ArcelorMittal lifts iron ore shipments as prices soar

Market: Metals
01/08/19

ArcelorMittal's mining division increased iron ore shipments by 6pc year on year in the second quarter, taking advantage of soaring iron ore prices.

Iron ore shipments totalled 15.5mn t in April-June, of which 9.9mn t was shipped at market prices. Overall January-June iron ore shipments came to 29.3mn t, up by 3pc year on year, of which 19.1mn t was shipped at market prices.

This year's iron ore price rally has pressured margins across ArcelorMittal's steel business, but the mining division has benefited significantly, with its January-June earnings before interest, taxation, depreciation and amortisation (ebitda) rising by 51.3pc year on year to $990mn. By comparison, the company's overall ebitda was down on the year by 42.6pc at $3.2bn.

Argus today assessed the ICX index for 62pc Fe fines at $116.55/dmt cfr Qingdao, up from $72/dmt at the start of 2019 and $66.50/dmt a year ago. The mining division continues to peg its free cash flow breakeven threshold at around $40/dmt cfr China for 62pc Fe fines.

ArcelorMittal produced 14.6mn t of iron ore in the second quarter, up from 14.1mn t in January-March, primarily thanks to a seasonal increase in output at its Canadian operations. Its Ukrainian operation also lifted output slightly, further helping to offset a dip in production in Liberia and Kazakhstan, while the Volcan mine in Mexico reached end of life in May.

ArcelorMittal's mining business joins several other companies boosting iron ore production in the first half of 2019, taking advantage of the global iron ore price rally, which was spurred by the fatal dam collapse at Vale's Brumandinho mine in late-January. This supply response is fuelling speculation over whether iron ore prices can sustain their recent multi-year highs, with many end-users describing plentiful availability of key iron ore products, including both fines and pellets.

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