Falling steel prices will hurt earnings, ArcelorMittal warns

|About: ArcelorMittal (MT)|By:, SA News Editor

ArcelorMittal (NYSE:MT-6.3% premarket after reporting below consensus Q2 earnings and warning it will miss its target for full-year earnings, as shipments are being hit by lower commodity prices.

MT says FY 2014 EBITDA likely would total more than $7B, below a previous forecast of ~$8B, reflecting a probable average iron ore price of $105/metric ton for this year vs. prior expectations for $120.

While the softening of iron ore prices may hurt MT's relatively small mining segment, the result could be countered by stronger demand for the steel that makes up most of the company’s business.

Also, MT agrees to acquire a near 50% effective stake in Guinea's Mount Nimba iron ore project, buying out shareholders BHP and Areva for an undisclosed sum; the high-quality deposit is 40 km from MT's existing Liberian iron ore mine, which means the steelmaker could take advantage of its existing rail and port infrastructure in Liberia to lower development costs.