How The Outcome Of The U.S. Presidential Election Could Benefit ArcelorMittal

+14.35%
Upside
27.50
Market
31.44
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Arcelor Mittal

The outcome of last week’s presidential election could have significant implications for the domestic steel industry. President-elect Trump’s policies could potentially boost the prospects of domestic steel producers, including the North American operations of ArcelorMittal. The domestic steel industry has been negatively impacted by competition from cheap steel imports from a number of countries. U.S. trade authorities took action earlier in the year against these imports in response to petitions from domestic steelmakers, imposing punitive tariffs on steel imports from a number of countries including South Korea and China. President-elect Trump has promised to address the issue of unfairly traded steel imports. [1] In addition, the President-elect plans to kick-start U.S. economic growth by providing a sharp boost to infrastructure investment, which could sharply boost the demand for steel in the U.S. [1] Both of these steps would positively impact the business prospects of ArcelorMittal. While we will wait for more details on President-elect Trump’s plans before altering our forecasts, in this article we will look at how his plans could impact ArcelorMittal’s stock price.

ArcelorMittal’s NAFTA division, which operates in North America (primarily based in the U.S.), will be directly impacted by the President-elect’s policies. In order to model the impact of the President-elect’s policies on the company’s stock, we have factored in an 8% increase in our realized price forecast for the division to $900 per ton, as well as a 10% increase in shipments to 28.4 million tons, by the end of our forecast period. We have also correspondingly boosted our margin forecasts. Check out our original and modified shipment forecasts for comparison.

See our forecast for the NAFTA division’s shipments in this scenari0 here

If we factor in these estimates into our model for ArcelorMittal, our price estimate for the company’s stock rises by around 35%. Thus, if President-elect Trump can transform his vision into reality, it could significantly boost ArcelorMittal’s stock price.

See our complete analysis for this scenario here

Have more questions about ArcelorMittal? See the links below.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for ArcelorMittal

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Notes:
  1. US steel producers join Trump rally, Financial Times [] []