) has been jumping at opportunities to make a bigger impact in
Asian. The company is by far the largest producer of steel in the
world, and obviously knows how important it is to gain a strong
foothold in Asia to retain this position. No wonder it has been
keen on growing in India. After 2 failed attempts, the company
might finally be able to enter this rapidly growing economy.
ArcelorMittal competes with other international steel giants like
BaoSteel, Posco (
), Nippon Steel and ThyssenKrupp.
Our price estimate for Arcelor Mittal stands at
, roughly 11% above the current market price.
ArcelorMittal's Push into Asia
Asia provides ArcelorMittal with two important components: a
rapidly growing market for steel due to economic growth, and
low-cost labor to reduce its overall production costs. It is
already present in China through its subsidiary, Lugang, and also
through a joint venture with the China Oriental group.
Quite recently, the company announced its plans to acquire a 40%
stake in the Thai steel producer G Steel. You can read more about
the deal and its potential impact on ArcelorMittal in our article
ArcelorMittal's G Steel Stake Widens Footprint in Asia
India Has Been Held up Until Now
ArcelorMittal had first signed an agreement in 2005 with the
government of the Indian state of Jharkhand to set up a plant with
an annual capacity of 12 million tons per annum (mtpa). This was
followed by another agreement to set up a plant with 12 mtpa in the
state of Orissa. However both plants have been held up as the
company has waited to receive land by the respective state
The Indian state of Karnataka has agreed to allot ArcelorMittal
the land for setting up a 6 mtps plant within the next 30 days. The
plant could cost the company about $6 billion to construct
according to estimates, and if all goes according to plan, the
construction would begin by May of this year.
We currently forecast that ArcelorMittal sells around 14 mpta
through its Asia, Africa and CIS division, and we expect this to
grow to around 18.7 mpta by the end of our forecast period. In a
scenario where this increased to 25 mpta, this would add around 5%
to our price estimate.
See our full analysis and $40.67 price estimate for