ID :
27963
Sat, 11/01/2008 - 23:28
Auther :
Shortlink :
http://m.oananews.org//node/27963
The shortlink copeid
Mittal suffers USD 50 bn decline in ArcelorMittal share value
London, Nov 1 (PTI) NRI steel tycoon Lakshmi Mittal has
suffered a USD 50 billion decline in the value of shares he
holds in the ArcelorMittal following the global financial
meltdown, a leading economic daily has claimed.
Mittal, who owns 45 percent of the stock in
ArcelorMittal, has seen the value of his personal shareholding
fall since late June from USD 66 billion to USD 16 billion,
The Financial Times claimed in an analysis of the effect of
global financial crisis on the steel industry.
"When Mittal talks to investors and analysts next week,
he is likely to come in for tough questioning about how much
he will cut production in the next few months.
"He will also be asked to explain the status of the
company's expansion programme, in particular two big plants
being planned for India, which look likely to be scaled back,"
the report said.
Noting that Mittal, Chairman and Chief Executive of
ArcelorMittal, next week faces the biggest test of his career,
the report said "the Indian metals magnate will try to
convince investors that his vision of the steel industry still
has merit, in spite of the battering the sector has received
amid the global financial crisis."
When he presents the third-quarter results of
ArcelorMittal on Wednesday from the company's imposing
headquarters in the centre of Luxembourg, Mittal will do his
best to put a "brave face on a 72 percent decline in the
share price of the world's biggest steelmaker over the past
four months."
In his response to the setbacks, "Mittal is expected to
outline new production cuts on top of those ArcelorMittal has
made in the past month.
"He is also thought likely to announce some trimming of
its ambitious 35 billion dollar expansion plan over the next
eight years, while also pointing to growth opportunities for
the industry even in the midst of the current gloom."
The report said whatever Mittals says, "the past month is
bound to have removed a certain amount of gloss from Mittal's
reputation - and made investors think rather harder than
before about the value of his company's shares."
Quoting an unnamed chief executive of a large US
steelmaker, the report said the "stream of negative economic
and financial news in September and October has hit the
industry like a bomb".
Fears about an economic slowdown in China, which has
sustained the steel industry during the boom years, plus a
sudden reduction in world steel demand in September from
sectors such as construction and vehicles, were also behind
the rapid build-up in negative investor sentiment.
That came after a year or so in which the steel business
weathered fairly well the perturbations affecting other
sectors, largely due to signs that demand for steel from
emerging regions had been holding up.
"Inevitably, one of the biggest losers from the change in
sentiment of recent weeks has been Mittal himself. Since the
chairman and chief executive of ArcelorMittal also owns 45
percent of its stock, the value of his personal shareholding
has fallen since late June from 66 billion dollars to 16
billion dollars."
The steel industry has annual sales of about USD 1,000
billion, making it one of the world's biggest production
businesses - the use of steel in construction and
manufacturing dwarfs that of all other metals, the report
said.
"The impact of the drop in demand is being felt not just
by steel producers but many companies that sell equipment to
the industry. In the past month, orders and inquiries have all
but come to a halt," said Brian Lunn, managing director of
U.K.-based Bronx Engineering, which makes inspection systems
for steel mills.
ArcelorMittal has already cut production in much of its
global network of plants by as much as 15 percent
year-on-year in the current quarter. The company's action has
been followed by others, notably Severstal, Russia's biggest
steelmaker, as well as U.S. Steel, America's largest producer,
and Corus, the European steel-making arm of India's Tata
Group.
Others including Nippon Steel and J.F.E., also of Japan,
could follow suit in the coming weeks. As a result, global
steel production could in the first quarter of next year be
falling at an annual rate of 20 percent which, many in the
industry believe, could be roughly in line with overall
reductions in demand, the report said.
As regards prices of steel, the report quoted Meps, a
U.K. steel consultancy, to say the global average is likely to
fall to USD 821 a tonne by January, from a high of USD 1,117
in July this year.
"On the basis that steel demand starts to pick up later
in 2009, prices could start to edge up again, presaging a much
better period of financial health for the world's steel
makers," the report said.
Even in China, which has many small and inefficient
mills, 150 blast furnaces have shut in recent months because
they were not making money, according to Zhang Xiaogang,
chairman of Anshan Steel, one of China's biggest steel
producers, who is also chairman of the China Iron and Steel
Association. PTI
suffered a USD 50 billion decline in the value of shares he
holds in the ArcelorMittal following the global financial
meltdown, a leading economic daily has claimed.
Mittal, who owns 45 percent of the stock in
ArcelorMittal, has seen the value of his personal shareholding
fall since late June from USD 66 billion to USD 16 billion,
The Financial Times claimed in an analysis of the effect of
global financial crisis on the steel industry.
"When Mittal talks to investors and analysts next week,
he is likely to come in for tough questioning about how much
he will cut production in the next few months.
"He will also be asked to explain the status of the
company's expansion programme, in particular two big plants
being planned for India, which look likely to be scaled back,"
the report said.
Noting that Mittal, Chairman and Chief Executive of
ArcelorMittal, next week faces the biggest test of his career,
the report said "the Indian metals magnate will try to
convince investors that his vision of the steel industry still
has merit, in spite of the battering the sector has received
amid the global financial crisis."
When he presents the third-quarter results of
ArcelorMittal on Wednesday from the company's imposing
headquarters in the centre of Luxembourg, Mittal will do his
best to put a "brave face on a 72 percent decline in the
share price of the world's biggest steelmaker over the past
four months."
In his response to the setbacks, "Mittal is expected to
outline new production cuts on top of those ArcelorMittal has
made in the past month.
"He is also thought likely to announce some trimming of
its ambitious 35 billion dollar expansion plan over the next
eight years, while also pointing to growth opportunities for
the industry even in the midst of the current gloom."
The report said whatever Mittals says, "the past month is
bound to have removed a certain amount of gloss from Mittal's
reputation - and made investors think rather harder than
before about the value of his company's shares."
Quoting an unnamed chief executive of a large US
steelmaker, the report said the "stream of negative economic
and financial news in September and October has hit the
industry like a bomb".
Fears about an economic slowdown in China, which has
sustained the steel industry during the boom years, plus a
sudden reduction in world steel demand in September from
sectors such as construction and vehicles, were also behind
the rapid build-up in negative investor sentiment.
That came after a year or so in which the steel business
weathered fairly well the perturbations affecting other
sectors, largely due to signs that demand for steel from
emerging regions had been holding up.
"Inevitably, one of the biggest losers from the change in
sentiment of recent weeks has been Mittal himself. Since the
chairman and chief executive of ArcelorMittal also owns 45
percent of its stock, the value of his personal shareholding
has fallen since late June from 66 billion dollars to 16
billion dollars."
The steel industry has annual sales of about USD 1,000
billion, making it one of the world's biggest production
businesses - the use of steel in construction and
manufacturing dwarfs that of all other metals, the report
said.
"The impact of the drop in demand is being felt not just
by steel producers but many companies that sell equipment to
the industry. In the past month, orders and inquiries have all
but come to a halt," said Brian Lunn, managing director of
U.K.-based Bronx Engineering, which makes inspection systems
for steel mills.
ArcelorMittal has already cut production in much of its
global network of plants by as much as 15 percent
year-on-year in the current quarter. The company's action has
been followed by others, notably Severstal, Russia's biggest
steelmaker, as well as U.S. Steel, America's largest producer,
and Corus, the European steel-making arm of India's Tata
Group.
Others including Nippon Steel and J.F.E., also of Japan,
could follow suit in the coming weeks. As a result, global
steel production could in the first quarter of next year be
falling at an annual rate of 20 percent which, many in the
industry believe, could be roughly in line with overall
reductions in demand, the report said.
As regards prices of steel, the report quoted Meps, a
U.K. steel consultancy, to say the global average is likely to
fall to USD 821 a tonne by January, from a high of USD 1,117
in July this year.
"On the basis that steel demand starts to pick up later
in 2009, prices could start to edge up again, presaging a much
better period of financial health for the world's steel
makers," the report said.
Even in China, which has many small and inefficient
mills, 150 blast furnaces have shut in recent months because
they were not making money, according to Zhang Xiaogang,
chairman of Anshan Steel, one of China's biggest steel
producers, who is also chairman of the China Iron and Steel
Association. PTI
