Normally, when we hear about the steel industry, we think about the ongoing buyout drama surrounding U.S. Steel (NYSE:X). But now, one of its former suitors, ArcelorMittal (NYSE:MT), is having issues of its own with a strike in Mexico. However, it’s not exactly a concern to shareholders, as ArcelorMittal shares are actually up fractionally in Tuesday afternoon’s trading.
The workers at the steelmaking facility in Michoacan have caused around 300,000 metric tons of steel to be held up. Interestingly, the strike isn’t even fully approved, as it started ahead of the ending period for conciliation talks. But it’s already done quite a bit of damage, as the steelworkers have problems with the annual profit distribution scheme recently set up by the company. Meanwhile, the Canacero steel chamber is calling for workers to “…respect the channels and procedures provided by law to raise their demands and disagreements.”
An Unexpected Increase
Interestingly, as the Michoacan facility saw a serious downturn, others stepped up. Kryvyi Rih, a subsidiary operation located in the Ukraine, of all places, saw a massive increase in production. It boosted steel production by 68% against the same time last year, upped rolled products by 66%, increased pig iron production by 15%, and even shot raw iron ore up by a whopping 86%. All of this happened despite the ongoing Russia/Ukraine war, and apparently, is traced back to the launch of an entirely new blast furnace as well as two new coke oven batteries.
Is ArcelorMittal a Good Investment?
Turning to Wall Street, analysts have a Hold consensus rating on MT stock based on one Buy and three Holds assigned in the past three months, as indicated by the graphic below. After an 11.32% loss in its share price over the past year, the average MT price target of $30.30 per share implies 27.79% upside potential.
