Investors proved disappointed by recent news from steelmaker ArcelorMittal (NYSE:MT). In fact, they didn’t seem to like a recently reversed plan to keep a South African plant open instead of closing it down. Word about the company’s near-term future didn’t help either, and shares were down fractionally in Tuesday afternoon’s trading.
Originally, the plan called for ArcelorMittal to shutter the Newcastle steel plant in the KwaZulu-Natal province of South Africa. But that changed after ArcelorMittal revealed that it had landed a billion-rand, roughly $53.7 million, credit facility that would keep the Newcastle plant up and running.
It also helped that the local government didn’t renew an export ban on steel scrap following its previous expiry back in December. That, in turn, brought with it “…greater fairness and equity into the input cost structures,” according to ArcelorMittal. But what didn’t help was news that ArcelorMittal is actually expecting wider losses now than it did previously. Now, it looks to lose between 0.96 and 1.04 rand per share for the current six months. This time last year, it was a loss of just 0.40 rand per share.
The Labor Troubles Persist
Meanwhile, a couple of weeks ago, we reported on labor troubles at the company’s facility in Michoacan, Mexico. As of two weeks ago, the blockade had held up around 300,000 metric tons of steel, and there are no signs that it is loosening.
In fact, new reports note that a federal judge struck down some protections against the Sindcato Minero mining union, which means that ArcelorMittal can, in turn, terminate its relationship with the union. Which it will likely do, even as it’s putting out a fresh call for union workers to get back to work. ArcelorMittal’s note in court that the union’s actions have caused “considerable million-dollar losses to the company” and “irreparable damage” to the mill itself haven’t helped the union here.
What Is the Stock Price Forecast for ArcelorMittal?
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 a 15.26% loss in its share price over the past year, the average MT price target of $29.80 per share implies 31.19% upside potential.
