Europe’s leading steelmakers delivered stronger-than-expected Q1 earnings but cautioned that rising global trade tensions, sluggish European prices, and ongoing market instability could dampen their full-year outlook.
ArcelorMittal reported a decline smaller than anticipated in its quarterly core profit, but the steel giant warned that trade disruptions could threaten its 2025 demand projections, especially in key markets like the U.S. and China, triggering a 5% share price drop.
“Heightened uncertainty around the terms of global trade is hurting business confidence and risks causing further economic disruption if not quickly resolved,” the CEO of the world’s number two steelmaker Aditya Mittal said, echoing concerns raised by Swedish rival SSAB.
SSAB also reported a similar drop in earnings on Tuesday, noting that its customer proximity and specialized product lines reduced the initial blow of new U.S. tariffs. However, the steelmaker cautioned of an uncertain Q2 outlook for its steel operations, which seemed unusual.
Luxembourg-based steel group Aperam’s result also came slightly above expectations on Wednesday. Aperam makes stainless and speciality steels and alloys, and operates mainly in the EU and Brazil, with limited exposure to the U.S. market. The company attributed this performance to increased European sales volumes and the added boost from integrating its U.S. operations.
The group warned that ongoing pricing pressures would continue to impact Q2 earnings, though it expects some recovery from the previous quarter’s results.
“Reliable projections for the remainder of the year are challenging in the current volatile environment,” group CEO Timoteo Di Maulo said.
According to Oddo-BHF analyst Maxime Kogge, Q2 could bring some relief with trade restrictions expected to lift prices, European players further scaling back their investments in China, with restructuring efforts bringing in added benefits.
However, the European steel sector is under pressure from soaring energy prices, cheap Chinese imports, and rising U.S. export tariffs, compounding the strain of an already oversaturated global market.
“Global steel excess capacity is expected to continue rising, (…) fuelled by cross-border investments by Chinese steel companies,” the Organisation for Economic Co-operation and Development stated in a report.
ArcelorMittal offered a mixed assessment of its Asian markets, with India expected to maintain strong demand, supported by a 12% safeguard India tariff on steel imports, mainly targeting Chinese suppliers, the report states. In China, however, the group expects low steel spreads as the margin between steel prices and production costs will continue to exist due to overcapacity.
ArcelorMittal stood by its 2025 capital expenditure plans, pointing to improved European steel spreads driven by the EU’s trade protections, policy support, and expected infrastructure investments in Germany, irrespective of their cautiousness.
Source: Reuters