ArcelorMittal Reduces Costs - Analyst Blog
04 Aprile 2011 - 10:00AM
Zacks
Steel giant,
ArcelorMittal (MT) is trying to reduce costs by
improving its self-sufficiency in steel manufacturing input
materials – namely iron ore and coking coal. The company intends to
increase iron ore capacity to 100 million metric tons from less
than 60 million metric tons in 2010. Similar expansion plans for
coal capacity are also expected soon.
Total steel shipments in the fourth
quarter of 2010 were 21.1 million metric tonnes compared with 19.5
million metric tonnes in the year-ago quarter. In fiscal 2010,
total steel shipments increased 22% year over year to 85.0 million
metric tonnes from 69.6 million metric tonnes in the prior
year.
ArcelorMittal has been the single
biggest customer for Cliffs Natural Resources
(CLF) since 2007, contributing 40% of the revenues for Cliffs'
North American iron ore division. According to the umbrella
agreement signed between the two companies, ArcelorMittal has been
buying almost 10 million tons of iron ore pellets from Cliffs
annually. The agreement has not been renewed since it expired at
the end of 2010 which implies that supply will be limited as per
ArcelorMittal's requirement.
Moreover, ArcelorMittal has
indicated that it will improve its self-sufficiency in making steel
due to increasing iron ore costs. Its share of iron-ore mining
operations across the world currently contributes to about half its
requirements, but the company intends to increase this to around
65% by 2015.
ArcelorMittal competes with other
international steel companies like BaoSteel, POSCO
(PKX), Nippon Steel and Tata Steel.
Currently, ArcelorMittal has a
short-term (1 to 3 months) Zacks #3 Rank (Hold) on the stock.
CLIFFS NATURAL (CLF): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
POSCO-ADR (PKX): Free Stock Analysis Report
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