a given quarter are set during the previous three-month period, meaning that the pick-up of steel prices should influence first-quarter sector earnings, but only have a full impact from the second quarter.

Analysts are divided on what will happen in the second half of the year to the $500 billion steel sector, seen by many as a proxy for the global economy. The question is if there will be a repeat of last year's margin compression.

Bears point to a large price differential between Asia and other markets, a weak construction market, spare capacity and a further rise in ore and coal costs.

Bulls say inventory levels are healthy, demand is improving and Chinese prices should rise rather than Western prices fall.

Steel trader Kloeckner & Co also reports results on Wednesday, followed by German steelmaker Salzgitter on Thursday and peer ThyssenKrupp on Friday.

The latter, along with Austria's Voestalpine, have benefited from their exposure to the booming German car and engineering sectors. Voestalpine raised its full-year outlook in February after a forecast-beating quarter, and said only the construction sector was still lagging.

ArcelorMittal investors also gained an insight on Wednesday into the health of the company's growing mining assets, for which it provided separate results for the first time. The group mining production profitability would also improve in the second quarter from the first three months.

(Editing by Rex Merrifield, Sourced Reuters)

Salzgitter outlook muted by raw material costs

Mon Mar 7, 2011 3:38pm GMT

* 2010 pretax profit 48.9 mln euros vs 44 mln in poll
* Sees 2011 sales growth of 15-20 pct
* Sees pretax profit doubling from 2010 level
* Shares down 3.6 percent, hit lowest in over 7 weeks
(Recasts, adds background and share price)

By Marilyn Gerlach

FRANKFURT, March 7 (Reuters) - Germany's No. 2 steelmaker Salzgitter AG (SZGG.DE: Quote) forecast earnings growing less than analysts had forecast this year, sending its shares down more than 3 percent to their lowest in nearly seven weeks.

Announcing a swing to pretax profit of 48.9 million euros ($68.6 million) in the past year versus an expected 44 million in a Reuters poll of banks and brokerages, the group said it saw pretax earnings more than doubling in the current year.

"The forecast of more than doubling the pretax profit was a disappointment and was weaker than expected," analyst Michael Broeker of Steubing said.

Broeker said it was also disappointing that Salzgitter's steel sections and sheet piling product segments -- which cater to the construction sector -- did not pick up last year.

Shares in the company, which has traditionally issued a conservative outlook for the year only to upgrade it in subsequent quarters, fell as much as 3.6 percent in early trade and were down 2.6 percent at 56.36 euros by 1124 GMT. Germany's midcap index was up 0.2 percent.

The stock hit a low of 56.53 euros, its lowest since late January.

ThyssenKrupp (TKAG.DE: Quote), the top steelmaker in Europe's biggest economy, has been upbeat for this year, expecting a 10 to 15 percent sales increase as orders from its home market helped it navigate global price pressures.

ArcelorMittal (ISPA.AS: Quote), the world's largest steelmaker, forecast a rebound in demand and prices at the start of 2011, signalling an end to a margin squeeze that hit the global steel industry late last year.
TUBES WEIGH

Salzgitter said its steel division -- which generates about a quarter of group sales -- will swing to a pretax profit this year from a year-earlier loss, boosted by economic recovery and a pickup in orders.

Also helping 2011 earnings, the technology business comprising mainly beverage bottling unit Kloeckner-Werke may break even this year.

But earnings growth is being limited by the tubes business, which generates about a fifth of group sales and is seen posting a decline in its result in this year.

Analysts have said contract prices for large diameter tubes used in the Nord Stream gas pipelines were fixed at lower prices at a time before spot prices of raw materials used in steelmaking soared to current levels.

Prices for coking coal, a key raw material for steel, rose by $150 last month to between $380 and $390 per tonne on a free on board (FOB) basis shipped from Australia, as devastating floods hit production from the world's top exporter.

Salzgitter said capacity utilisation at its plants was at a high level last year, particularly in the flat steel product segment, used mainly in the automotive sector, while selling prices of many products gradually recovered.

Germany's booming automotive and mechanical engineering industries have allowed steelmakers to pass on some of the high input costs to their end-clients.

According to StarMine, which weights analyst views by their track records, Salzgitter trades at around 21.2 times estimated 12-month forward earnings per share, a premium to ThyssenKrupp's 11.0 and ArcelorMittal's 12.3.

Salzgitter shares have fallen 11 percent over the past 12 months, underperforming ThyssenKrupp and the STOXX Europe 600 Industrial Goods and Services Index , which rose 22 percent and 32 percent, respectively, during the period. (Editing by David Holmes) ($1=.7131 Euro, sourced : Thomson Reuters)

New Millennium, Tata to extend iron ore deal

Tue,March01,2011

March 1 - New Millennium Capital Corp said late Monday it has agreed to extend an iron ore project exclusivity agreement with India's Tata Steel , which could potentially feed the world's No.7 steelmaker's European unit.

Both companies have mutually agreed to extend the exclusivity period to March 7 from February 28, New Millennium (NML) said.

Tata Steel and NML shall continue to work toward negotiating a binding agreement for the development and operation of the LabMag and KeMag iron ore projects, the company said.

NML had extended Tata's exclusivity right twice -- once by 18 months till the end of last year and once till Feb. 28. (Edited by Reuters)

Tags :LabMag iron ore project, KeMag iron ore project, steel mills, steelmaking