Rolled up steel sits in the ArcelorMittal Dofasco steel plant in Hamilton, Ontario, Canada. Image Credit: Reuters

Brussels: The world’s largest steelmaker ArcelorMittal said the outlook for 2018 had improved after a sharp pickup in steel prices and increased iron ore shipments helped it deliver higher-than-expected first-quarter earnings on Friday.

The group did not give a specific forecast for its own prospects, but repeated that it saw 2018 global apparent steel consumption, which takes into account inventory changes, growing by between 1.5 and 2.5 per cent.

The steel industry, worth about $900 billion (Dh3.3 trillion) a year, is seen as a gauge of the world’s economic health.

ArcelorMittal said demand was likely to increase this year for steel in machinery and construction amid solid expansion in the United States and Europe, while Brazil, another of its large markets, had pulled clear of a two-year recession.

The spread between the price of steel and its raw materials was also healthy, the company said.

“The outlook for 2018 has strengthened as the year has progressed, with the combination of growing demand and supply-side reform driving higher capacity utilisation rates and healthy steel spreads globally,” Chief Executive Lakshmi Mittal said in a statement.

First-quarter core profit (Ebitda), the figure most closely watched by analysts, rose 13 per cent year-on-year to $2.51 billion, above the average $2.33 billion expected in a Reuters poll of 10 analysts.

ArcelorMittal shares matched a four-year high of 30.76 euros and were up 2.2 per cent at €30.22 at 0820 GMT, making them among the strongest performers in the FTSEurofirst index of leading European shares.

Commerzbank analyst Ingo Martin Schachel said the results were strong at every level and mainly linked to higher profit margins, with plants running at full capacity after capacity reduction in Europe and North America and protective trade measures already in place.

“The first quarter was better than expected and the market backdrop for the second and third quarters is better than we imagined at the start of the year. It’s improving almost on a week-by-week basis,” he said.

Cheap imports

ArcelorMittal said its average steel selling price was 18.2 per cent higher than in the first quarter of 2017, with shipments up 1.4 per cent. For iron ore, of which it mines more than 50 million tonnes a year, shipments rose 5.5 per cent, while prices were down 13.1 per cent.

The firm has been a vocal supporter of trade measures against cheap imports into both the United States and the European Union, where it has the bulk of its operations.

“Comprehensive solution for unfairly trade imports across geographies still required,” ArcelorMittal said in an overview of EU and US measures, including the 25 per cent import tariffs imposed since March 23 by US. President Donald Trump, with certain temporary exemptions, such as for EU steel.

The principal target of such measures has been China, the world’s largest consumer and producer of steel and a key gauge for the global industry, even though ArcelorMittal itself has no direct exposure to the Chinese market.

Chinese steel exports declined at the start of the year as local demand has grown and the state has reined its domestic steel capacity to curb stifling smog. However, they jumped in April despite the US tariffs.