Emerging markets and mining growth

Transcription

1 Emerging markets and mining growth Aditya Mittal CFO and member of Group Management Board Plant Tour Brazil March 21

2 Disclaimer Forward-Looking Statements This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements may be identified by the words believe, expect, anticipate, target or similar expressions. Although ArcelorMittal s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ArcelorMittal s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg Stock Market Authority for the Financial Markets (Commission de Surveillance du Secteur Financier) and the United States Securities and Exchange Commission (the SEC ) made or to be made by ArcelorMittal, including ArcelorMittal s Annual Report on Form 2-F for the year ended December 31, 29 filed with the SEC. ArcelorMittal undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise. 1

3 Agenda Crisis and slow recovery in the developed world China and emerging markets leading global market growth Raw materials challenge Industrial recovery Emerging markets and mining growth strategy 2

4 Crisis and slow recovery in the developed world 3

5 29 marked the worst crisis in the developed world since the 3 s US crude steel production and capacity utilization during crisis Europe** crude steel production and capacity utilization during crisis % 1932 vs vs vs vs vs vs vs 27 1% % 1932 vs vs vs vs vs vs 27 1% -2% 8% -2% 8% -4% 6% -4% 6% -6% 4% -6% 4% Steel production decline (LH) Steel production decline (LH) -8% Annual capacity utilisation* (RH) 2% -8% Annual capacity utilisation* (RH) 2% However, recovery started in the second half of 29 *estimates at crisis trough **West Europe Sources: World Steel Association (WSA) and ArcelorMittal 4

6 Real demand is improving slowly and progressively US steel market in million tonnes EU-15 steel market in million tonnes Sources: WSA and ArcelorMittal e -25% Medium-term recovery expected to be modest in Europe and the US e 5-28%

7 China and emerging markets leading global market growth 6

8 The world steel market has shifted Steel market structure (Mt) Steel consumption per capita in 28 (kg) Developed Emerging China 29% 21% % 35% 56% 45% 44% 44% 34% 39% 5% 11% India 95 Emerging World 319 China 462 Developed World* Europe, US and Japan combined represented less than half of China in 29 *US, Canada, EU-15 and Japan Sources: WSA and ArcelorMittal estimates 7

9 China demand growth to soften but remain solid Steel consumption per capita in 29e (kg) Chinese steel apparent demand (mt) 7 6 Western China (21 kg) Development and growth potential Central China (285 kg) Coastal China (615kg) Population migration Steel capacity utilization in China 1% 95% 9% 85% 8% 75% 7% P 212 P Jan-1 Jan-2 Jan-3 Jan-4 Jan-5 Jan-6 Jan-7 Jan-8 Jan-9 Jan-1 Steel demand expected to continue to be supported by strong fundamentals Sources: WSA, SBB and ArcelorMittal estimates 8

10 South American steel demand growing again at a solid rate Steel consumption per capita in 28 (kg/year) South America steel consumption (Mt) Other South America Venezuela Argentina Brazil United States P 212P South America is expected to continue to increase its steel consumption per capita Sources: WSA and ArcelorMittal estimates 9

11 Middle East demand supported by high oil prices and demographics Steel consumption per capita in 28 (kg/year) Middle East steel consumption (Mt) Egypt Middle East Turkey Developed World* P 212P Strong demand expected to continue in Middle East region *US, Canada, EU-15 and Japan Sources: WSA and ArcelorMittal estimates. 1

12 Indian steel market has not been impacted by the crisis Apparent steel use per capita in 28 (kg/year) India finished steel demand (Mt) India Brazil South Africa Russia Middle East China P 212P For the first time in history the Indian steel market was larger than the US market in 29 Sources: WSA and ArcelorMittal estimates. 11

13 World steel demand to rapidly return to pre-crisis levels World steel demand (Mt) World steel capacity utilization (%) Sources: WSA and ArcelorMittal estimates The credit crisis e 211e 212e Yet world steel market not expected to fully normalise in 21 15% 1% 95% 9% 85% 8% 75% 7% 65% 6% De c- De c- 1 Dec- 2 De c- 3 Dec- 4 De c- 5 Dec- 6 De c- 7 De c- 8 De c- 9 12

14 Raw materials challenge 13

15 Chinese mining production not able to satisfy domestic steel demand growth Chinese iron ore production (mt Fe 63% equivalent) China iron ore imports (mt) Despite crisis, iron ore imports into China have increased by 41% in 29 creating significant market tightness Sources: AME, WSA, ArcelorMittal 14

16 Strong pressure on raw materials despite weak steel demand developed world Iron ore benchmark price (USD/Fe unit) 16 Analyst estimates* Met Coal benchmark price (USD/t) Quaterly price signed 2Q 2Q 1 2Q 2 2Q 3 2Q 4 2Q 5 2Q 6 2Q 7 2Q 8 2Q 9 2Q 1 2Q 2Q 1 2Q 2 2Q 3 2Q 4 2Q 5 2Q 6 2Q 7 2Q 8 2Q 9 2Q 1 Raw material prices expected to remain high as China and emerging markets continue to grow and the developed world recover *Goldman Sachs Source: SBB 15

17 Price-cost squeeze Iron ore spot price and steel price in China Coke price and steel price in China Dec 4 Dec 5 Dec 6 Dec 7 Dec 8 Dec 9 Dec 4 Dec 5 Dec 6 Dec 7 Dec 8 Dec 9 Indian Iron Ore 63% Fe dry - China import CFR (USD/t) - LHS HRC - China domestic Shanghai (USD/t) - RHS Coke China export FOB (USD/t) - LHS HRC - China domestic Shanghai (USD/t) - RHS Past 5 years correlation between raw material costs and steel prices Source: SBB 16

18 Industrial recovery 17

19 Steel production expected to cautiously increase ArcelorMittal crude steel production (million tonnes) ArcelorMittal crude steel production versus European and North American crude steel production (base 1) Q 6 2Q 6 3Q 6 4Q 6 1Q 7 2Q 7 3Q 7 4Q 7 1Q 8 2Q 8 3Q 8 4Q 8 1Q 9 2Q 9 3Q 9 4Q 9 1Q Q 6 2Q 6 3Q 6 4Q 6 1Q 7 2Q 7 3Q 7 4Q 7 1Q 8 2Q 8 3Q 8 4Q 8 1Q 9 2Q 9 3Q 9 4Q 9 Realised crude steel production Estimated crude steel production Europe & North America production (base 1) ArcelorMittal production (base 1) Capacity utilization expected to continue to increase gradually and market share to recover slowly 18

20 Significant progress in sustainable SG&A and fixed cost reduction Management gains progress (USD billion annualized) Fixed costs annualized (in billion USD) Target by end of 21 Target by end of USD2.7bn of sustainable management gains USD5bn of temporary fixed cost saving* Captured at 31/12/8 Captured at 31/3/9 Captured at 3/6/9 Captured at 3/9/9 Captured at 31/12/ Q4 28 Q1 29 Q2 29 Q3 29 Q4 29 On track to achieve USD 5 billion of sustainable management gains by end of 212 * USD 4.3 billion in constant US Dollar 19

21 Stronger balance sheet allows for cautious growth Net debt over average EBITDA* Gearing 2. 55% 5% % % 35% Target range 3% Target range 25%. 2% Net Debt / average EBITDA between.5x and 1.8x Gearing to be between 25% and 4% Net debt reduced by USD 13.7 billion since the financial crisis began** * Based on yearly average EBITDA since January 1, 24 ** Since September 3, Q 26 4Q 26 1Q 27 2Q 27 3Q 27 4Q 27 1Q 28 2Q 28 3Q 28 4Q 28 1Q 29 2Q 29 3Q 29 4Q 29 3Q 26 4Q 26 1Q 27 2Q 27 3Q 27 4Q 27 1Q 28 2Q 28 3Q 28 4Q 28 1Q 29 2Q 29 3Q 29 4Q 29

22 Emerging markets and mining growth strategy 21

23 Cautiously reinitiating growth projects ArcelorMittal sales in value breakdown in 29 ArcelorMittal CAPEX (in billion USD) Export to emerging 16% EU-15 38% Emerging domestic 23% US & Canada 23% e Maintenance capex Grow th capex CAPEX budget of USD 4. billion for 21 22

24 Targeting growth in emerging markets ArcelorMittal key emerging markets currently targeted for growth ArcelorMittal key CAPEX projects Flat Carbon America (Brazil) Vega do Sul increase of HDG production of 35, t (H1 21) Long carbon (Brazil) Monlevade expansion by 1.15mt (212) Saudi Arabia JV 6,t of seamless tubes (212) Iraq JV 25,t of rebars (End 211) China JV Automotive products and Electrical steel (212) Indian Greenfield projects Main growth projects located in South America, Middle-East and Asia 23

25 An ambitious mining growth plan ArcelorMittal iron ore self-sufficiency Key mining assets and projects 8% +/- 75% 7% 6% 5% 4% 3% 2% 45% 46% 47% 64% 1% % Target 215 Iron ore Coal Targeting 1mt of iron ore production by 215 from greenfied projects and brownfield expansion 24

26 Q&A 25