An ArcelorMittal steel factory in Zenica, Bosnia and Herzegovina. Picture: REUTERS
An ArcelorMittal steel factory in Zenica, Bosnia and Herzegovina. Picture: REUTERS

Brussels — ArcelorMittal, the world’s largest steel maker, cut its demand forecast for its key markets on Thursday and said it was facing the twin challenges of lower steel prices and reduced consumption in Europe.

The Luxembourg-based company, which makes about 6% of the world's steel, announced on Monday that it was temporarily reducing European steel output by three-million tonnes on an annualised basis due to weak demand and increased imports.

"Our first-quarter results reflect the challenging operating environment the industry has faced in recent months." CEO Lakshmi Mittal said in a statement.

The company reported a first-quarter core profit (EBITDA) of $1.65bn, a 34% decline from a year earlier and below the company-compiled consensus of $1.68bn.

Profitability, Mittal said, had been hit by lower steel pricing due to weaker economic activity and global overcapacity, as well as from rising raw materials costs.

ArcelorMittal increased its growth forecast for 2019 global apparent steel consumption, which also reflects changes in inventory levels, to 1.0%-1.5% from its February guidance of 0.5%-1.0%.

However, the major change was its more bullish view of China, the world's largest steel consumer and producer, but where ArcelorMittal almost has no business.

Nearly half of ArcelorMittal's steel is produced in Europe, with just under 40% in the Americas.

Excluding China, growth in 2019 would be 1.0%-2.0%, down a percentage point from ArcelorMittal's earlier view. It now sees contraction in Europe and has a more moderate view of expansion in Brazil.

It left its growth forecasts for the US and the former countries of the Soviet Union unchanged.