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ArcelorMittal (MT) Inks Deal to Supply XCarb to General Motors

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ArcelorMittal (MT - Free Report) North America will supply XCarb recycled and renewably produced (RRP) steel to General Motors (GM - Free Report) . This deal will aid MT and GM’s goal to be carbon neutral as XCarb RRP is made with recycled content, which emits much less CO2 than other carbon steel available in North America. Shipments are expected to start in the second quarter of 2023.

XCarb RRP steel is produced using the Electric Arc Furnace (EAF) technique. It uses at least 70% scrap, with up to 90% scrap, and does not use carbon offsets to achieve lower carbon intensity. Its lower CO2 intensity has been objectively verified through an associated Life Cycle Analysis (LCA) that includes emissions from Scope 1, 2, and 3. In addition, the electricity used in the steelmaking process is derived from renewable sources.  

This is an excellent first step toward supplying steel with significantly fewer CO2 emissions to North American automobile manufacturers. ArcelorMittal, a worldwide steel industry leader, is developing smarter steels for people and the environment. XCarb RRP is one of the smartest steels available.

Shares of ArcelorMittal have lost 8.2% over the past year compared with industry’s rise of 13%.

Zacks Investment Research
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It recorded first-quarter 2023 profits of $1,096 million or $1.27 per share, down from $4,125 million or $4.27 in the year-ago quarter. Total sales fell around 16.3% year over year to $18,501 million in the quarter owing to lower average steel selling prices and reduced steel shipments. MT, however, noted demand conditions have improved once the destocking phase reached its maturity in the first quarter of 2023. Despite ongoing obstacles to real demand, the absence of further destocking is likely to lead to stronger apparent demand in 2023 compared to 2022.

The company anticipates world apparent steel consumption, excluding China, to rise 2-3% year over year in 2023. ArcelorMittal also expects its steel shipments to grow roughly 5% this year.

Zacks Rank & Key Picks

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

Better-ranked stocks to consider in the basic materials space include Koppers Holdings Inc. (KOP - Free Report) and Gold Fields Limited (GFI - Free Report) each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Koppers’ current-year earnings is currently pegged at $4.40, implying year-over-year growth of 6.3%. It has a trailing four-quarter earnings surprise of 13.64%, on average. KOP has gained 19.5% in a year.

The Zacks Consensus Estimate for Gold Fields’ current-year earnings has been revised 23.5% upward in the past 60 days. The consensus estimate for current-year earnings for GFI is currently pegged at $1.05, indicating year-over-year growth of 8.3%. The company’s shares have gained 67.9% in the past year.

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