Bastian Synagowitz

Bastian Synagowitz asked about the potential for further consolidation in the European steel market, given its fragmentation, and whether ArcelorMittal intends to play a role in future consolidation efforts. He also sought ArcelorMittal's view on the treatment of Russian semi-finished products, particularly slabs, within the planned European Trade Defense Instruments (TDI) and the likelihood of new measures.

Answer

CEO Aditya Mittal stated that ArcelorMittal is comfortable with its current European footprint, possessing latent capacity for growth at minimal capital costs, which provides economies of scale. He indicated no significant benefits from further consolidation at this time but would update if circumstances change. Regarding Russian material, Aditya Mittal clarified that slabs are not currently part of the Tariff-Rate Quota (TRQ). He noted that while the European Parliament has published a position paper demanding no Russian slabs in the European market, this has not yet been adopted by the council or commission, and the future policy remains to be seen.

Bastian Synagowitz asked if ArcelorMittal sees further scope and need for consolidation in the fragmented European steel market, and if the company intends to play a role in such consolidation. He also inquired about ArcelorMittal's view on the European stance regarding Russian material, specifically how semi-finished products might be treated under planned trade defense instruments (TDI) and the likelihood of new measures.

Answer

CEO Aditya Mittal stated that ArcelorMittal is comfortable with its current European footprint, possessing latent capacity for growth at minimal capital costs, which provides economies of scale and fixed cost absorption. He indicated that the company does not see significant benefits from further consolidation at this time. Regarding Russian material, Mr. Mittal clarified that steel slabs are not currently part of the Tariff-Rate Quota (TRQ). He noted that while the European Parliament has published a position paper demanding no Russian slabs, this has not yet been adopted as policy by the council or commission, and the timeline for such enactment remains uncertain.

Bastian Synagowitz asked about the European capacity landscape's ability to absorb market share from reduced imports, whether idle capacity restarts would be needed, and if the policy impact would be more on volume or price. He also inquired about Dofasco's profitability and the Hazira expansion's progress.

Answer

CFO Genuino Christino and Head of Investor Relations Daniel Fairclough explained that Europe's low capacity utilization allows for market share absorption, potentially requiring some idle capacity restarts with associated costs. They emphasized that both volume and price leverage would contribute to the industry covering its cost of capital. Genuino Christino confirmed Dofasco remains very profitable and that the Hazira expansion projects are on track for commissioning finishing lines this year/early next and upstream completion in 2026.

Bastian Synagowitz asked about recent project delays and the strategy for the company's Brazilian slab capacity, given the increasing self-sufficiency of the U.S. market.

Answer

EVP & CFO Genuino Christino clarified that the project delays in France and Mexico were minor and did not significantly impact the overall EBITDA growth outlook. Regarding Brazil, he explained that the assets are well-positioned to serve growing domestic demand and that their high-quality slabs will always be marketable globally.

Bastian Synagowitz of Deutsche Bank asked about the reasons for recent project delays, the potential for further shifts, and the long-term strategy for the company's Brazilian slab capacity in light of growing U.S. production.

Answer

EVP & CFO Genuino Christino explained that minor project delays in France and Mexico were due to permitting and site-specific issues and do not significantly alter the company's growth pipeline. He stated that for its Brazilian slab assets, the focus is on serving Brazil's growing domestic market and leveraging the high quality of the slabs for the global export market, ensuring their continued value.

Bastian Synagowitz of Deutsche Bank asked about the Calvert EAF startup, seeking a production target for the year and details on slab supply from Brazil, including where tariff costs are booked. He also inquired about the ramp-up timeline for the new EAF.

Answer

Group CFO Genuino Christino explained that the EAF commissioning is underway and timely given the trade environment. He expects a full 12-month ramp-up to reach full run rate, with the first slab anticipated by the end of Q2. He clarified that tariff costs for slabs imported from Brazil will be booked at the Calvert level, not in the Brazilian segment, and that higher U.S. prices will more than offset this cost.

Bastian Synagowitz asked about the drivers behind Europe's resilient margins despite falling spreads and questioned if the company was considering further footprint changes like restructuring or M&A.

Answer

CFO Genuino Christino attributed the strong European performance to excellent cost control, improved production, and better fixed cost management. CEO Aditya Mittal added that future footprint actions in Europe depend on policy outcomes. If supportive action is taken on trade, energy, and CBAM, major restructuring will be limited. If not, the company will act to restore competitiveness as it has in the past.

Bastian Synagowitz asked for an early indication of decarbonization-related CapEx for 2025, questioning whether it would see a significant step-up to a range of $0.5 billion to over $1 billion as project pace accelerates.

Answer

Executive Daniel Fairclough responded that the current focus remains on engineering studies and securing government support for decarbonization projects. He stated that he does not expect a material step-up in decarbonization CapEx in 2025 compared to the current year's level of $300-$400 million, which is primarily for these studies.

Bastian Synagowitz asked about the financial impact of the new hot rolling agreement in the Americas, whether Americas supply was used to honor European commitments, the outlook for the Americas division to reach its $170 million midterm EBITDA target, and details on the CapEx budget, including the CRONIMET investment and the full-year free cash flow outlook.

Answer

CFO Pia Aaltonen-Forsell stated that Americas supply was not used for European customers and that the impact of the new hot rolling agreement is reflected in the revised sustainable EBITDA target of $170 million, down from $200 million. She noted that reaching this run rate depends on macro factors and market recovery. She clarified that the CRONIMET investment is included within the guided EUR 220 million CapEx for the year. Regarding cash flow, she expects a modest working capital investment in H2 and stated that achieving positive free cash flow for the year is possible but depends heavily on market recovery.

Asked about the maintenance schedule for the remainder of 2024 and the CapEx outlook, specifically if the budget could increase from the EUR 200 million level before 2025.

Answer

The company indicated that some maintenance is likely in Q3 or Q4 2024 but will provide guidance later. They confirmed their commitment to the EUR 200 million CapEx budget for 2024. Any more significant investment decisions are pending the assessment of the U.S. cold rolling opportunity, which is expected within a year.