The world’s biggest steel-maker reported its smallest quarterly profit since 2016 and warned that global demand outside of China will be lower than previously expected as the industry faces increasing pressure.

ArcelorMittal posted a first-quarter earnings before interest, taxes, depreciation and amortization (EBITDA) of $1.65 billion, missing the average analyst estimate.

Key insights

ArcelorMittal now sees global demand outside of China rising approximately two per cent and the company is forecasting a contraction of up to one per cent in Europe. China is seen as a rare bright spot, with the biggest consumer now expected to use more steel this year due to economic stimulus and real-estate demand.

ArcelorMittal had previously forecast a contraction in Chinese demand. On Monday, the company said that it was shuttering plants in Poland and Spain.

The company said safeguard tariffs imposed by the European Commission earlier this year have failed to stem a rise in flat-steel imports into the region. ArcelorMittal’s debt increased to $11.2 billion and the company said its adjusted its borrowings target to $7 billion. The company has made debt reduction one of its key goals, having said previously it aimed to cut borrowings to $6 billion before it restarted paying more than a token dividend.

CEO Comments

“Our first-quarter results reflect the challenging operating environment the industry has faced in recent months, Chief Executive Officer (CEO) Lakshmi Mittal said.

He added that profitability has been impacted by lower steel pricing due to weaker economic activity and continued global overcapacity, as well as rising raw-material costs as a result of supply-side developments in Brazil.

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