ArcelorMittal Faces Heat of Global Slump in Steel Consumption
By Ritsumita
Posted on : 5/12/2009
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Global Demand slump again
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 ArcelorMittal, which is the biggest steel maker of the world, has started feeling the taste of global slump in steel consumption. It has reported a deficit of $1.1 billion for the last three months. The sales and earning figure of the company in the first quarter of 2009 is down significantly as compared to the last year.
The group’s chairman Lakshmi Mittal, who is also one of the wealthiest men of the world, is confident about the recovery. He expressed his view that a technical recovery is imminent when the stocks take a nosedive. However the forecast of World Steel Association indicated that the global demand for steel consumption will fall by a margin of 15 percent this year. This would be the highest drop post the Second World War.
It has also been heard from reliable sources that ArcelorMittal is going to cut around 9,000 jobs for cost reduction. Mr Mittal had also expressed his concern over the global economic meltdown in a recent statement issued by him. However in the same statement he had also said that the downturn will end by the second quarter of 2009 and things can brighten up after that. The prices can soar upwards in the third quarter across the big markets of the group, he added.
Nonetheless the investors are yet to be convinced. ArcelorMittal has recently also announced plans to dish out $2.5 billion of shares for facilitating debt reduction. This has not managed to generate confidence among investors. The debt amount the group has incurred in recent times has given birth to speculations that it would be forced to sell core assets or close sites permanently. But Mr Mittal brushed aside these possibilities.
The company had, however, issued a statement in the last quarter of 2008 about a steep fall in demand and possible layoffs. As per confidential company sources, though ArcelorMittal anticipated a loss in the first quarter of the year 2009, yet proportion has surpassed its expectations. It is almost twice of the expected amount. It has been announced by the company that 10 percent of the stocks would be bought by the Mittal family.
As a matter of fact the steel giant has been badly affected by diminishing demands from the troubled car companies and construction sector. The car companies are struggling with low demand and low production. The loss of the steel maker has shaken the market. A number of the plants owned by ArcelorMittal are functioning below par. The export figures reveal the reality. In the first quarter of the present year the company shipped just 16 million tonnes, a downfall from 29.2 million tonnes last year.
ArcelorMittal also slashed its global workforce in the last part of 2008. In another related development, an ArcelorMittal spokesman said in Liberia that its facility in the country will cut jobs. ArcelorMittal makes 10 percent of the steel that is made all over the world annually.
The stock of the company is traded in the exchanges of places like New York, Amsterdam, Luxembourg, and Paris etc. All the countries are witnessing a slump in the demand of steel and this naturally has affected the steel giant.
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About the author:
Ritusmita
Biswas has over 10 years of experience in media and has contributed in several
national as well as international publications like The Statesman, The Hindu,
Deccan Herald, Jetwings, Media Transasia, Sahara Times, Bohemia
(Singapore)
etc. Ritusmita has also worked as a senior editor with reputed publishing
houses like Macmillan. She has been an academic consultant with institutions
like The Princeton Review (India)
and ICFAI University.
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