- ArcelorMittal reports a fall in second-quarter profits due to increased Chinese steel exports.
- The company has lowered its forecast for steel consumption outside of China to 2.5%-3%.
- US and European steel markets face pressure from low-cost imports and weak demand.
ArcelorMittal has sounded the alarm on unsustainable market conditions caused by a surge in Chinese steel exports. This influx of low-cost steel has pressured prices in the US and Europe, leading to a challenging environment for steel producers.
ArcelorMittal’s second-quarter profits have fallen, and the company has lowered its forecast for steel consumption outside of China to between 2.5% and 3%, down from an earlier projection of up to 4%.
Global Steel Trade Turbulence: ArcelorMittal Highlights Challenges from Chinese Exports
In response to the excess production and aggressive export strategies of China, the US and European Union have started implementing new trade barriers. Despite these measures, the global steel trade remains volatile, with market conditions compared to a game of whack-a-mole.
The economic dynamics in China have played a significant role in this development. While manufacturing has occasionally shown strength, the broader economy has been hampered by a prolonged real estate crisis. This has resulted in an increase in China’s trade surplus, with steel exports reaching record levels.
The political ramifications of this situation are becoming increasingly apparent. The US and the European Union, two of China’s largest steel export markets, have responded by erecting new trade barriers. These measures aim to counteract what they see as unfair advantages provided by Chinese state subsidies, which have contributed to excess industrial capacity.
ArcelorMittal’s financial results reflect the challenging market conditions. Despite a decline in profits from both the previous quarter and the same period last year, the company’s earnings before interest, taxes, depreciation, and amortization were $1.86 billion, slightly above analysts’ expectations. This performance underscores the resilience of ArcelorMittal amidst a turbulent global steel trade environment.
The ongoing surge in Chinese steel exports poses a significant challenge to global steel markets, highlighting the need for coordinated international responses to ensure fair competition and market stability.
“Current market conditions are unsustainable,” ArcelorMittal stated, highlighting the impact of China’s excess steel production and aggressive exports on global steel prices.
