The large industries tend to generate high revenues and shares in these areas therefore enable the opportunity to earn dividends or speculate directly on movements in these companies share prices in real time. However, to do so you first need to understand their activities to be able to detect movements in these share prices. This is what we offer you the opportunity to do regarding ArcelorMittal.
The ArcelorMittal group, which has just published its annual results for 2020, has also communicated its new cost reduction plan, which you can discover here in detail.
ArcelorMittal shares are considered as assets that present a significant risk of returns, notably since the major losses experienced in 2015 and after the increase in capital implemented in 2016. A technical analysis should therefore be at the heart of your strategies whatever the state of the markets.
As noted earlier, the profitability of this company is strongly exposed to the price of iron minerals and the economic and industrial growth of countries with emerging markets. We would therefore monitor closely the European steel protection procedures against the aggressive competition from China.
The ArcelorMittal Group implemented a plan a few years ago named ‘Action 2020’ which had the objective of reducing costs by 3 million dollars before 2020. The achievement of this objective has of course been closely followed.
The company’s profits are also closely followed by investors with a promising increase foreseen for the coming years.
Although the present competition to ArcelorMittal is fairly weak, even nonexistent in certain geographical areas, it is highly recommended to monitor certain outsiders from Asia in particular that could change the face of the international markets.
The French group ArcelorMittal is currently the world leader in the steel industry. The turnover it generates each year is therefore generated by different activities related to each industrial sector. Although the largest part of its revenue is from the sale of flat carbon steel, it also sells long carbon steel, tubular products and also offers services related to steel processing and distribution.
This group’s clients are companies in the automobile, home appliances, packaging and construction sectors.
Let us now discover the main competitors of the ArcelorMittal group with a presentation of the main players in this sector and some information about them.
This company, formerly known as Baosteel, is currently ArcelorMittal's biggest competitor. It is the largest steel manufacturer in China. The company's headquarters are located in the suburbs of the Baoshan district of Shanghai. The group currently employs over 35,000 people and is headed by Ai Baojun. It should be noted here that this company is a state-owned enterprise and in 2019 it became the world's largest steel manufacturer, overtaking ArcelorMittal.
Another direct competitor of ArcelorMittal is the German steel group officially created in 1999, ThyssenKrupp AG. The latter was formed by the merger of Friedrich Krupp AG Hoesch-Krupp and Thyssent AG. It owns and operates several subsidiaries worldwide but has two headquarters, one in Essen and one in Duisburg. In the past, its headquarters were located in Düsseldorf. Today, ThyssenKrupp employs more than 160,000 people and its activities are divided into several divisions with Steel Europe, Automotive Components with Component Technology, Elevators with Elevator Technology, Materials with Material Services, Industrial Solutions with Industrial Solutions and Marine Systems with Marine Systems.
Tata Steel Europe, formerly known as Corus Group, is a steel and aluminium production company. It is one of the subsidiaries of the Indian steel group Tata Steel and was formed by the merger of Koninklijke Hoogovens NV and British Steel plc in October 1999. The company changed its name to Tata Steel Europe in 2010.
Another competitor of ArcelorMittal is Salzgitter AG which consists of two companies with Reichwerke AG fur Berg and Huttenbetriebe AG which was founded in 1962. It was subsequently taken over by the Preussag AG group in 1989. The second company was re-founded in 1998 from Preussag Sthal AG when the purely steel activities of Preussag AG were dismantled and the company was subsequently converted to tourism. Salzgitter AG is now a German steel group with around 100 companies. The group is listed on the SDAX and employs over 25,000 people. It is also ranked 5th in Europe in the field of profiled beams and flat products and 1st worldwide in tube rolling.
Finally, the last major competitor of ArcelorMittal is the American group US Steel, formerly known as United Steel Corporation. It is a US-based steel producer with significant operations in Central Europe. The company was formed in 1901 through the merger of the Federal Steel Company and Andrew Carneige's steel mills.
The strategy of the ArcelorMittal Company against its competitors relies upon a strategy based on certain strategic partnerships including the following:
In 2014, ArcelorMittal was chosen by the TechnipFMC Group as sole partner for the supply of high resistance steel wire destined for the development of crude oil and offshore gas fields.
On the 10th February 2017 the metals company ArcelorMittal announced the creation of a joint venture with the Italian Cellino Group which would be named Steelcame. This would take over the assets of Solustil, a French subsidiary of the ArcelorMittal Group specialised in the processing of steel products.
Air Liquide and ArcelorMittal, worldwide leader in steel production, also signed two long term renewal contracts in 2017 for the supply of oxygen, azotes and argon from the production site of ArcelorMittal situated in the port industrial zones of Fos-en-Mer and Dunkirk in France. Air Liquide thereby strengthened its position at Gand, Belgium by signing a new long term supply contract with ArcelorMittal to support the growth in its requirements of industrial gasses. Within the framework of this new contract Air Liquide would increase its pipe network in the Benelux area.
In 2018, the ArcelorMittal Group also implemented a partnership with the Veolia Group and its subsidiary Veolia Industries Global Solutions relating to the creation of a joint venture which had the objective of modernising the energy production centre of Veolia in Fos-en-mer through the environmental improvement of this site by the optimisation of energy recovery from the steel production gases and a reduction in CO2 emissions.
The first thing we can note as an undeniable advantage of the ArcelorMittal Company of course relates to its position in its major activity sector. In fact the group is currently the leader in the metal industry sector worldwide and is alone responsible for 7% of the steel production on an international level. It also retains its position as world leader in mining operations, well in front of its competitors.
The markets where the ArcelorMittal group is most present are also advantages for this company from a strategic point of view. In fact, the group is notably present in the European market which offers the advantage of being protected by the anti-dumping regulations against steel originating from China. ArcelorMittal thereby enhances its reputation by holding 60% of the market share of steel sales in North America which is also a favoured market of the companies in this sector.
Over time, the ArcelorMittal Group has shown its ability to benefit from its experience and nowadays offers a vertical integration of its activities by itself completing different tasks, from the simple extraction to the distribution passing through the metals processing which of course assures consequent supplementary revenue and an increasingly strong presence on the market.
The international development strategy of this group, notably in the emerging countries where industries are increasingly in demand such as Brazil or South Africa are another factor in favour of investing in ArcelorMittal shares.
We also applaud the efforts made by this company to reduce its level of debt. ArcelorMittal implemented a strategy of increasing its capital coupled with a more stable profitability to achieve this objective.
To conclude we should note that the ArcelorMittal share price has recorded one of the highest rises on the stock market in recent years and benefits from an advantageous status as a ‘pure player’ in the eyes of the investors.
Firstly, if we count the industrial strategy implemented by the ArcelorMittal Company which consists of a completely vertical management from the extraction to the production as an advantage then we should also note that we are disappointed by the lack of boldness displayed by the group relating to the creation of value through its activities that display a lack of diversity.
Over recent years the company has also been subject to a rebound from a major drop in the price of certain commodities such as iron ore and coal. Due to this, its mines have been subject to a significant drop in profitability. The ArcelorMittal Group, due to its specific activities, is also highly exposed to movements in the steel market and the related prices. This effectively displays a recent significant drop due notably to a significant fall in the demand from China where the company achieves the largest part of its sales at the market price, thereby considerably reducing its margins. The price of steel has also been subject to a major fall in the United States, which has caused investors a certain amount of anxiety related to a possible drop in results over the coming years.
We may also admit to being a little anxious concerning the near future regarding the delocalisation of other production units of ArcelorMittal outside Europe notably due to the increasingly strict regulations relating to CO2 emissions.
We do in fact know that the ArcelorMittal Group share price is currently listed on the principal French stock market index, the CAC 40 which means this is one of the top 40 French companies in terms of stock market capital. However this asset is also listed on other stock market indices such as the CAC All Share, the CAC All Tradable, the CAC Large 60, the Euronext 100, the IBEX 35, the LuxX and the AEX. Its principal index remains however the French CAC 40.
If you wish to learn about the performance of the ArcelorMitttal share price over recent years we note that this has displayed a rise of 63.72% over the last year. Over the last two years it in fact showed a drop of 33.91% and over three years the price of this company’s shares lost 41.27% and 40.91% over the last five years. This information can be useful to better understand the base trends of this asset.
