ArcelorMittal CFO Says China's Steel Industry Losses Unsustainable--Update
November 06 2015 - 3:54AM
Dow Jones News
By Alex MacDonald
LONDON--The losses that Chinese steel makers are racking up due
to the continued sale of cheap steel at unsustainably low prices
will likely impact the country's economy if the issue isn't
resolved soon, ArcelorMittal's (MT) chief financial officer said
Friday.
It is also affecting steel markets worldwide as Chinese steel
makers export record amounts of steel to offset weaker demand at
home, Aditya Mittal told reporters following ArcelorMittal's
third-quarter results.
In the first nine months of the year, Chinese steel producers
have accumulated $8 billion in losses, most of them in the third
quarter, Mr. Mittal noted, citing figures from the China's steel
association.
"Eventually...these losses will mount up, and are mounting, and
if no solution is found, clearly that will have other consequences
for the Chinese economy," said Mr. Mittal, CFO of the world's
largest steel maker.
He said that China's cheap steel prices are "just not
sustainable," with prices continuing to fall in the fourth quarter
compared with the third. "That problem is being amplified and
exported onto our market[s]," Mr. Mittal noted.
China exported 110 million tons of steel in the first nine
months of this year, up 17% from 94 million tons in the same period
a year before, according to Mr. Mittal. In September alone, Chinese
steel exports hit a record monthly rate equivalent to 122 million
tons on an annualized basis.
"These losses cannot normally exist in market-based steel
economies and so we are focused on ensuring that no further dumping
occurs and no further subsidies are granted to the Chinese steel
industry."
He said that Chinese steel imports into the U.S. are starting to
decline, an indication that U.S. steel trade cases are having a
positive effect. Elsewhere, though, Chinese steel imports are
increasing. In the European Union, Chinese exports rose 40% in the
first nine months of the year compared with the same period a year
before.
-Write to Alex MacDonald at alex.macdonald@wsj.com
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(END) Dow Jones Newswires
November 06, 2015 04:39 ET (09:39 GMT)
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