(News Bulletin 247) – Barclays downgraded its recommendation on ArcelorMittal on Monday, reducing it from ‘overweight’ to ‘weight in line’ with a price target reduced from 37 to 31 euros.
In a sector note, the broker explains that he expects a 31% rebound in steel exports from China this year, an element historically linked to a decline in ArcelorMittal shares.
Barclays now says it expects net exports of around 58 million tonnes from China in 2023, up from 25 million tonnes so far.
For the broker, this rise in power represents a ‘major’ risk factor for the favorable momentum currently enjoyed by European steelmakers.
These headwinds could, in this case, prevent any further revaluation of the Arcelor title, he warns.
If he says he appreciates the value from a long-term perspective, because of its attractive valuation and the remuneration offered to shareholders, the professional believes that the recovery of Chinese production will constitute a penalizing element in the short term.
Barclays also fears that gas supply difficulties at the approach of next winter will rekindle fears about the health of European industry.
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