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October 28, 2010

World’s biggest steel-maker ArcelorMittal sees Q3 profits rise

BRUSSELS

ArcelorMittal, the world’s biggest steel maker, posted a 48 per cent jump in third-quarter net profit as the global recovery boosted demand for steel.

Net profit rose to US$1.35 billion in the third quarter, up from $910 million a year earlier. Sales increased 30 per cent to $21.04 billion from $16.17 billion a year earlier.

But earnings were down from the previous quarter, and the company warned of higher raw materials prices and muted demand ahead. Profit was down 21 per cent to $1.7 billion from the second quarter, as steel prices fell but iron ore prices rose. Iron ore is one of the key raw materials for steel.

Steel demand is still well below pre-crisis levels, as the construction and automobile sectors are struggling to recover.

In the third quarter, Arcelor’s operations were running at 71 per cent of total capacity, down from 78 per cent in the previous three months. The Luxembourg-based company attributed the decline to s “seasonal slowdown, primarily in Europe.’’

Arcelor was cautious in its outlook for the fourth quarter, “as the expected higher input prices continue to work through the business and demand remains muted, though with some regional differences,’’ chief executive Lakshmi N. Mittal said in a statement.

The company said shipments are likely to improve slightly in the final three months of 2010, but average steel prices are expected to decline and capacity utilization will likely remain flat. Costs are also expected to increase, with raw material prices going up further, Arcelor added.

ArcelorMittal, based in Luxembourg, was created in 2006 through the merger of Arcelor and Mittal Steel.

Associated Press

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