General presentation of the ArcelorMittal Company:
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.
Know the competition to ArcelorMittal shares:
The ArcelorMittal Group is currently the international leader of the steel and iron metals industries. But of course, it is not the only company in this sector and must face an increasingly stronger competition from a number of other large international companies. To achieve a comprehensive and full analysis of this company’s share price on the stock markets you should of course be fully aware of this company’s competitors to be able to study their results and the movements in their market parts. To assist you these are the major adversaries to the ArcelorMittal Company worldwide:
The strategic alliances implemented by the ArcelorMittal Group:
The strategy of the ArcelorMittal Company against its competitors relies upon a strategy based on certain strategic partnerships including the following:
- TechnipFMC: 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.
- Steelcame: 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: 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.
- Veolia: 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.
What are the advantages and strong points of the ArcelorMittal shares as stock market assets?
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.
What are the disadvantages and weak points of ArcelorMittal shares in terms of stock market assets?
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.