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What Makes ArcelorMittal Optimistic about Its 2017 Outlook?

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Feb. 24 2017, Updated 2:06 p.m. ET

ArcelorMittal’s 2017 outlook

Most steel companies, including U.S. Steel Corporation (X) and Nucor (NUE), seem optimistic about 2017. In this article, we’ll see what ArcelorMittal (MT) had to say about the company’s 2017 outlook during its 4Q16 earnings call.

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Global operations

Unlike AK Steel (AKS) and Steel Dynamics (STLD), which have primarily US operations, ArcelorMittal’s operations are spread around the world. Over the last couple of years, the slowdown in Europe and Brazil has negatively impacted ArcelorMittal’s steel shipments.

ArcelorMittal expects the European Union’s apparent steel consumption (or ASC) to increase between 0.5%–1.5% year-over-year (or YoY) in 2017. The company expects construction activity to remain weak while expecting growth in auto sales. Europe is MT’s biggest market, accounting for ~50% of the company’s revenues.

The Americas

ArcelorMittal also sounded positive on steel demand in NAFTA[1. North American Free Trade Agreement] and expects the region’s ASC to increase between 3%–4% YoY this year. Along with more demand from the construction sector, MT is also expecting an end of the inventory destocking activity that has negatively impacted US steel demand for the last two years.

ArcelorMittal is also expecting ASC growth between 3%–4% YoY in Brazil. The region has seen a contraction in steel demand over the last couple of years as the Brazilian economy has plunged into a recession.

ArcelorMittal should also post shipment growth in 2017 if the global economy stays on its current course.

So far in this series, we’ve looked at steelmakers’ shipment profiles. In the coming parts of this series, we’ll look at their 4Q16 average selling prices.

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