Steel behemoth ArcelorMittal (NYSE:MT) will invest about $23 million to relaunch a furnace at a plant in french city Florange after holding discussions with France president Nicolas Sarkozy.  Many are seeing this move as a gesture to boost Sarkozy’s election campaign since European steel demand has not really picked up. Since last year, the company has been cutting its steel production at various plants, citing insufficient demand. The company shut down its two blast furnaces at Florange, but continued to operate the hot and cold rolling mills, coke plant and coating lines.
In pursuit of iron ore, to continue with steel expansion in India
In this year’s earnings release, the company reiterated that it will cease capital expenditures for steel sector growth investments while continuing to invest in iron ore and coal capacity expansion, where the outlook is stronger than that of steel. We discussed this in a article ArcelorMittal Continues Its Iron Ore Pursuit.
However, the company is looking at steel expansion in India to leverage the cost advantage and tap demand from the Asia-Pacific region. The company recently took possession of about 1,827 acres for the proposed 6 million ton plant in the Karnataka state in India. The project will cost about $6.5 billion. 
African Unit Cuts Flat Steel Prices
It seems that the worst may still be yet to come for the steel industry as it continues to reel under the slowdown in demand. ArcelorMittal’s South Africa unit announced that it would cut prices of flat steel products by 2 to 5% effective March 1. If the company’s other units decide to follow suit, it could have a substantial impact on our price estimate. Notes:
- Steel plant at heart of French election to restart-Sarkozy, March 1 2012 [↩]
- ArcelorMittal secures 1,827 acre for K’taka, Feb 26 2012 [↩]
- ArcelorMittal S.Africa to cut some flat product prices, Feb 29 2012 [↩]