Yahoo Finance ArcelorMittal & Koppers Ink Long-Term Coal Tar Supply Deals
Leading steelmaker, ArcelorMittal MT entered into new long-term coal tar supply agreements with Koppers Inc., a fully-owned subsidiary of Koppers Holdings Inc. According to the terms of contract, Koppers will purchase coal tar, a byproduct of ArcelorMittal coke plants in the U.S. The contracted volume will meet a major portion of the domestic raw material requirements for Koppers.
ArcelorMittal’s U.S. division operates three coke plants which transform coal into coke. Coke is required in the production of integrated steel. Coal tar is a viscous, carbon-rich liquid byproduct with a complex chemical make-up and is an important raw material used by Koppers to make creosote, an oil-based wood preservative.
More than 90% of all of the byproducts and residues from ArcelorMittal’s U.S. operations are reused or recycled. This deal with Koppers will thus help to repurpose the byproducts of steelmaking and promote environmental sustainability.
ArcelorMittal posted net income of $680 million or 22 cents per share in third-quarter 2016, compared to a net loss of $711 million or 31 cents per share recorded a year ago. However, revenues declined 6.8% year over year to $14,523 million in the quarter, affected by lower steel shipments and steel prices.
ArcelorMittal has outperformed the Zacks categorized Steel - Producers industry over the past six months, partly owing to its cost and debt reduction measures. The company’s shares have gained around 49.2% over this period, compared with 30.9% gain recorded by the industry.
The company remains focused on reducing debt and lowering costs. The company’s net debt declined by $4.6 billion year over year in the third quarter. ArcelorMittal also remains committed to divest its non-core assets and focus on important operations.
However, the company sees a decline in profitability in fourth-quarter 2016 on a sequential basis due to lower steel prices in the U.S. and the unfavorable impact of rising metallurgical coal prices. Demand and pricing for steel remains weak due to weak economy and challenging conditions in Europe and emerging markets. Moreover, high levels cheap steel exports from China, which has built up a massive excess steel capacity, is still a major challenge.
ArcelorMittal Price and Consensus
ArcelorMittal Price and Consensus | ArcelorMittal Quote
ArcelorMittal currently carries a Zacks Rank #3 (Hold).
Key Picks
Better-ranked companies in the steel industry include AK Steel Holding Corporation AKS, United States Steel Corporation X and Steel Dynamics, Inc. STLD, all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AK Steel Holding has an expected long-term growth of 5%.
U.S. Steel has an expected long-term growth of 8%.
Steel Dynamics has an expected long-term growth of 12%.
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