Lakshmi Mittal disappoints with ArcelorMittal steel figures

Lakshmi Mittal today reported disappointingly weak profits at his ArcelorMittal steel empire, hit by muted demand, lower prices and higher raw material costs.

The company, whose output is more than double that of its nearest rival, said that its shipments would pick up slightly, average steel prices would be lower than in the third quarter and iron ore and coal costs would be higher.

Analysts had been expecting a marginal improvement.

"In Q3 the business performed towards the lower end of our expectations against a background of seasonally lower volumes, weakening spot prices and higher costs," Mittal said.

"Our outlook for Q4 remains cautious as the expected higher input prices continue to work through the business and demand remains muted, though with some regional differences."

ArcelorMittal said its much-watched core profit would be between $1.5 billion (£946 million) and $1.9 billion (£1.2 billion) in the fourth quarter, a 25% decrease from the third quarter.

The market had on average forecast a figure of $2.4 billion, and the figure for the last three months of $2.27 billion was itself a 25% slide from the April-June second quarter.

The $500 billion steel industry, a bellwether for the broader economy, profited in the second quarter from a strong motor sector and booming demand in China, but since then both have cooled. Iron ore and coal costs rose but steel prices were stagnant.

ArcelorMittal shares are 22% down this year and 29% off a peak hit in April. The STOXX European basic resources index has risen 11% so far this year and is just 5% off its April high.

Rivals such as world number three POSCO and Nucor have reported lower-than-expected third-quarter results, the former cutting its 2010 forecast, the latter warning of uncertainty. US Steel and AK Steel also report third-quarter results today.