Andy Jones

Andy Jones asked about ArcelorMittal's European CO2 emissions for 2025, how they compare to free allocation levels, and the expected change in free allocation for 2026. He also inquired about the interpretation of a White House proclamation regarding potential tariff carve-outs for Canadian auto-grade steel.

Answer

CFO Genuino Christino explained that most European players are short on CO2 allowances, with a rule of thumb of paying for about 20% of production, and does not expect meaningful loss of free emissions due to operation levels in 2026, but noted gradual reductions with CBAM and benchmark revisions. He stated that negotiations regarding Canadian auto-grade steel tariffs are currently suspended, with hope for resumption and an agreement.

Andy Jones from UBS asked about ArcelorMittal's European CO2 emissions for 2025 compared to free allocation levels, the expected change in free allocation for 2026, and if any assets emit less than their free allocations. He also inquired about the interpretation of a White House proclamation regarding potential tariff reductions on Canadian auto-grade steel.

Answer

Genuino Christino (CFO) explained that most European players are short on CO2 allowances, with a rule of thumb of paying for about 20% of production. He noted a 2% reduction in ETS free allowances for 2026 and gradual reductions with CBAM, emphasizing that CBAM aims to create a level playing field. Regarding Canadian tariffs, Mr. Christino stated that negotiations are currently suspended and he had no further comment.

Andy Jones from UBS Group asked about the fabrication segment's ability to pass on higher steel costs, requested specific utilization metrics for the Sinton mill, and inquired what the aluminum project's profitability would be at current spot prices.

Answer

EVP & CFO Theresa Wagler stated that while substrate costs are a factor, volume is the primary driver of fabrication profitability. She did not provide specific Sinton metrics but pointed to coated volume trends as an indicator. She declined to provide a spot-based profitability forecast for the aluminum project, reiterating the company's focus on through-cycle returns.

Andy Jones from UBS Group inquired about the fabrication business's ability to pass on higher costs, sought specifics on Sinton's Q2 utilization, and asked what the aluminum business's EBITDA would be at current spot prices.

Answer

CFO Theresa Wagler noted that while substrate costs rise, the main driver of fabrication profitability is higher volume, which significantly compresses costs. She did not provide specific Q2 metrics for Sinton but pointed to lower overall coated volumes as an indicator of growth potential. She declined to provide a spot-based EBITDA for the aluminum business, reiterating the company's focus on its through-cycle guidance of $650-700 million.

Andy Jones from UBS Group AG asked if the fabrication business expects to pass on higher substrate costs through pricing, sought specifics on Sinton's Q2 utilization and value-add mix, and inquired what the aluminum business's profitability would look like at current spot prices.

Answer

EVP & CFO Theresa Wagler confirmed that higher substrate costs in fabrication will be passed on but emphasized that increased volume is the primary driver of profitability. She did not provide specific Sinton metrics. Regarding the aluminum business, she declined to provide a spot-based profitability forecast, reiterating the company's focus on its through-cycle guidance of $650-$700 million.

Andy Jones from UBS Group questioned if the fabrication business could pass on higher substrate costs through pricing. He also sought details on Sinton's Q2 utilization and value-add mix, and asked what the aluminum business's EBITDA could be at current spot prices.

Answer

EVP & CFO Theresa Wagler noted that while substrate costs will rise, the primary driver for fabrication profitability is volume, which significantly compresses costs, but did not rule out price increases. She declined to give specific Sinton metrics but pointed to overall coated volume trends as an indicator of room for growth. She also reiterated the through-cycle EBITDA guidance of $650-700M for aluminum, declining to provide a spot-based profitability figure.

Andy Jones from UBS Group asked about the fabrication business's ability to pass on higher substrate costs. He also requested figures for Sinton's Q2 utilization and value-add mix, and what the aluminum business's EBITDA would be at current spot prices.

Answer

EVP & CFO Theresa Wagler responded that while substrate costs will rise, the primary driver of improved fabrication profitability is volume, which provides significant cost compression. She did not provide specific metrics for Sinton but reiterated the company will stick to its $650-700 million through-cycle EBITDA forecast for the aluminum business rather than provide a spot-based figure.