Arcelor Mittal sales fall in 2Q '20 on pandemic impact
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ArcelorMittal, the world's largest steel producer, posted a 23.7% q-o-q and around 35% y-o-y drop in sales volume to 14.8 mn t, as demand was significantly impacted by the effect of the pandemic across all of the company's major markets.
Arcelor's steel shipments fell on a y-o-y basis in Europe (-42.3%), NAFTA (-30.2%), Brazil (-26.1%) and Africa and CIS markets (-24.7%).
The company's core markets are showing signs of recovery with rate of shipments in June higher than the low points of April and May. It expects shipments in 3Q 2020 to exceed those in 2Q 2020.
"There are now signs of activity picking up, especially in regions where lockdowns have ended, but clearly it is prudent to remain cautious about the outlook," said ArcelorMittal chairman L.N. Mittal.
Arcelor narrowed its net loss and operating loss on a q-o-q basis in 2Q'2020. But, the company's operating profit (Ebitda) from steel sales only was at $21/t in 2Q'20 compared with $34/t in 1Q'2020.
The company posted an increase in its market-priced iron ore sales to third parties in 2Q'20, with impact of Covid19 restrictions minimal on mining. Iron ore shipments were at 9.2mn t in 2Q'20 compared with 8.6mn t in 1Q'20 and 9.9mn t in 2Q'19. Iron ore production for captive use fell to 13.5mn t in 2Q'20 vs 14.4mn t in 1Q'20.
Arcelor guided for a 5% y-o-y drop in market-priced iron ore shipments in 2020.
India operations
AMNS India's crude steel output fell by around 29.5% in 2Q'20 to 1.2 mn t compared with 1.7Mt in 1Q 2020 due to lockdown.
The lifting of lockdown measures and higher exports have enabled AMNS India to increase capacity utilization in June 2020, with annualized crude steel production of 7.0Mt in that month (around 583,333t monthly output).
Despite COVID-19 impact on domestic demand, AMNS was able to export more steel and pellet.
The 2Q 2020 Ebitda for Indian operations was $107 million vs $140 million in 1Q 2020. Cash flow generation is expected to be strong in FY'21 (Apr 2020-Mar 2021) as maintenance capital expenditure, interest expense and cash tax expense are expected to be less than $250 million for the fiscal year.
AMNS India acquired the Odisha Slurry Pipeline Infrastructure (OSPIL) for around $245 million in the Apr-Jun quarter. The 253-km pipeline connects AMNS India's iron ore beneficiation plant in Dabuna to its pellet plant in Paradip in the state of Odisha.
