ArcelorMittal Raises the Coronavirus Flag

The ArcelorMittal report says: “The exact impact of the Coronavirus is unknown, but it has had a negative impact on prices and spreads in China and may continue to have a negative impact if inventories at factories in China continue to rise, putting downward pressure on prices.

While the Company expects a significant negative impact on industrial output and steel demand during the first quarter of 2020, given the disruptions to fade soon, employment and earnings are expected to be relatively unaffected, with much of the lost production being recouped over the remainder. 2020, supported by fiscal and monetary easing. However, in 2020, GDP growth and steel demand are likely to still be weaker than anticipated prior to the outbreak. Steel demand is currently expected to grow by only 0-1% in 2020. Compared to the previously expected 1 - 2% ”.

It also states: “The coronavirus is having a significant impact on demand in China in the first quarter of 2020 and is likely to have a negative impact on other countries, mainly in Asia, due to a decrease in exports of goods to China, a decrease in the number of tourists from China and supply chain disruptions. to a shortage of Chinese production of intermediate goods. While the impact on the company's core markets is expected to be less until the virus is under control, they cannot be quantified, and our current steel demand forecasts suggest that the situation in China will not deteriorate significantly. However, the recent increase in cases outside China is worrying and increases the risk of a global pandemic and a much more serious negative impact on global GDP. The company is closely monitoring the situation, in particular in Italy,

ArcelorMittal believes that there are signs that a slowdown in real demand is beginning to stabilize, and a favorable inventory environment means that the Company is more optimistic about its outlook for explicit demand for 2020. This could be revised downward due to the impact of the coronavirus outside of China.

In the US, demand is expected to rise in the range of + 0% to + 1% in 2020 (up from an estimated -2% decline in 2019), with stronger ASC in flat products offsetting the expected decrease in ASC for long products.

In Europe, demand is expected to grow between + 1% and + 2% in 2020 (up from an expected decline of more than -4% in 2019); While the auto industry is expected to remain weak, the end of the inventory drawdown is expected to support the improvement in ASC for flat products, similarly, the end of the inventory drawdown should offset the impact of the slowdown in construction activity�