International credit ratings agency Fitch Ratings has announced that it has downgraded Luxembourg-headquartered global steel giant ArcelorMittal's credit rating to 'BB+' from 'BBB-'. It is stated that its outlook remains negative.
According to Fitch, the credit rating of ArcelorMittal reflects lower steel demand, decreasing steel prices and the measures taken against the coronavirus outbreak such as production cuts.
The international credit ratings agency expects that steel demand will decrease as major steel consuming industries have been largely affected by the coronavirus and that steel prices will drop this year due to lower demand and the expected decline in key raw material prices.
Fitch anticipates that production cuts will be more profound in Europe, which accounts for around half of the company’s production and also expects that the company’s capital expenditure in 2020 will be below previous guidance.
Fitch also forecasts that the company’s EBITDA will decline by around 15 percent year on year in 2020, falling from $4.8 billion in the previous year due to lower shipments. However, it believes that some fixed costs from temporary closures will be balanced by government support.