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ArcelorMittal warns on lower U.S. steel prices, higher coking coal costs

Published 11/08/2016, 08:26 AM
ArcelorMittal warns on lower U.S. steel prices, higher coking coal costs
MT
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  • ArcelorMittal (NYSE:MT) -6.7% premarket after reporting a Q3 earnings beat and a 40% jump in EBITDA to $1.9B, despite a 6.8% drop in revenue to $14.5B.
  • But MT warns that lower steel prices in the U.S., combined with the impact of rapidly rising metallurgical coal prices on steel spreads in other areas, likely will lead to a Q/Q decline in profitability in Q4.
  • Prices of coking coal, one of the main ingredients in steelmaking, have nearly tripled to ~$236/metric ton in the past five months on declines in output in China and Australia, partly related to poor weather.
  • Taking into account an expected full year investment in operating working capital of ~$1B, raised from its earlier outlook of ~$500M, MT expects cash flows from operating activities to exceed capex in 2016.
  • For Q3, MT says steel shipments totaled 20.3M tons, a seasonal decline of 8.1% vs. Q2; steel shipments for the first nine months totaled 63.9M tons, down 1.5% Y/Y.

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