ArcelorMittal CFO Calls for 'More Comprehensive' Fight Against China Exports
November 08 2016 - 5:56AM
Dow Jones News
By Alex MacDonald
LONDON--ArcelorMittal (MT) wants national governments and
international governments to do more to counteract sustained
Chinese steel exports, according to the chief financial Officer of
the world's largest steelmaker by shipments.
Aditya Mittal told reporters that Chinese steel exports remain
at very high levels despite signs of better-than-expected steel
demand growth in the country, the world's largest consumer and
producer of the metal used in skyscrapers, bridges and fridges.
Mr. Mittal called upon countries to find ways to make sure that
China isn't able to circumvent steel tariffs by shipping steel
through other countries. "We see that [Chinese steelmakers are]
using Vietnam to continue to export steel into the United States.
We need a resolution to make Vietnam a part of these trade cases"
too, he said. "We need a comprehensive trade solution."
U.S. officials on Monday launched two new investigations into
whether Chinese steelmakers are shipping metal to the U.S. through
Vietnam to evade U.S. import tariffs.
Mr. Mittal also said tariffs need to be applied to more steel
products since China has demonstrated agility in tweaking
production to focus on steel products that don't have steel
tariffs.
Lastly, governments should consider raising existing tariffs
even more to make sure they remain relevant, given emerging trends
in Chinese steel production, he said.
For instance, China limited coking coal production to only 276
days a year, thereby spurring a surge in coking coal prices. It
also imposed a ban on coking coal exports. This resulted in cheaper
domestic coking coal prices for Chinese steelmakers than for
international steelmakers, he said.
Nevertheless, Mr. Mittal said he felt "comfortable" that his
company would be able to pass along the recent rise in coking coal
prices to customers, although it would likely impact its profit
margin in the fourth quarter as the steel industry adjusts to
higher production costs.
In ArcelorMittal's case, the company consumes about 35 million
tons of coking coal a year and produces about 6 million to 7
million tons from its mines annually. Mr. Mittal wouldn't comment
on whether current coking coal prices are unsustainable, a view
buttressed by coal producer BHP Billiton Ltd (BHP) last week. "What
we're focused on is passing on this cost increase to our end
markets. We did that by leading a price increase a few weeks ago,"
Mr. Mittal said.
He also noted that the company has pushed for a steel price rise
in the U.S. even as it warned of lower profitability at its U.S
operations in the current quarter due to lower steel prices in the
third quarter from the second quarter. "We have a lag effect in our
revenue... The orders we booked in the second quarter, some of that
gets shipped in the third quarter." The same applies to the third
and fourth quarters, he said.
Looking at the U.S. presidential elections, Mr. Mittal said both
U.S. presidential candidates, Hillary Clinton and Donald Trump,
would be good for buttressing North American steel demand.
"The good thing is that both candidates have talked about
[increasing] infrastructure spending and working on creating a fair
level playing field in terms of trade."
-Write to Alex MacDonald at alex.macdonald@wsj.com
(END) Dow Jones Newswires
November 08, 2016 05:41 ET (10:41 GMT)
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