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ArcelorMittal (MT - Free Report) recently announced the acquisition of Companhia Siderurgica do Pecem (“CSP”) in Brazil for an enterprise value of $2.2 billion. CSP operates a 3 million ton capacity blast furnace and its facility, located in Ceara in northeast Brazil, was commissioned in 2016.
The acquisition brings the opportunity for further expansions, including the potential to boost primary steelmaking capacity (including direct reduced iron) and rolling and finishing capacity. Moreover, it offers significant operational and financial synergies. Given its location, CSP also offers an opportunity to establish a new center for producing low-carbon steel, capitalizing on the state of Ceara's desire to establish a low-cost, green hydrogen hub in Pecem.
This gives ArcelorMittal a choice to sell either inside the group or to the North and South American markets while also adding capacity for high-quality, cost-competitive slabs. The company also has the choice of adding finishing facilities and expanding its capacity in the long run. With the investments in renewable energy in the state of Ceara, there is a clear road to decarbonizing the asset.
On its fourth-quarter call, the company noted that it is seeing apparent demand conditions improving as the current destocking phase reaches maturity.
For 2023, the company anticipates a 2-3% year-over-year recovery in overall steel consumption worldwide, excluding China. Moreover, MT forecasts a 5% year-over-year increase in steel shipments in 2023. Although it is anticipated that real consumption growth in the United States will continue to be lackluster, it is believed that the projected cessation of destocking would bring about a rise of 1.5-3.5% in apparent demand in 2023. In Europe this year, it anticipates a slight fall in real demand. Yet it projects a 0.5-2.5% recovery in apparent demand in 2023.
As COVID-19 restrictions ended in 2023, ArcelorMittal predicts a significant rebound in economic growth in China. Considering the continued weakness in real estate, it forecasts steel consumption to stabilize in 2023 (+1% to -1%), with potential growth relying on China government's infrastructure stimulus.
ATI has a projected earnings growth rate of 8.5% for the current year. The Zacks Consensus Estimate for the firm’s current year earnings has been revised 4.4% upward in the past 60 days. Its earnings beat the Zacks Consensus Estimate, the average being 32.4%. ATI has rallied 64.4% in a year. The company has a Zacks Rank #2 (Buy).
CALM has a projected earnings growth rate of 515.8% for the current year. The Zacks Consensus Estimate for the firm’s current-year earnings has been constant in the past 60 days. Its earnings beat the Zacks Consensus Estimate, the average being 15.3%. CALM has rallied roughly 4.7% in a year. The company flaunts a Zacks Rank #1.
LIN has a projected earnings growth rate of 8.1% for the current year. The Zacks Consensus Estimate for the firm’s current-year earnings has been revised 5.5% upward in the past 60 days. Its earnings beat the Zacks Consensus Estimate, the average being 5.9%. LIN has rallied roughly 11.1% in a year. The company has a Zacks Rank #2.
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ArcelorMittal (MT) Acquires Brazil-based Slab Producer CSP
ArcelorMittal (MT - Free Report) recently announced the acquisition of Companhia Siderurgica do Pecem (“CSP”) in Brazil for an enterprise value of $2.2 billion. CSP operates a 3 million ton capacity blast furnace and its facility, located in Ceara in northeast Brazil, was commissioned in 2016.
The acquisition brings the opportunity for further expansions, including the potential to boost primary steelmaking capacity (including direct reduced iron) and rolling and finishing capacity. Moreover, it offers significant operational and financial synergies. Given its location, CSP also offers an opportunity to establish a new center for producing low-carbon steel, capitalizing on the state of Ceara's desire to establish a low-cost, green hydrogen hub in Pecem.
This gives ArcelorMittal a choice to sell either inside the group or to the North and South American markets while also adding capacity for high-quality, cost-competitive slabs. The company also has the choice of adding finishing facilities and expanding its capacity in the long run. With the investments in renewable energy in the state of Ceara, there is a clear road to decarbonizing the asset.
On its fourth-quarter call, the company noted that it is seeing apparent demand conditions improving as the current destocking phase reaches maturity.
For 2023, the company anticipates a 2-3% year-over-year recovery in overall steel consumption worldwide, excluding China. Moreover, MT forecasts a 5% year-over-year increase in steel shipments in 2023. Although it is anticipated that real consumption growth in the United States will continue to be lackluster, it is believed that the projected cessation of destocking would bring about a rise of 1.5-3.5% in apparent demand in 2023. In Europe this year, it anticipates a slight fall in real demand. Yet it projects a 0.5-2.5% recovery in apparent demand in 2023.
As COVID-19 restrictions ended in 2023, ArcelorMittal predicts a significant rebound in economic growth in China. Considering the continued weakness in real estate, it forecasts steel consumption to stabilize in 2023 (+1% to -1%), with potential growth relying on China government's infrastructure stimulus.
ArcelorMittal Price and Consensus
ArcelorMittal price-consensus-chart | ArcelorMittal Quote
Price Performance
MT’s shares are down 1.3% over the trailing 12-month period against the industry’s rise of 9.8%.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
MT currently sports a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks worth considering in the basic materials space include ATI Inc. (ATI - Free Report) , Cal-Maine Foods (CALM - Free Report) and Linde plc (LIN - Free Report) . You can see the complete list of today’s Zacks #1 Rank stocks here.
ATI has a projected earnings growth rate of 8.5% for the current year. The Zacks Consensus Estimate for the firm’s current year earnings has been revised 4.4% upward in the past 60 days. Its earnings beat the Zacks Consensus Estimate, the average being 32.4%. ATI has rallied 64.4% in a year. The company has a Zacks Rank #2 (Buy).
CALM has a projected earnings growth rate of 515.8% for the current year. The Zacks Consensus Estimate for the firm’s current-year earnings has been constant in the past 60 days. Its earnings beat the Zacks Consensus Estimate, the average being 15.3%. CALM has rallied roughly 4.7% in a year. The company flaunts a Zacks Rank #1.
LIN has a projected earnings growth rate of 8.1% for the current year. The Zacks Consensus Estimate for the firm’s current-year earnings has been revised 5.5% upward in the past 60 days. Its earnings beat the Zacks Consensus Estimate, the average being 5.9%. LIN has rallied roughly 11.1% in a year. The company has a Zacks Rank #2.