Standard & Poor’s Ratings Services today it lowered its corporate credit ratings for ArcelorMittal by one notch, saying that it expects the steel industry to weaken as the economy continues to slow down.
S&P cut its long-term rating for the world’s largest steelmaker to “BB+” from “BBB” and short-term rating to “B” from “A-3.” The outlook is negative.
US shares of ArcelorMittal fell 11 per cent.
S&P said the downgrades reflect the weaker global steel industry environment and economic prospects, particularly in Europe, which prompted the ratings service to cut its profit predictions for the Luxemburg-based company for the rest of this year and 2013.
In addition, S&P said the 20 per cent drop in steel and raw material prices over the past two months shows that the industry environment is currently weaker than previously expected. And the downgrades take into account ArcelorMittal’s second-quarter results, which were lower than S&P expected they would be.
Last month, ArcelorMittal said its second-quarter profit fell 37 per cent, hurt by the effects of Europe’s ongoing financial crisis.
In afternoon trading, ArcelorMittal’s US shares fell $1.76, or 11 per cent, to $14.19. They traded at a 52-week low of $13.28 in early June.