Has ArcelorMittal Stock Lost Its Sheen?

After observing a strong rally in early 2021 from rising steel and iron ore prices, ArcelorMittal stock (NYSE: MT) is undergoing a correction. With the Russia-Ukraine war crossing the two-month mark, disruptions in global energy supplies continue to mount – taking a toll on discretionary spending. Considering the ongoing situation in Europe, the company revised its full-year outlook in the first-quarter results. However, the construction sector accounts for 22% of the company’s total sales which is likely to retain strength in 2022 as per a report by EUROFER. While rising cost pressure from high energy prices and supply chain delays are likely to slow down consumer demand, Trefis believes that ArcelorMittal’s topline is unlikely to observe a deep contraction in 2022. We highlight the historical revenue trends in ArcelorMittal’s revenues across key operating segments in an interactive dashboard analysis.

ArcelorMittal is the largest steel producer in Europe

In 2021, ArcelorMittal reported 69 million tons of total steel production against a total capacity of 82.7 million tons. Despite a strong recovery reported in Europe, Brazil, and South Africa regions, the total production stood relatively flat compared to the prior year, largely due to the acquisition of ArcelorMittal USA by Cleveland-Cliffs. Per annual filings, the company reported 33 million tons of steel shipments to Europe. Comparing it with Europe’s apparent steel consumption of 149 million tons reported by EUROFER (The European Steel Association) – MT accounts for nearly one-fifth of Europe’s consumption. In Q1 2022 filings, the company revised its apparent steel consumption outlook for Europe downward due to rising inflation and uncertainty associated with the Russia-Ukraine war.

Comparing ArcelorMittal’s outlook with EUROFER

Per Q1 filings, the company expects Europe’s apparent steel consumption (ASC) to decline by between -4% to -2% in 2022. While EUROFER also projects a -2% (y-o-y) decline in ASC for 2022, the forecast is bullish for 2023 with an expected growth of 5.1%. However, the construction and automotive industries, which account for 35% and 18% of total steel consumption, respectively, are likely to retain strength despite the ongoing repercussions of the war. With residential investments and public-funded construction projects picking up pace in 2021, EUROFER projects construction output to grow by 2.3% in 2022 and 1.5% in 2023. After observing a severe contraction in 2020, the automotive industry reported a modest rebound of 4% in 2021. Given the continued depressed demand for passenger vehicles, the sector is likely to post feeble numbers in 2022. (related: Is Freeport-McMoRan Stock A Buy?)

What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

[1] Month-to-date and year-to-date as of 5/6/2022
[2] Cumulative total returns since the end of 2016

Invest with Trefis Market Beating Portfolios
See all Trefis Price Estimates