Ternium SA

In this article, we’ll look at ArcelorMittal’s 1Q17 cash flow and leverage positions. As of the end of 1Q17, ArcelorMittal had net debt of $12.1 billion.

ArcelorMittal’s 1Q17 operating income rose sharply in 1Q17 compared to 4Q16. There are several other metrics we can look at to assess a company’s financial performance.

Stock prices across European markets (VGK) (HEZU) rose on February 21, 2017, and business activity in the Eurozone reached a six-year high.

China plans to curtail its excess steel capacity. However, even if China actually cuts the excess steel capacity, it could be in a very gradual way.

Chinese steel prices have continued to slide in November. Chinese steel mills lost $35 per ton on average in 3Q15.

U.S. Steel cut its EBITDA guidance three times in the current year. During the earnings conference call, it gave an EBITDA guidance of $1.2–$1.4 billion for 2015.

ArcelorMittal’s YTD price movement has been falling quarter-over-quarter in 2015. After the 3Q15 earnings report, the company fell by 0.55% to close at $5.43 per share.

Steel demand is dependent on the fortunes of its end users, and the construction sector is the biggest steel consumer in the United States.

Housing starts are a leading indicator of residential construction activity. Housing starts in May increased 4.6% on a year-over-year basis. However, compared to April, they dipped 11.1%.

The construction sector accounts for more than 40% of total steel consumption in the US. In April, construction spending increased 2.2% over the previous month.

Chinese steel production declined 0.7% in April on a year-over-year (or YoY) basis.

While China’s official PMI held above 50 for two consecutive months, the PMI figures released by HSBC Markit paint a grim picture of China’s economy.