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ArcelorMittal Update on NAFTA

Steel News - Published on Wed, 05 Aug 2020

Image Source: ArcelorMittal
NAFTA segment crude steel production decreased by 32.8% to 3.7 million tonne in 2Q 2020 as compared to 5.5 million tonne in 1Q 2020, primarily due to weak demand driven by the COVID-19 pandemic (particularly in US and Canadian operations).

The escalation of the COVID-19 pandemic during the latter part of 1Q 2020 had impacted ArcelorMittal's key end markets in the US and Canada. The Company responded immediately by significantly adapting its capacity which continued during 2Q 2020.

Steel shipments in 2Q 2020 decreased by 31.4% to 3.8 million tonne as compared to 5.5 million tonne in 1Q 2020. due to weak demand driven by COVID-19 pandemic particularly in the automotive and energy sectors. As the 2Q 2020 progressed, steel shipments started to recover as lockdown measures eased and automotive production and manufacturing activity restarted.

Sales in 2Q 2020 decreased by 35.7% to $2.8 billion as compared to $4.3 billion in 1Q 2020, primarily due to a 31.4% decrease in steel shipments and a 6.3% decline in average steel selling prices (with flat steel products down by 6.8% whilst long products increased by 2.9%).

Exceptional items for 2Q 2020 and 1Q 2020 of $221 million and $241 million, respectively, consist of inventory charges. Impairment charges for 2Q 2019 were $600 million related to impairment of the fixed assets of ArcelorMittal USA following a downward revision of future cash flow projections reflecting a sharp decline in near term steel prices and higher raw material costs.

Operating loss in 2Q 2020 was $327 million as compared to a loss of $120 million in 1Q 2020 and a loss of $539 million in 2Q 2019. Operating results for 2Q 2020, 1Q 2020 and 2Q 2019 were impacted by impairment and exceptional items noted above.

EBITDA in 2Q 2020 of $30 million was significantly lower as compared to EBITDA of $247 million in 1Q 2020, primarily due to the loss of profit margin on reduced steel shipments, fixed costs headwinds (although significantly cut, fixed costs were not fully reduced in line with lower shipments) and lower automotive sales resulting in a weaker sales mix.

EBITDA in 2Q 2020 of $30 million was lower as compared to $198 million in 2Q 2019 driven primarily by lower steel shipments (-30.2%), and negative price-cost effect related to lower average steel selling prices (-19.9%).

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Posted By : Yogender Pancholi on Wed, 05 Aug 2020
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