Wednesday, May 14, 2008

Rising demand boosts European steel giants

Europe's two leading steel groups today shrugged off the impact of soaring commodity prices and the west's economic slowdown, with ArcelorMittal posting a 16% leap in first-quarter pre-tax profits to $5bn (£2.57bn) and ThyssenKrupp a jump from €572m (£453m) to €742m.

ArcelorMittal, the world's biggest steelmaker, said it was benefiting from a "healthy pricing benefit" as it announced further carbon steel price rises of around 20% in July on the back of a 7% jump in February.

The Luxembourg-based group said shipments rose 8% compared with a year ago to 29.2m tonnes, with revenues up 22% - in dollar terms - to $29.8bn. It said it had already achieved the promised $1.6bn in synergies from the hotly contested merger between Arcelor and Mittal.

Lakshmi Mittal, chief executive and newly elected chairman, said: "Despite global economic uncertainties, we are continuing to see strong demand for steel and a healthy pricing dynamic.

"This global demand is supported by the continued industrialisation of a number of key, emerging economies and ArcelorMittal is well positioned to continue to take advantage of these dynamics."

He said pre-tax profits in the second quarter would exceed $6.5bn. Ekkehard Schulz, ThyssenKrupp chief executive, meanwhile, forecast annual pre-tax profits of more than €3bn on sales of €53bn.

I am not so sure what the price increases will be doing to the profitability of their customers in Europe

Guardian UK

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