Top global steelmaker ArcelorMittal said today it had narrowed its first-quarter losses and saw a more upbeat period ahead but warned the market remained "fragile" due to excess capacity in China.
The company, which like other steelmakers has been hit by falling iron ore prices and cheap Chinese steel imports, said it was still hoping to reach its full-year target for core profit.
Lakshmi Mittal, ArcelorMittal chairman and chief executive, said the results for January to March "reflect the very tough operating conditions in the second half of 2015".
"Since that time, we have seen a recovery in spreads in our core markets to more sustainable levels, which is expected to result in improved results in the coming quarters."
"This is a welcome development, although given the levels of excess capacity in China, the market remains fragile and we must continue to be vigilant and active against the threat of unfair trade," he said in a statement.
European steelmakers have long been battling overcapacity and cheap prices from Chinese rivals, spurring a number of national governments to press Brussels to erect barriers against Chinese steel imports.
The company reduced its net losses in the first quarter to USD 416 million (364.3 million euros) compared to USD 728 million in the same period a year earlier, it said.
However, it confirmed that it expected core profits, as measured by EBITDA (earnings before interest, taxes, depreciation and amortisation), for 2016 to exceed USD 4.5 billion.
Shares in ArcelorMittal slumped more than four per cent on the Paris stock exchange in mid-morning trading.
The drop, said Xavier de Villepion of HPC, was due to poor visibility of developments on the steel market "considering Chinese overcapacities", as well as some profit-taking.
Since January 1, shares in the company have increased just over 49 per cent.
First-quarter EBITDA fell, as expected, to USD 927 million compared to the last three months of 2015 "primarily reflecting the lagged effect of weak steel pricing, offset in part by higher steel shipments".
Sales in the quarter dropped nearly 22 per cent from a year earlier, to USD 13.4 billion, it said.
Steel shipments reached 21.5 million tonnes in the first quarter, an 8.8-per cent increase compared to the previous quarter in 2015.
