VALUATION HIGHLIGHTS
- North America constitutes 32% of the Trefis price estimate for ArcelorMittal's stock.
- Europe constitutes 26% of the Trefis price estimate for ArcelorMittal's stock.
- India and JVs constitute 18% of the Trefis price estimate for ArcelorMittal's stock.
WHAT HAS CHANGED?
- Q4 2024 Earnings
- ArcelorMittal posted a weaker-than-expected set of Q4 2024 results. While revenue declined 3% year-over-year to $14.71 billion, earnings stood at -$0.51 per share down from $0.37 in the year-ago period. While marginal increase in steel prices helped the company, lower production partly offset this.
- Trump's tariff policies
- Trump's steel tariffs, including a 25% levy on imports, are expected to significantly impact ArcelorMittal's operations, particularly in North America. Since ArcelorMittal derives about 23% of its sales from North America, and much of its U.S. steel comes from its Canadian and Mexican plants, these tariffs will increase costs for its U.S.-bound exports, making its products less competitive in the domestic market​.
POTENTIAL UPSIDE & DOWNSIDE TO TREFIS PRICE
Below are key drivers of ArcelorMittal's value that present opportunities for upside or downside to the current Trefis price estimate for ArcelorMittal:
ArcelorMittal North America
- Steel Shipments in North America
: ArcelorMittal's steel shipments in North America increased from 9.6 million tons in 2021 to 10.6 million tons in 2023. It dropped to 10 million tons in 2024. Trefis expects the metric to rise marginally to about 10.5 million tons by 2031. However, if shipments grow to almost 11 million tons, there could be a 5% upside to our price estimate. On the other side, if shipments fall to less than 10 million tons, there could be a 5% downside to our price estimate.
- Average Steel Price in North America: ArcelorMittal's Average Price of steel in North America rose from $702 per ton in 2020 to $1215 in 2022 due to a surge in prices following the war in Ukraine. The metric fell to about $1024 in 2023 and dropped further to $985 in 2024 with lower demand. Trefis expects the metric to come in at about $1100 by 2031. However, if prices grow to about $1,200, there could be a 10% upside to our price estimate.
BUSINESS SUMMARY
ArcelorMittal is currently the largest steel manufacturer in the world and was formed by the merger of steel giants Arcelor and Mittal in 2006. The company has a crude steel production capacity of about 81 million metric tons of steel annually and has operations in 20 countries on four continents.
ArcelorMittal produces a variety of flat products such as sheets and plates and long products, including bars and rods. The firm also produces pipes and tubes for various applications.
SOURCES OF VALUE
The North American segment is the most valuable division of the firm, accounting for around 33% of the company's value. It is valuable for the following reasons:
North America division
North America accounts for about 23% of ArcelorMittal’s global revenue, making it a key geographical region for the company​. The division supplies steel to automotive, construction, energy, and manufacturing industries, which are critical to the U.S. and Canadian economies.
