ArcelorMittal Brazil chief says capital spending is slowing down due to lower steel demand

ArcelorMittal SA's Luxembourg-headquartered Brazil head MT.LU said on Thursday that he expects capital expenditures to fall as demand for steel falls.

“The world will be consuming less steel, so we can delay some investment a bit,” Jefferson de Paula said.

"For example, if we're going to buy some equipment and have it up and running within three years," the company can now stretch that out to five years, he said at a conference in Monterrey, Mexico hosted by regional industry group Alacero. .

In 2021, operations in Brazil accounted for 22% of the operating results of ArcelorMittal, one of the largest steel producers in the world.

ArcelorMittal, like other companies in the industry, has been hit by inflation, de Paula said. The executive said lowering costs, improving product quality and raising prices are short-term goals.

“This year and next, we see that operating costs and fixed costs should come down,” he added.

Last week, ArcelorMittal reported higher-than-expected third-quarter core earnings - still less than half of the earnings reported for the year-ago period - as the company sought to cut costs and reduce energy consumption.

However, as demand for steel began to fall, prices for raw materials such as iron ore and scrap metal also declined, de Paula said.

Alacero predicts that Latin American steel consumption will decline by 9.5% year-on-year in 2022. According to the forecasts of the organization, steel production in the region will decrease by 2.8%.