ArcelorMittal blamed cheap Chinese imports for depressing the price of steel as the world’s biggest steelmaker scrapped its annual dividend after losing $1.3bn (£860m) in the first nine months of 2015.
The company blamed unsustainably low export prices from China and customers delaying purchases for the net loss, which was 10 times bigger than the $131m loss recorded a year earlier. Sales fell by $11bn to $49.6bn, underlining the crisis in the steel industry.
Conditions deteriorated rapidly in the third quarter, when ArcelorMittal’s net loss was $711m – more than half the total for the year. ArcelorMittal, based in Luxembourg, wrote down the value of its steel stocks by $500m to reflect rapid falls in prices.
Aditya Mittal, the company’s finance director, said. “This is essentially the result of very low export prices out of China that are impacting prices worldwide.”
European steelmakers are struggling to cope with falling prices, cheap imports and weakened demand as the economy slows in China, the biggest user and producer of the metal.
British companies have partly blamed dumping of cheap steel by China for a series of plant closures that has left one in six UK steelworkers facing redundancy. Tata Steel slashed the value of its UK business by £862m on Thursday after announcing plans last month to cut 1,200 jobs. The writedown effectively made Tata’s UK operation worthless for accounting purposes.
ArcelorMittal, which makes car parts in the Midlands and has operations around the world, reduced its annual forecast for earnings before interest, tax, and other items to as low as $5.2bn from a target of $6bn to $7bn. It will suspend its annual dividend to save $360m and reduce investment spending and operating costs.
Before an emergency meeting of European Union ministers scheduled for Monday to discuss the steel crisis, ArcelorMittal said politicians needed to move more quickly to stop the dumping of cheap Chinese steel in Europe.
Lakshmi Mittal, ArcelorMittal’s chairman and chief executive, said: “While we are confident our actions are the right ones, there are also important issues for governments to address, specifically relating to unfair trade. We are encouraged by various examples of trade action being initiated in response to dumping, but the process needs to be faster in order to be fully effective.”
Sajid Javid, the business secretary, will represent Britain at the steel summit in Brussels, after receiving criticism for a slow response to the crisis. The UK government was also accused of failing to complain about cheap Chinese steel exports when China’s premier, Xi Jinping, visited the UK last month.
ArcelorMittal said imports in Europe, including from China and the Commonwealth of Independent States, were at a record high and were still rising, meaning European steelmakers would struggle to benefit from a recovery in demand as pricing pressure continued next year.
“This is not an economic crisis, it is not a volume crisis, it is an import crisis,” Aditya Mittal said. “Our core markets of Europe and Nafta [North American free trade agreeement] are still growing.”
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