ArcelorMittal (NYSE: MT ) , the world's largest steel company, has spent considerable time in the news this week. From predictions about the circumstances of global steel in 2010 to the status of two steel plants the company had planned to build in India, Arcelor has been the David Letterman of steelmaking.
Arcelor had planned to spend about $20 billion on a pair of steel plants in India, but those plans may be either reduced or scuttled since the company is having difficulty persuading farmers in the desired areas to sell it the land involved. The plants were to have been built in Jharkand and Orissa, but may have to be relocated.
In an interview in London's Financial Times, Lakshmi Mittal, the company's CEO, observed: "If we cannot make progress in these two sites, we will have to abandon the idea of starting the projects there and look for other places in India for our expansion." But despite the difficulty, he noted that the company remains committed to a minimum of a single plant in his native country. He also noted, however, that scuttling plans for the two plants -- which together were expected to produce about 24 million tons of steel annually -- would retard his company's expansion plans in his native India.
Apparently, ArcelorMittal is suffering the same fate as India's Tata Motors (NYSE: TTM ) . That company was forced to move the factory for the manufacture of its tiny Nano car from the West Bengal state in response to protests from farmers who were forced to give up land for a construction site.
And finally, Mittal expressed mixed feelings about the world of steel in 2010. While he predicted that "we will still be in for a bumpy ride" next year, he also noted that he expects that, while Chinese demand should increase by more than 15% this year, he is less sanguine about 2010, when he expects demand to shrink to an increase of about 5% for the year.
Analysts seem to expect relative weakness across the board for the steel industry for this quarter. ArcelorMittal and its competitors U.S. Steel (NYSE: X ) , Nucor (NYSE: NUE ) , and Steel Dynamics (Nasdaq: STLD ) are all pegged for soft quarters, and to a lesser extent, so is Commercial Metals (NYSE: CMC ) .
My recommendation for Fools would be to show caution when picking up steely shares. For example, U.S. Steel moved from the mid-teens in March to more than $42 currently -- an improvement that will be difficult to duplicate even if it is well below its 2008 highs.
On the other hand, U.S. Steel and ArcelorMittal are popular among Motley Fool CAPS players, garnering a four- and five-star rating, respectively. Why not you add your assessment to the mix?
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