MetalMiner | Feb 12, 2013 01:56AM ET
Lakshmi Mittal, CEO of ArcelorMittal (ADR), voiced cautious optimism concerning the upcoming year for the global steel industry, according to FT, even as another report underlines the extent to which investors disagree with his prospects for the world’s largest steel company.
ArcelorMittal’s share prices are said to have fallen 80 percent in the last five years, as the one-time darling of the stock market has been ravaged by the debt crisis, the ensuing collapse in developed world steel demand and a rapid rise in raw material input prices.
ArcelorMittal’s share price has underperformed even compared to its European competitors.
To What End?
With sales still deeply depressed in Europe and margins under pressure, it’s questionable whether the plant closures announced so far will have sufficient impact to raise profitability significantly.
ArcelorMittal as a company is not under threat, but as with other European-centric majors such as ThyssenKrupp, it is finding life hard going. Major re-structuring in Europe is hampered by political interference as governments fight to keep jobs and production facilities alive.
As such, the share price is unlikely to see much upside until the European market improves, regardless of what claims the company makes about progress in improving capacity utilization. Capacity utilization applies to operating plants, not those idled yet still costing money on the books.
by Stuart Burns
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