ArcelorMittal 2Q profit more than doubles

ArcelorMittal reported that its profit rose to $5.8 billion in the three months ended June 30 from $2.7 billion a year ago. Revenue was up more than a third to $37.8 billion from $27.2 billion a year ago despite only a slight increase in steel shipments worldwide.

Demand for the steel used for construct buildings and to produce cars and appliances continued to surge in Asia, Russia and the Middle East, and to grow strongly in Europe, more than compensating for lower sales — but higher prices — in the United States.

A slowdown in cheaper Chinese steel exports also has helped as energy costs rise and the government curbs overcapacity, cutting the competition for ArcelorMittal and others in key markets such as Europe.

This has allowed the company to charge European customers a fifth more for steel than during the first quarter. Europe is ArcelorMittal's largest market and pays the world's highest steel prices.

But more expensive steel is not yet hurting demand from car makers and machinery manufacturers, the company said, and may only add 0.5 percent to the retail price of a car.

ArcelorMittal said its results were not boosted considerably by the strength of the euro and other currencies against the U.S. dollar. It reports earnings in dollars which have tumbled in value over the past year.

"The most significant aspect is not currency," chief financial officer Aditya Mittal told reporters. "The most significant aspect of our results has to do with the fact that the steel market has improved ... and we have significant self sufficiency of raw materials."

The Luxembourg-based steelmaker, which produces 10 percent of world steel, said it expects good results for the third quarter and "a strong year," although it warned of a tougher climate in Europe, where production costs are rising as the economy slows.

The surge in global demand is losing pace, with Aditya Mittal forecasting growth of some 3 to 5 percent a year in the medium term, down from 7 percent in recent years.

Lakshmi Mittal, ArcelorMittal's chairman and CEO, said the results showed the success of the company's efforts to secure its own access to key inputs such as iron ore and cooking coal. It now supplies 45 percent of its own iron ore and 20 percent of its own coking coal.

He said the company would continue to look for "opportunities to further enhance our raw material self sufficiency" and would spend some $7 billion to improve and expand production this year.

ArcelorMittal said it also was looking at expanding iron ore mining in Ukraine, Liberia, Senegal and Mauritania to be able to control at least three quarters of all its supply needs by 2015.

The steel industry has seen costs soar since it started a deal with six Asian steel makers in February to raise iron ore prices by 65 percent. The coking coal that heats furnaces has gone up 200 percent.

Aditya Mittal said ArcelorMittal "was not seeing any easing of those prices in the short to medium term."