The global recovery in steel demand is making an often-beleaguered industry profitable again, but investors are still not convinced.
The world’s largest producer, ArcelorMittal, posted its biggest quarterly profit in almost five years Friday and earnings increased at Thyssenkrupp. Yet both shares sank as ArcelorMittal tempered its outlook for the second quarter and said Chinese exports remain a concern; Thyssenkrupp predicted negative free cash flow.
Even after the strong start to the year, ArcelorMittal expects stable market conditions in the second quarter, after earlier predicting margins may expand. The company also reported increased net debt and negative free cash flow in the quarter.
“We would not expect that consensus estimates for 2017 will change significantly,” said Carsten Riek, an analyst at UBS Group in London. “Especially after market fears that oversupply and an increase in imports could put pressure on steel prices and margins in second half 2017.”