ArcelorMittal MT Fos-sur-Mer recently commissioned its ladle furnace, marking a significant milestone in the French plant's contribution to the steel industry's energy transformation.

The ladle furnace is a steel reheating station that can enhance the amount of recycled steel in the end product by up to five times its current volume. The ladle furnace's commissioning will lower the amount of hot metal consumed by 10% as early as 2025. The new facility features two ladle stands, each holding more than 330 tons of liquid steel. Three electrodes heat the liquid steel to the desired temperature for the manufacturing process.

The ladle furnace's start-up represents an important milestone in the site's decarbonization path, which includes a significant overhaul of the steelmaking process. The two-year construction phase of the ladle furnace was completed in the first quarter of 2024, and the new facility has been undergoing testing since the summer. The ladle furnace represents a €76 million investment, with the French government contributing €15 million as part of France Relance.

The Fos-sur-Mer plant produces more than 150 grades of steel, with one-third used in the automobile industry, including safety parts and electrical steels for electric and hybrid car motors. Two-thirds of the grades are steels used in industries such as building, agriculture and energy.

Shares of ArcelorMittal have gained 5.9% over the past year against a 32.4% rise of its industry.

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The company, on its second-quarter call, said that it believes that the current market conditions are not sustainable due to China's excess steel production relative to demand, which resulted in very low domestic steel spreads and aggressive exports Both Europe and the United States are experiencing steel prices below the marginal cost. Nevertheless, the company anticipates higher apparent demand in the second half of 2024 compared with the same period in 2023, which was affected by destocking, especially in Europe. 

With absolute inventory levels remaining low in Europe, the company is optimistic about the potential for restocking activity as real demand begins to recover. MT now projects 2.5-3% growth in global steel consumption, excluding China, for 2024, compared with its prior view of 3-4% growth.

ArcelorMittal Price and Consensus

ArcelorMittal price-consensus-chart | ArcelorMittal Quote

Zacks Rank & Key Picks

MT currently carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the basic materials space include Carpenter Technology Corporation CRS, IAMGOLD Corporation IAG and Centrus Energy Corp. LEU. 

Carpenter Technology currently carries a Zacks Rank #1 (Strong Buy). CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 15.9%. The company's shares have soared 135.6% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for IAG’s current-year earnings is pegged at 49 cents, indicating a year-over-year rise of 444.4%. The Zacks Consensus Estimate for IAG's current-year earnings has increased in the past 30 days. IAG, a Zacks Rank #1 stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 200%. The company's shares have rallied roughly 132.3% in the past year.

The Zacks Consensus Estimate for Centrus’ current-year earnings is pegged at $3.06 per share. LEU, a Zacks Rank #1 stock, beat the consensus estimate in three of the last four quarters while missed once, with the average earnings surprise being 107.1%. LEU has rallied around 26.8% in the past year.