ArcelorMittal 2Q13 Earnings Call Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“My opening point would be that while the second quarter market trends were not favorable, the outlook today is better than it was a couple of months back.”

“we continue to fund our mining growth projects. We are making progress on our plan to take iron ore production capacity from our own mines from 56 million tonnes in 2012 up to 84 million tonnes in 2015.”

“In the Eurozone, leading indicators confirm the beginning of a slow turnaround in Europe. For the first time in 2 years in the Eurozone manufacturing, EMI is over 50. This points to our stabilization and underlying steel demand in Europe and the prospects to some slow improvement, but for very low levels. Although sales hit a 20-year low in June and all major markets declined except U.K., we remain cautious at high unemployment, and ongoing vertical uncertainties will weigh out growth”

“While manufacturing has slowed, the whole steel-intensive segments have continued to grow relatively strongly during first half ’13. There’s a robust growth in auto production, and infrastructure investment continues to benefit from previous stimulus measures. Housing starts have also begun to pick up recently. Therefore, despite high steel production level during the second quarter, inventories at mills have been reduced so that the prospects for efforts and [ph] demand in the second half are better than previously expected.”

“we’re within 5 points of the precrisis consumption level. We actually see consumption in the flat world market, at least being a bit lower in 2013 than in 2012. But I think that’s also an inventory effect, and of course, low inventories, which we’re seeing certainly in the distribution sector now. We will support some upside and pricing, if markets tighten it out. And we’ve seen that over the last 6 to 8 weeks in the U.S.”

“We have increased our consumption rate in China, a growth by — from 4.25% to 5.8%. And what happened in the first half — because if you want, we could also see from the raw material price, specifically iron ore price, that everyone was expecting that the iron ore prices would drop in the second half, so there has been also destocking in the first half of this year. But since the demand continued to grow and there had been a strong production, we are seeing that the iron ore prices have not dropped as much as everyone was expecting and still it is moving around $130, $128, and — which means that now, there will be some restocking, and though the second half, we believe that the market will slow down, but iron ore prices will stay around $115 to $120 to $130. And they could be slowed down over the first half, but it’s still the average growth will be about 5.8%.”

” have to tell you that in South Africa, the third quarter is winter, it’s a high month of electricity. So we do have somewhat higher cost.”

“automotive, I think second quarter marked a 20-year low. We’re not seeing a change in the order book. We are seeing a stronger order book in the third quarter, which I talked about earlier, but that’s not coming necessarily from the automotive side. It’s just a general market environment”