Shares of ArcelorMittalMT sank to a 52-week low of $4.79 last Friday, before recovering a bit to close the day at $4.84. The steel behemoth has seen its shares plummet roughly 54% so far this year and 58% over a year. The stock is also down around 24% over a month.
What's Weighing on ArcelorMittal?
ArcelorMittal's third-quarter 2015 loss was much wider than the Zacks Consensus Estimate. Revenues fell by double-digits on lower steel pricing, and missed expectations. Cheap Chinese exports weighed on steel prices in the quarter.
ArcelorMittal cut its profit forecast for the full year factoring in the weak operating conditions. Considering the challenging economic environment, the company's board also proposed a suspension of its dividend for 2015, subject to shareholders' approval at the annual general meeting in May 2016.
ArcelorMittal remains hamstrung by a challenging steel market environment. The steel industry is affected by increased global production capacity. Demand and pricing for steel remain soft. The world economy is still weak, and challenging conditions persist in Europe and the emerging markets. Moreover, there is a demand-supply gap in the U.S.
The slowdown in China is also affecting steel demand in that country. Soft construction activity in the Europe remains another concern. In Brazil, steel consumption is also expected to remain weak due to recessionary conditions.
Accelerated steel exports from China in the wake of a weaker yuan is another major concern. Weakening demand at home due to a sluggish economy has forced the country to push up steel exports to attractive overseas markets. China's steel exports swelled 27% year over year to 83.11 million tons in the first nine months of 2015, per the General Administration of Customs. The country's steel exports are expected to top 100 million metric tons in 2015.
Moreover, lower iron ore pricing is weighing on ArcelorMittal's mining business. Seaborne iron ore prices tumbled around 44% during the first nine months of 2015, hurting the company's sales in the process.
ArcelorMittal is a Zacks Rank #4 (sell).
Stocks to Consider
Better-ranked companies in the steel and metals space include NSK Ltd. NPSKY , Worthington Industries, Inc. WOR and Norsk Hydro ASA NHYDY . While NSK holds a Zacks Rank #1 (Strong Buy), both Worthington and Norsk Hydro sport a Zacks Rank #2 (Buy).
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