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How ArcelorMittal’s 2Q16 Average Selling Prices Compare to Peers

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2Q16 average selling prices

Steel companies’ earnings are sensitive to changes in steel prices. In recent quarters, steel companies’ earnings have been negatively impacted by falling steel prices. However, spot steel prices—especially for flat-rolled sheet products—have risen sharply this year.

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Selling prices rise

All of the steel companies that we are covering in this series reported sequentially higher steel prices in 2Q16. However, average selling prices fell on a YoY (year-over-year) basis.

We should note that while spot steel prices are currently higher than they were in the corresponding period last year, its impact has yet to become visible in some of the contract sales. Because some of the contracts have still not reset to higher prices, we’ve seen a YoY decline in most steel companies’ 2Q16 average steel selling prices.

Quarterly change

Steel Dynamics (STLD) reported a quarter-over-quarter increase of 11% in its average steel selling prices in 2Q16—the highest among the companies that we are covering. Nucor’s (NUE) ASP (average selling prices) rose by 9% over this period.

ArcelorMittal’s (MT) 2Q16 ASP rose by 8% sequentially. The company’s ACIS (Africa and Commonwealth of Independent States) segment realized ASP of $409 per metric ton in 2Q16, which is 28% higher than in the sequential quarter. We should note that while 40% of ArcelorMittal’s shipments in North America and Europe (VGK) are tied to contract sales, the company sells steel on a spot basis in the ACIS segment. Because of this, the ACIS segment’s ASP rose sharply, as compared to MT’s performance in other regions.

However, U.S. Steel’s (X) ASP didn’t rise much in 2Q16. We’ll discuss this further in the next part.

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