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Steel giant ArcelorMittal (MT - Analyst Report) announced that it plans to restart an expansion project at its Monlevade and Juiz de Fora sites in Brazil.  The project expansion is expected to increase the annual production capacity from 3.75 million tons to 4.9 million tons.

Monlevade is expected to produce 1.05 million tons per year of coil on capital investment of $140 million. The expanded wire rod from Monlevade is expected to enhance supply of added value products mainly to the domestic construction and automotive industries.

On the other hand, Rebar capacity at Juiz de Fora will also be increased from 50,000 to 400,000 tons a year and the site’s melt shop will produce an extra 200,000 tons of billets per year using its new ladle and new sixth strand in the continuous caster.  Additional rebar at the Juiz de Fora site is expected to go into downstream cut and bend operations and to civil construction end users.

ArcelorMittal expects demand to resume in Brazil and, based on this, the company restarted its wire rod mill expansion. This $108 million project is expected to be completed in two phases with the first phase mainly aimed at downstream facilities while the upstream portion of the investment remains on hold. Project start-up is scheduled for 2015.

ArcelorMittal Monlevade produces for domestic and international markets and the Juiz de Fora site produces mainly for the domestic market.

Few weeks ago, ArcelorMittal released its second-quarter 2013 results. The company posted a net loss of $0.8 billion or 44 cents per share in the quarter compared with a net income of $1 billion or 66 cents per share a year ago. Barring one-time items (restructuring and impairment charges), loss was 32 cents per share. Analysts polled by Zacks were expecting earnings of 9 cents a share on average for the quarter. The results were impacted by lower pricing and weak demand.

Revenues declined 10.1% year over year to $20.2 billion in the reported quarter and missed the Zacks Consensus estimate of $20.7 billion. Sales increased 2.3% on a sequential basis due to higher steel shipment volumes. Shipments declined 1.8% year over year to 21.3 million metric tons in the quarter.

ArcelorMittal currently maintains a Zacks Rank #3 (Hold).

Other companies in the steel industry with favorable Zacks Rank are Nippon Steel & Sumitomo Metal Corporation (NSSMY), Ternium S.A. (TX - Snapshot Report) and Kobe Steel Ltd. (KBSTY). While Nippon Steel maintains a Zacks Rank #1 (Strong Buy), Kobe Steel and Ternium hold a Zacks Rank #2 (Buy).

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