ArcelorMittal's (MT) Vega Unit to Restart Expansion Project

ArcelorMittal MT Brazil is set to restart the $330 million expansion project at ArcelorMittal Vega, flat steel cold rolling, pickling and galvanizing unit located in Sao Francisco do Sul (state of Santa Catarina).

The investment will facilitate the company for the production of cold rolled and galvanized products through the construction of a new continuous annealing line, and a third galvanization line. The unit’s capacity is set to increase by 700,000 tons to 2.1 million tons per year. The company is expected to start the production in 2021.

The expansion will allow the Vega unit to boost production for the construction, automotive and home appliances sectors, allowing ArcelorMittal to meet the market expectations, and provide high strength and quality steel products.

As a result of the investment ArcelorMittal is expected to achieve sustainable growth in Brazil and Latin America.

ArcelorMittal has outperformed the industry in a year’s time. While shares of the company have moved up around 9.5%, the industry rose 8%.

 

Per ArcelorMittal, market conditions are favorable and demand environment continues to be positive along with healthy steel spreads. The company now expects global apparent steel consumption (ASC) to grow 2-3% in 2018, up from the previous expectation of 1.5-2.5%.

The company now expects ASC to rise 5.5-6.5% in Brazil compared with its earlier expectation of 6.5%-7.5%, reflecting the impacts of the nationwide truck strike and cautious outlook ahead of the elections.
 

ArcelorMittal Price and Consensus

ArcelorMittal Price and Consensus | ArcelorMittal Quote

Zacks Rank & Other Stocks to Consider

Currently, ArcelorMittal is a Zacks Rank #2 (Buy) stock.
 
Some other top-ranked companies in the basic materials space are Huntsman Corporation HUN, Air Products and Chemicals, Inc. APD and LyondellBasell Industries N.V. LYB.

Huntsman has an expected long-term earnings growth rate of 8.5% and a Zacks Rank #1 (Strong Buy). The company’s shares have rallied 24% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Air Products has an expected long-term earnings growth rate of 16.1% and a Zacks Rank #2. Its shares have gained 13% in a year’s time.

LyondellBasell has an expected long-term earnings growth rate of 9.5% and carries a Zacks Rank #2. The stock has rallied 28.2% in a year.

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