(Bloomberg) -- ArcelorMittal SA expects global steel consumption to contract this year as Russia's invasion of Ukraine slows the economic rebound from the pandemic.
Demand for steel -- a key barometer for global economic growth -- will fall by as much as 1% this year, the company said in a statement Thursday. ArcelorMittal said before the war that it saw consumption steady or growing slightly in 2022.
“We are now anticipating apparent steel consumption to contract slightly this year compared with 2021,” Chief Executive Officer Aditya Mittal said in the statement. “Nevertheless, it is clear that the longer-term fundamental outlook for steel is positive.”
The gloomier outlook for steel consumption comes after the International Monetary Fund slashed its world growth forecast last month. Consumption in Ukraine and Russia will drop significantly, while demand in Europe will also be hit. Chinese demand will contract by the bottom end of the company's previous forecast as Covid-19 lockdowns curb economic output.
Read: IMF Cuts Growth Outlook on Russia Invasion, China Lockdowns
The biggest European steelmaker still posted a healthy first-quarter profit, with earnings before interest, taxes, depreciation and amortization of $5.08 billion, beating analyst expectations.
ArcelorMittal rose as much as 5% in Amsterdam trading, the biggest intraday gain in more than six weeks. The shares were 3.6% higher as of 9:14 a.m. local time, paring this year's drop to 1.1%.
Record steel prices have helped insulate the sector from the surging cost of energy and raw materials. Steel shipments fell 2.7% in the first quarter, largely due to the impact of the war in Ukraine, the company said. It has “temporarily suspended” a pellet plant project in the country.
ArcelorMittal said it's doubling its share buyback to $2 billion this year.
©2022 Bloomberg L.P.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
