Morgan Stanley: According to Reuters, employees have rejected the agreement to end the strike at the Lázaro Cardenas plant, which has been in place since 24 May. Alain Gabriel (analyst) points out that the blockade is likely to have a significant impact on the North American division (the plant represents almost half of the division’s capacity). In this sense, an 80% utilisation would imply an annual production of up to ~4.2mt/year (~80kt/week). As such, the analyst estimates that each week of no production should affect the group’s EBITDA by ~$30-40m (~0.5% of its 2024 EBITDA estimates). So, assuming the impact could have been mitigated during the first two weeks, the three weeks of lost production should have generated an impact of ~$120m and he continues to see downside to his estimate of $1.74Bn of EBITDA in Q3.
ArcelorMittal SA, Overweight, Target Price €30/share.
