24 April 2017Reading time: 4 minutes

ArcelorMittal,one of the largest steel companies in the world, is positive about the outlook for 2017. However, in the past couple of months iron ore prices have been under pressure due to the problems in China.


ArcelorMittal presented their annual results over 2016 on February 10th this year. The steel company saw their revenue declining with 11% to USD 56,8 billion, while the ebitda increased with approximately 20% to USD 6,3 billion. The net profit came out at USD 1,8 billion over 2016, while 2015 resulted in a net loss of USD 7,9 billion.

ArcelorMittal counts on an increasing steel consumption of 0,5%-1,5% for 2017 and hopes to profit from the upcoming infrastructure expenditure in the United States. For now however it is uncertain how much the American President Donald Trump will invest exactly in the US infrastructure.

Furthermore the European Union has imposed import charges on certain Chinese steel products. This should discourage the dumping of cheap steel on the European market and protect producers such as ArcelorMittal. Rating agencies became more positive about the steel company. At the end of February Moody’s increased the rating of ArcelorMittal from Ba2 to Ba1 with a stable outlook. Fitch followed in April by increasing the outlook from negative to stable, whereat the rating was maintained at BB+.


Iron ore is the most important raw material for steel and ArcelorMittal exploit its own iron ore mine. This makes the stock very sensitive for price developments of the raw material. During the past months the iron ore price dropped to approximately USD 74 a tonne, the lowest level since November 30, 2016.

China represents 50% of the worldwide steel production and the needed iron ore is mostly imported. According to analysts the recent price decline is a result of the diminishing demand from China. The house market in China is overheated and the Chines government is taking measures, according to the British business newspaper The Financial Times. There are also concerns about the further increasing of the mine supplies in Brazil, Australia and China which could pressurize the prices even more. For example Australia has announced that the supply growth will overgrown the demand during the remainder of 2017.

Analysts polled by Bloomberg expect that the iron ore price could plummet down to USD 60 a tonne. Throughout 2016 the iron ore price increased with more than 80% and despite the recent decline, still remains 30% above the level of twelve months ago. Other market researchers expect the iron ore price will  restore itself this year to USD 80 a tonne. 

As a result of the increasing iron ore price in 2016 and the positive results, the stock price of ArcelorMittal doubled last year. Since the steel market came under pressure in February, the stock price however slightly dropped. However it remains to be seen if the taken measures worldwide will result in the actual desired effects. 



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24/01/2022 02:04:23