ArcelorMittal Plans Q1 Steel Price Increase for U.S., Q2 Increase for EU
11/20/2007 - Raw material and energy cost increases for 2008 are prompting ArcelorMittal to increase prices for flat steel products in the NAFTA and European markets.
Raw material and energy cost increases for 2008 are prompting ArcelorMittal to increase prices for flat steel products in the NAFTA and European markets.
The company expects around 6% growth in overall global steel demand in 2008, based on continued firm demand for steel products; continued strength in the macroeconomic environment in the BRIC countries, emerging Asia, Middle East and CIS regions; and slower but positive growth in Europe. The company says its expectations are also supported by a pick-up in apparent steel demand in the NAFTA regions, as evidenced by the International Iron and Steel institute’s forecast that worldwide apparent steel use will rise 6.8% in 2008 vs. 2007.
In the U.S. market, ArcelorMittal had previously announced an increase of USD 40/t for deliveries as of January 1, 2008, building on the average USD 20/t price increase for strip mill products achieved in the fourth quarter of 2007. On top of rising raw material prices, current U.S. prices are below prevailing global market levels. Going forward, says ArcelorMittal, low inventories, falling steel imports and relatively robust demand for high quality steels should underpin a realignment of U.S. prices toward global-market levels.
In the EU, ArcelorMittal plans to maintain 2007 prices during the first quarter of 2008 and apply price increases reflecting raw material cost increases from the second quarter. After two years of exceptional demand, noted the company, developments in the European steel market continue to be positive despite the expected slowdown in economic growth.
However, ArcelorMittal said it recognizes that current Euro/USD exchange rates are affecting its industrial customers’ competitiveness. The current import slowdown will help to readjust inventories to adequate levels and create strong demand after the winter season.
“We are convinced that strong demand in China and very expensive freight rates will help to rebalance the European inventory situation within short term and create an excellent basis for further positive developments during the year 2008,” said Christophe Cornier, CEO of Flat Carbon Europe. “Our price policy reflects ArcelorMittal’s commitment to stability and fair play with our customers. We are dedicated to raising the levels of service offered to customers”.
ArcelorMittal is the world's largest steel company, with 320,000 employees in more than 60 countries. The company leads a number of major global markets, including automotive, construction, household appliances and packaging, with leading R&D and technology, as well as sizeable captive supplies of raw materials and outstanding distribution networks. An industrial presence in 27 European, Asian, African and American countries exposes the company to key steel markets, from emerging to mature, positions it will be looking to develop in the high-growth Chinese and Indian markets.
ArcelorMittal’s key pro forma financials for 2006 show combined revenues of USD 88.6 billion, with a crude steel production of 118 million tonnes, representing around 10% of world steel output.
