ArcelorMittal (MT) Starts Producing Magnelis In Spain

ArcelorMittal’s (NYSE:MT) metallic coated steel, Magnelis, is now being produced in Aviles, Spain. The move came on the back of the company’s initiative to meet the growing demand for Magnelis.

An exceptional metallic coating – Magnelis – is a key preference among consumers due to its usage in a wide range of industries and end applications. Apart from Spain, it is also currently being produced in Belgium and Germany.

Magnelis is a breakthrough in corrosion protection, which ensures optimal surface protection against long-term wear and tear. This revolutionary new coating is touted to perform significantly better than alternative European products. Also, in production and during its service life, Magnelis has a significant lower environmental impact compared to its competitors.

Magnelis provides an unprecedented level of surface and cut-edge protection owing to its unique composition. Along with this, the self-healing effect of Magnelis ensures protection of uncoated edges, scratches and perforations.

The cost advantages of the coating include freedom to optimize designs, lower weight of Magnelis coating (depending on environment) to obtain the same level of corrosion resistance, protection of flat and deformed surfaces as well as cut edges and shorter logistics chain due to simpler fabrication processes.

Magnelis is known in the solar energy market as the industry’s reference product for ground mounted structures with tripled consumption in the last three years. Also, it is on the verge of becoming the product of choice in harsh outdoor and indoor environments.

ArcelorMittal has outperformed the Zacks categorized Steel-Producers industry in the last one year. The company's shares have moved up 38.1% over this period while the industry witnessed a gain of 28.4%.

The company remains focused on progressing in three areas, namely cost optimization, product mix and volume growth. ArcelorMittal expects global apparent steel consumption (ASC) to rise 0.5–1.5% year over year in 2017. In the U.S., the company sees apparent steel consumption growth of 3–4% in 2017. The company also anticipates modest growth (0.5–1.5%) in apparent steel consumption in Europe. Moreover, apparent steel consumption is forecast to rise 3–4% in Brazil. Demand for steel in China is likely to stabilize in 2017.

ArcelorMittal should gain from its efforts to reduce debt, lower cost, expand capacity and improve efficiency. The company remains on track with its cost reduction actions under its Action 2020 program. The Action 2020 program includes plans to optimize costs and increase steel shipment volumes, along with improving the portfolio of high added value products.

ArcelorMittal is also expanding its automotive steel line of products by launching a new generation of advanced high strength steels (AHSS). It is also planning to expand its family of third-generation advanced high strength steel. These products will ensure that the company is best positioned to meet customer requirements via a strong technical and product portfolio. The company is also looking to sell its non-core assets to focus on key operations.

However, ArcelorMittal remains exposed to volatility in steel prices. Demand for steel remains weak in Europe and China. Moreover, cheap steel exports from China still remain a woe.

ArcelorMittal Price and Consensus

ArcelorMittal Price and Consensus | ArcelorMittal Quote

ArcelorMittal currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked companies in the basic material space are BASF SE (OTC:BASFY) , The Chemours Company (NYSE:CC) and Kronos Worldwide Inc (NYSE:KRO) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

BASF has expected long-term growth of 8.9%.

Chemours has expected long-term growth of 15.5%.

Kronos has expected long-term growth of 5%.

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