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It's nice to see the ArcelorMittal (AMS:MT) share price up 15% in a week. But if you look at the last five years the...
(Bloomberg Opinion) -- It’s been almost two years since President Donald Trump announced, on March 1, 2018, that he would be imposing a 25% tariff on steel imports to the U.S. and 10% on aluminum. “We must not let our country, companies and workers be taken advantage of any longer,” he tweeted at the time.The tariffs exempted a few countries to start, and were rolled back last May for products from Canada and Mexico, but otherwise still stand. Things have gone pretty well for the country in the meantime. For companies and workers in the U.S. steel and aluminum industries, not so much. U.S. Steel Corp.’s share price, for example, closed at its highest level in almost seven years on the day the tariffs were announced. It has since declined 80%.Not every steel and aluminum manufacturer’s stock chart makes this point quite so perfectly. The biggest U.S. steel producer, mini-mill operator Nucor Corp., saw its stock price peak in January 2018, not March, and it’s down a mere 31% since then. At the biggest U.S. aluminum producer, Alcoa Corp., the stock peaked in April 2018 and is down 74% since. Those are still sharp declines amid a generally rising stock market, though, and I was unable to find a single publicly traded U.S. steel or aluminum maker that hasn’t experienced something similar since early or mid-2018.As for the workers, primary metals manufacturers did keep adding jobs for the rest of 2018. But they began shedding them last April and now employ fewer people than when the tariffs were announced.As described in detail in the current Bloomberg Businessweek, the tariffs have directly harmed some U.S. steelmakers that depend on imported semi-finished steel slabs. For the most part, though, the industry’s troubles seem to be the product not of the metals tariffs but of a global industrial slump. The world’s biggest steelmaker, Luxembourg-based ArcelorMittal SA, has also experienced a big (45%) stock-price drop since mid-2018. Also, as someone who speculated back in March 2018 that the tariffs might help metals manufacturers at the expense of the much-larger industries that use that metal, I feel obliged to report that this doesn’t seem to have happened either, at least not in terms of employment.What does strike me, though, as I think of the industry sectors that President Trump has gone to bat for in a big way with tariffs and other forms of aid — metals makers, appliance manufacturers, coal miners, and oil and gas drillers sprang immediately to mind — is that hardly any of them have been having a great time of it lately, with all those I just named shedding jobs last year.(1) Meanwhile, the giant technology companies that have been recipients chiefly of the president’s ire keep chugging right along. The causes for these differing fortunes surely go way beyond White House policy, and it’s worth reiterating that the economy overall has been growing and creating jobs. But it does raise some questions about the president’s priorities.There is an unkind saying about Trump to the effect that everything he touches dies, a reference to the many past business failures with which he has been associated. It’s not entirely true — the Manhattan real estate business is still quite alive, despite his continued involvement in it — and the direction of causality isn’t always clear. With Trump’s economic interventions, maybe it’s just that the man is drawn to things that have their glory days behind them (like golf!). As someone who chose to pursue a career in journalism, I cannot help but have some sympathy with this worldview. But nostalgia seems like a counterproductive motivation for industrial policy. Picking winners is hard enough for a government to do successfully, but you’re stacking the deck against yourself if you focus most of your attention on the losers.On Tuesday, the president seemed to change his tune a bit on big tech, celebrating the stock-market gains of the “trillion-dollar club” of Google-parent Alphabet Inc., Amazon.com Inc., Apple Inc. and Microsoft Corp. I wouldn’t make too much of that — on the same day the Federal Trade Commission, controlled by Trump appointees, ordered those four companies plus Facebook Inc. to cough up details of past acquisitions for an investigation that might eventually lead to antitrust action. But if Trump ever decides to help the tech giants, look out. A clearer sell signal would be hard to imagine.(1) According to the Bureau of Labor Statistics, there was an increase in employment in oil and gas extraction over the course of 2019, but an even bigger decrease in employment in "support activities for oil and gas extraction."To contact the author of this story: Justin Fox at email@example.comTo contact the editor responsible for this story: Stacey Shick at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Justin Fox is a Bloomberg Opinion columnist covering business. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
India is the world's largest democracy, and its economy has been growing rapidly over the past few decades. Not surprisingly, India has produced a number of billionaire businessmen and businesswomen. Although there are still many who live in poverty due to India's high levels of income inequality, the country has maintained a long tradition of entrepreneurship and wealth creation.
(Bloomberg) -- The Chinese doctor who issued an early warning about the coronavirus has died, said the hospital where he worked, ending hours of confusion about his status.The city of Wuhan told residents to begin reporting their body temperature daily, and the large port city of Tianjin said it would restrict residents’ movement, part of steps across the country to stop the coronavirus outbreak from spreading. In Beijing, the Chinese government voiced anger as countries placed more restrictions on travelers.Tesla temporarily closed its stores in the nation, and Fiat Chrysler Automobiles NV warned that a China-related parts shortage could force it to idle a European plant, according to a report. Equities rose on China’s plans to cut tariffs on U.S. imports and optimism the global economy can withstand the impact of the virus.Bloomberg is tracking the outbreak on the terminal and online.Key DevelopmentsChina death toll at 563; mainland cases at 28,018, with 3,859 severeWhy Reports of Drugs for Coronavirus Are Premature: QuickTakeWhat You Need to Know About the Spreading Coronavirus: QuickTakeMan vs. Microbe: We’re Not Ready for Next Global Virus OutbreakTerminal subscribers: Join TOPLive Q&A on risks to the economyChinese Doctor Has Died, Hospital Says (3 p.m. NY)Li Wenliang, the Chinese doctor who was one of the first to warn about the coronavirus in Wuhan, has died, according to the hospital where he worked.The doctor’s status had been subject to hours of confusion after earlier reports of his death on Chinese social media were deleted and replaced by messages saying he was being treated.“Li Wenliang, an ophthalmologist at our hospital had unfortunately been infected when he worked on fighting against the coronavirus outbreak,” Wuhan Central Hospital said in a post on the Chinese social platform Weibo.The hospital said he died at 2:58 a.m. in China “after all efforts to save him failed.”Li was in his 30s, according to a report by the Chinese media outlet Caixin.Social Media Posts About Doctor’s Death Are Deleted (2:14 p.m. NY)Confusing reports emerged about the status of the Chinese doctor, Li Wenliang, who was earlier reported dead, after posts about his death by a Chinese state media-affiliated publication were removed from social media.The doctor had been one of the first to warn about the coronavirus in Wuhan, but had been reprimanded by local authorities for doing so.Posts by the Global Times, which is affiliated with the Communist Party’s People’s Daily, saying the doctor had died were deleted from the social media platform Weibo sometime before midnight in Beijing. Another post mourning the doctor by Hu Xijing, the Global Times’s editor-in-chief, was also deleted.They were replaced later with suggestions the doctor was alive. Hu said in a Weibo post around 1 a.m. Beijing time that attempts were still being made to save Li. “We wish a miracle of life could happen,” Hu said.Bloomberg earlier reported Li’s death, citing a person familiar with the matter and state-affiliated media. The doctor had been infected with coronavirus before his death.Li’s reported passing quickly became a trending topic on the Chinese social-media platform Weibo around midnight local time, with the hashtags DoctorLiPassedAway and LiWenliangPassedAway attracting hundreds of millions of views. The World Health Organization, which had posted a tweet mourning Li, issued an update saying it had no information his status.The Wuhan doctor became well-known after, in early December before the outbreak of coronavirus exploded, he posted a warning on a social media platform about a SARS-like illness. Days after his warning, he was reprimanded by police for rumor-mongering online, according to his social media account.Canadian Evacuation From Wuhan Begins (2 p.m. NY)Canada’s first evacuation of citizens from Wuhan is underway.A plane with 194 people on board was stationed at a Wuhan airport and set to depart as soon as passengers go through the screening and boarding process. A separate U.S. plane will take a smaller number of Canadians; the two planes combined will account for two-thirds of the 347 Canadians who requested assistance evacuating.Another Canadian plane will depart Feb. 10 with the remaining passengers, Minister of Foreign Affairs Francois-Philippe Champagne said at a press briefing.Canada has reported five cases of coronavirus infection; three in Ontario and two in British Columbia.Report Claims Attempts to Save Chinese Doctor (1:01 p.m. NY)Confusing reports emerged about the status of the Chinese doctor, Li Wenliang, who was earlier reported dead. The editor of the Chinese state media Global Times, which hours before said that Li had died, said in a social media post that efforts were being made to save him. Wuhan Central Hospital, where Li worked, also said that there were attempts being made to rescue him. Li’s status was not immediately clear.American Airlines Extends Flight Cancelations (12:11 p.m. NY)American Airlines Holdings Inc. extended the suspension of flights to Hong Kong from Los Angeles through March 27, citing reduced demand. Service previously had been scheduled to resume Feb. 21. Flights to Hong Kong from Dallas-Fort Worth remain scheduled to resume Feb. 21.The airline is one of the major U.S. carriers serving China.Chinese Doctor Who Warned of Virus Is Dead (10:30 a.m. NY)A Chinese doctor, Li Wenliang, who was reprimanded by police after warning colleagues about a new respiratory disease emerging in Wuhan, has died after falling ill, according to a person familiar with the matter.Li had been admitted to a hospital in early January and later confirmed to have the coronavirus, according to a post on his social media account. The exact cause of death wasn’t immediately known.Li on Dec. 30 posted in a social media group about a SARS-like illness that within weeks would explode into the coronavirus epidemic that has infected more than 25,000 people. Days after his warning, he was reprimanded by police for rumor-mongering online, according to his social media account. The Chinese Supreme Court later said the police were wrong to have taken the actions they did.The death was reported earlier by the Global Times, a Chinese state-run media organization, and other Chinese outlets. A person familiar with the situation confirmed Li’s death to Bloomberg.Economic Impact Will Be Limited, Envoy Says (9:45 a.m. NY)The impact of the coronavirus outbreak on the Chinese economy will be limited and short-term, the country’s envoy to the European Union, Zhang Ming, said in an interview. Smart investors shouldn’t lose confidence on the country’s prospects, the ambassador told Bloomberg TV.The priority of the Chinese government is to contain the virus and save lives, Zhang said. Asked about any fallout from the outbreak to the China-U.S trade deal, he reiterated that any impact will be limited, though he did acknowledge that the virus will affect both the Chinese and the global economy.Port City of Tianjin to Restrict Residents’ Movement (9:08 a.m. NY)Tianjin, a Chinese port city of some 15.6 million people, said it will restrict movement in residential compounds citywide in an effort to slow the coronavirus’s spread there.The city borders Beijing and has only reported 78 cases and one death so far, but authorities across China have taken drastic measures to slow the virus’s spread outside the center of the outbreak in Wuhan. There are more than 25,000 cases across China, concentrated mainly in Hubei province.Tianjin authorities said that residential areas will check and register people who come into communities, limit the access of deliveries and food orders, and restrict entrances and exits, according to the state media People’s Daily.The notice also calls for keeping track of people with electronic registration systems and enhancing management of rentals.Wuhan Tells Residents to Report Body Temperature (8:35 a.m. NY)The city of Wuhan told residents check their body temperature on a daily basis and report it to local health authorities, part of new steps to contain the coronavirus in the city of 11 million that’s the center of the outbreak.The city is conducting door-to-door inspections as well, and will send someone to check on people displaying a fever, according to a notice posted by the provincial government. People with symptoms will be sent to a community health center for evaluation.Fiat Chrysler Warns Disruption Could Shut Europe Plant (8:33 a.m. NY)Fiat Chrysler Automobiles NV could be weeks away from needing to idle one of its plants in Europe because it’s running out of parts sourced from China, Chief Executive Officer Mike Manley told the Financial Times.Manley said one critical maker of components is putting European production at risk. He didn’t name the company or specify what type of parts, or say which of Fiat’s European factories may have to close.Hyundai Motor Co. said earlier this week it was halting production in South Korea because of the shortage of a wiring component sourced from China.Estee Lauder Cuts Profit Outlook Again, Citing Coronavirus (7:03 a.m. NY)Estee Lauder Cos. cut its earnings outlook for a second straight quarter, saying the coronavirus outbreak in China would crimp demand for luxury cosmetics. ArcelorMittal SA is also slowing steel production in the country after the Beijing extended national holidays due to the outbreak.Chinese Government Calls for Return to Normal Production (6:36 a.m. NY)A meeting chaired by Premier Li Keqiang said resources should be allocated rationally to avoid panic, according to CCTV. Coal, power, oil and gas supplies must be secured. Sixteen provinces will provide medical staff to Hubei.OPEC+ Recommends Output Cut (6:46 p.m. HK)The OPEC+ Joint Technical Committee recommended an output cut of 600,000 barrels a day to offset the demand impact of the coronavirus, a delegate said. The recommendation will still have to be discussed by OPEC+ ministers and the group hasn’t yet agreed on a date for an early meeting.Melco Scraps Plans to Invest in Crown Resorts (6:45 p.m. HK)Melco Resorts & Entertainment Limited pulled out of a deal to invest in Australia’s Crown Resorts Limited, citing a “severe drop” in tourism to Asia and Macau’s decision to close casinos following the coronavirus outbreak.Tesla Temporarily Closes China Stores, CNBC Says (6:22 p.m. HK)Tesla has temporarily closed its stores in China as of Feb. 2, CNBC reported, citing a WeChat post from an unidentified company sales employee on that date. It wasn’t immediately clear if closures also applied to Hong Kong. The company had previously said it expects a delay in Model 3s built in Shanghai.Tesla China didn’t respond to a Bloomberg request for comment and Tesla US declined to comment.Separately, Nikkei Asian Review said Honda would extend Wuhan site closures until late February and that Toyota might prolong its production halt at Wuhan plants.Hong Kong Banks Plan Temporary Relief Measures (6:03 p.m. HK)Measures being considered include principal moratorium on residential and commercial mortgages, fee reductions on credit card borrowing and restructuring of repayment schedules for corporate loans.Indonesia Eyes Empty Islands for Quarantine Hub (5:49 p.m. HK)Indonesia plans to build a medical and rehabilitation center on an uninhabited island to isolate infectious disease victims. The country is yet to record a single case, but has quarantined 243 people on the island of Natuna after they were evacuated from China.China Objects to Countries Imposing Travel Restrictions (5:39 p.m. HK)Authorities in Beijing are growing increasingly angry and have registered “strong objections” with countries imposing harsh travel restrictions on visitors from China.Nations are ignoring recommendations from the World Health Organization and the International Civil Aviation Organization, which have advised against canceling flight routes and limiting travel to affected nations, foreign ministry spokeswoman Hua Chunying said.Coronavirus Cluster Linked to Singapore Business Event (5:35 p.m. HK)A Malaysian woman whose brother caught the coronavirus in Singapore also has the virus, widening a multinational cluster of cases linked to a meeting in the city-state.The 40-year-old woman’s older brother was the first Malaysian to be diagnosed with the pneumonia-causing illness. He was among more than 100 people who had attended a business event at Singapore’s Grand Hyatt hotel.GM China Car JV to Produce Millions of Face Masks (4:24 p.m. HK)SAIC-GM-Wuling Automobile, one of GM’s joint ventures in China, will start making face masks to help ease a shortage caused by the spread of the coronavirus in the country.More Businesses Caution on Virus Impact (4:20 p.m. HK)Volvo Car AB said two plants in China have not reopened and the shutdown would last a “few weeks,” Osram Licht AG also said some of its manufacturing facilities were temporarily shut, while Publicis Groupe SA said it was too soon to quantify the impact from the virus.CNOOC Declares Force Majeure on LNG Contracts (3:10 p.m. HK)China National Offshore Oil Corp. told some suppliers it won’t take delivery of liquefied natural gas cargoes, a rare step that shows how deeply the coronavirus is impacting global commodity flows.It’s among the first reports of a so-called force majeure clause being invoked in the global commodity market after mounting speculation that Chinese buyers of everything from copper to LNG could be forced to take the step. Separately, the China Iron & Steel Association -- the nation’s most influential mills’ group -- said the situation this quarter that “does not look optimistic.”Japan’s Abe Says Olympics Won’t Be Postponed (2:10 p.m. HK)Prime Minister Shinzo Abe told parliament the Tokyo 2020 Olympics would not be canceled or postponed despite fears about the novel coronavirus. However, travel restrictions have already begun to affect some qualifying events.China Car Sales May Fall Over 10%, LMC Says (12:48 p.m. HK)China’s auto market, the world’s largest, may shrink 10% or more this year if the coronavirus outbreak persists through the third quarter, researcher LMC Automotive said.That’s the worst of three scenarios outlined by the researcher and involves the virus undergoing further mutations and the epidemic not being contained until late in the year, LMC said in a note to clients. More likely would be for the outbreak to be under control by June, resulting in industry sales falling 3% to 5% in 2020, it said.China Offers Incentives to Firms Helping Battle Virus (12:09 p.m. HK)China is stepping up efforts to contain the spread of the new coronavirus with a series of relief measures for companies directly engaged in the fight against the disease.The steps include reduction in value-added taxes and nudging banks to offer loans carrying interest rates of less than 1.6% for key enterprises that produce, sell or transport essential medical products and daily necessities, China’s State Council said on its website last night. Separately, the nation’s airlines will also be exempt from a civil aviation fund fee starting Jan. 1, it said.Commodity Shippers Face ‘Crisis in Demand’ (11:27 a.m. HK)The global commodity-shipping industry faces an extremely challenging quarter as the impact of the coronavirus outbreak in China adds to other headwinds including seasonally low demand and the impact of recent fuel-rule changes, according to IHS Markit.The spreading health emergency in Asia’s top economy, the world’s largest importer of iron ore, has sent shock waves through raw material markets, and the companies that ferry goods across the world’s oceans. Freight rates have swooned amid gathering indications that demand for cargoes will slump.There are signs of congestion building up at ports, and reports mills are cutting output, Rahul Kapoor, global head of commodity analytics and research for maritime and trade, told Bloomberg Television.Want to Avoid Virus on a Plane? Wash Your Hands (9:37 a.m. HK)Forget face masks and rubber gloves. The best way to avoid the coronavirus on a flight is frequent hand washing, according to a medical adviser to the world’s airlines.The virus can’t survive long on seats or armrests, so physical contact with another person carries the greatest risk of infection on a flight, said David Powell, a physician and medical adviser to the International Air Transport Association. Masks and gloves do a better job of spreading bugs than stopping them, he said.Read the full story here.Vietnam Quarantines Ships From China Ports: VietnamPlus (9:24 a.m. HK)Ships arriving at Vietnam’s northern Haiphong city port that have visited China in the last two weeks will be quarantined to prevent the spread of novel coronavirus, news website VietnamPlus reported.The regulation went into effect Feb. 4, the report said, citing a regulation of the port authority under the Vietnam Maritime Administration.Japan Finds 10 More Cases on Cruise Ship (8:35 a.m. HK)Japan’s Health Ministry said it found an additional 10 cases of the novel coronavirus on a quarantined cruise ship off Yokohama. That would bring the total number of cases on the vessel to 20.The Diamond Princess was placed under quarantine this week before it reached Japan and checks were conducted after a passenger from Hong Kong who had been on the ship tested positive for the virus.More than 7,000 passengers and crew are being held in quarantine in Hong Kong and Japan as their cruises turned into confinement. In Hong Kong, the cruise ship World Dream, owned by Genting HK’s Dream Cruises, was quarantined after three travelers who disembarked in China were diagnosed with the coronavirus.The new infections bring to 45 the number of people in Japan confirmed to have the disease.(Earlier versions of this article were corrected to remove and clarify a reference about an apology to Chinese doctor following reprimand by officials, and to correct the spelling of the city of Tianjin.)\--With assistance from Linly Lin, Kyunghee Park, Chunying Zhang, Isabel Reynolds, Angus Whitley, Krystal Chia, Haidi Lun, Takashi Hirokawa, Abbas Al Lawati, Belinda Cao and Shelly Hagan.To contact Bloomberg News staff for this story: Michelle Fay Cortez in Minneapolis at email@example.com;Jason Gale in Melbourne at firstname.lastname@example.org;Drew Armstrong in New York at email@example.com;Dong Lyu in Beijing at firstname.lastname@example.org;Haze Fan in Beijing at email@example.comTo contact the editors responsible for this story: Stuart Wallace at firstname.lastname@example.org, ;Drew Armstrong at email@example.com, Mark SchoifetFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
European stocks extended a rally on Thursday, getting a further boost as a sign of warming U.S.-China trade relations stoked optimism, even as a virus continues to curb the world’s number-two economy.
Shares in steelmaker ArcelorMittal surged 10% in Amsterdam as the steelmaker reported a higher operating profit, lower debt and a better dividend than anticipated. ArcelorMittal reported a 53% drop in EBITDA to $925 million in the fourth quarter, with sales falling 15% to $15.51 billion. The EBITDA was 8% higher than the company consensus. Its net debt of $9.3 billion is the lowest since Arcelor and Mittal merged. The company said it will pay a 30 cents a share dividend, above Citi estimates of 20 cents a share.
(Bloomberg) -- Want the lowdown on European markets? In your inbox before the open, every day. Sign up here.European equities surged to a new record high, fueled by positive earnings reports and investor optimism that global growth is strong enough to weather the impact of the coronavirus.The Stoxx Europe 600 Index added 0.5%, with cyclical sectors such as oil, mining and banking shares leading the advance. Earnings drove some of the biggest contributors to gains, with Total SA up 2.9% after fourth-quarter figures beat the highest estimates. Sanofi gained 2% as a key medicine is expected to help boost profit in 2020. UniCredit SpA was up 4.8% as the lender mulled higher investor rewards via buybacks and dividends.While European equities tumbled last week amid fears about the spreading coronavirus, traders have since embraced risk amid a string of reports on possible vaccines for the virus, even as the World Health Organization later said there are no proven therapeutics. Investors analyzing corporate outlooks to gauge the strength of the global economy have been pleasantly surprised today.“At the moment the good news is piling up and we have increased our risk exposure over the last two days,”said Ulrich Urbahn head of multi-asset strategy and research at Joh Berenberg Gossler & Co. “Equities have become even more attractive relative to bonds and economic data remain robust for the time being -- though the coranavirus will have some negative temporary impact on growth figures.”Another big corporate mover was ArcelorMittal with a jump of 9.8% after the company said it’s more optimistic on the outlook for steel demand this year and expects the effect of the coronavirus outbreak in China will only be felt in the short term.“The market prefers to put off the virus issue, probably because it’s all a bit uncertain,” said Alberto Tocchio, chief investment officer at Colombo Wealth SA in Lugano. “2020 is going to be very interesting and with much more volatility than previous years, but for the moment let’s enjoy the rally.”Tocchio says he has been buying stocks since last Friday and had closed his put options on equities early this week as he felt that the stock market sell-off has been “excessive.”To contact the reporter on this story: Ksenia Galouchko in London at firstname.lastname@example.orgTo contact the editors responsible for this story: Blaise Robinson at email@example.com, Namitha JagadeeshFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- The most influential mills’ group in the world’s largest steelmaker has sounded the alarm about the outlook as the coronavirus crisis rips through China’s economy, warning of transport snarls, weaker demand, and a situation this quarter that “does not look optimistic.”“Companies are facing restrictions in logistics and transport, trades have been muted, prices of raw materials and steel have slid, which is causing the market’s value to decline,” the China Iron & Steel Association said. The group, which represents the biggest suppliers, gave a green light for lower production, while flagging potential for stimulus-aided demand later in the year.Commodities have been rocked by China’s health crisis, which has killed hundreds, sickened thousands, and hurt the outlook for raw material demand as company activities are suspended and transport barred. The country is the top buyer of iron ore from shippers including BHP Group, Rio Tinto Group and Vale SA. Conditions in China’s steel industry -- which accounts for more than half global output -- set the tone for producers and users around the world.The virus’s impact on the steel industry will be concentrated in the first quarter, the association said in a statement. “Steelmakers should appropriately adjust production schedules based on orders, finances, ability to transport materials,” it said. The sector should “avoid malignant competition, manage traders, and strictly not sell at low prices and disrupt the market.”Iron ore has slumped this year amid the health crisis, which has escalated during an annual, nationwide vacation when mills and steel users scale back operations. Given the outbreak, most of China’s provinces -- including areas where steel production is concentrated -- have extended the break.Iron ore has sagged 13% in Singapore in 2020, and last traded at $79.55 a ton as most-active futures overturned an intraday loss following a statement from China’s central government that it planned to halve tariffs on some U.S. imports. Steel prices are also lower this year.The steel association urged producers to analyze trends rationally, and flagged the possibility of an improving outlook in the second quarter on stimulus, according to the statement. The steel sector’s performance this year would still improve compared with last year, it said.Seaborne SupplyIn 2019, China churned out almost 1 billion tons of steel, with mills buying about 70% of global seaborne iron ore supply. The spread of the virus and curbs on industry and movement have hurt the restart of construction projects after the Lunar New Year break, and disrupted manufacturing.A few hours after the statement from the China mills’ grouping, Luxembourg-based producer ArcelorMittal struck an upbeat tone as it reported earnings. “We believe the effect of the coronavirus will likely have a short-term negative demand impact in China and to a lesser degree elsewhere,” it said.A more cautious note came from Austria’s Voestalpine AG, which also reported earnings. The company, which has nine manufacturing companies in China, said the plants are on an extended shutdown until at least Feb. 9. “The ramifications of the coronavirus add yet another risk factor to the current global economic picture,” it said.(Updates to add comment from Voestalpine in final paragraph)\--With assistance from Elena Mazneva and Wout Vergauwen.To contact the reporter on this story: Krystal Chia in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Phoebe Sedgman at email@example.com, Jake Lloyd-Smith, Jason RogersFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Canadian transportation champion Bombardier Inc. is running out of road. Its shares lost more than one-third of their already much diminished value last week after another disastrous profit warning.The trains and private jet manufacturer may be forced to exit its commercial aerospace joint venture with Airbus SE because of a shortage of cash; a writedown looms when the group reports 2019 results next month. In the meantime, it’s looking at ways to accelerate repayment of its $10 billion debt pile, which suggests a breakup might be on the cards. Bombardier has held talks about a combination of its rail businesses with French rival Alstom SA, Bloomberg reported on Tuesday, adding that this is one of several options being considered.On the other side of the Atlantic another storied industrial conglomerate, ThyssenKrupp AG, is suffering a comparable crisis. The German steel and car-parts maker has put its prized elevator division up for sale to help with its massive debt and pension liabilities.When their respective restructurings are completed, these vast and politically important employers will be shadows of their former selves. ThyssenKrupp has already been booted from Germany’s benchmark Dax index, while Bombardier’s on the cusp of becoming a penny stock (again).So how did they get into such a mess and why haven’t they managed to extricate themselves, despite years of restructuring and several false dawns? In both cases, hubris, shoddy governance and poor project management have played a role in their downfall. The fate of the two companies was sealed around a decade ago when they bet the farm on high-risk growth strategies — and lost. Bombardier signed off on the C-Series, an ambitious attempt to break Airbus and Boeing Co.’s lock on the commercial aerospace market. The small, fuel-efficient jet won rave reviews but orders were disappointing and delays caused costs to balloon to about $6 billion and debt to pile up. Bombardier made things worse by trying to bring several new business jets to market at the same time. Weak sales forced it to abandon development of the Learjet 85 — resulting in a $2.5 billion writedown — and to cede control of the C-Series to Airbus for the humiliating sum of one Canadian dollar.ThyssenKrupp’s original sin was sinking about 12 billion euros ($13.3 billion) into a pair of steel plants in Brazil and the U.S. to try to keep pace with the acquisitive ArcelorMittal SA. Poor construction work and a faulty business plan led to massive losses from which ThyssenKrupp has never really recovered.Woeful governance had a hand in both corporate disasters. Bombardier has a dual-share structure that gives the founding Bombardier-Beaudoin families majority voting control even though they own a much smaller fraction of the share capital. Pierre Beaudoin served as chief executive officer from 2008 until 2015 — during which time his father, Laurent, remained chairman — but he didn’t do a very good job. Pierre is now the chairman.ThyssenKrupp’s anchor shareholder, the Krupp Foundation, presided over a management culture that prized fealty and the preservation of corporate perks, including the company’s hunting grounds, but failed to prevent compliance breaches. Recent boardroom fireworks at the German giant (two chief executives and a chairman have departed in quick succession) suggest it remains dysfunctional.In their attempt to stop the rot, ThyssenKrupp and Bombardier have followed a similar script. Scrap the dividend, sell underperforming assets, slash thousands of jobs and cut costs. But the cash flow needed to cut debt has never consistently materialized and things have got worse.In 2019 ThyssenKrupp burned through 1.1 billion euros of cash and it expects to consume even more in 2020, risking a breach of banking covenants. Bombardier burned about $1.2 billion in cash last year, far in excess of the roughly break-even target it set at the start of the year.A problem for both companies has been estimating the cost and completion date of large projects. It’s one reason why ThyssenKrupp’s industrial plant construction unit — once a decent source of cash flow from large customer prepayments — has become a bottomless money pit (the unit is now up for sale). At Bombardier, several high-profile train projects have run late and over budget. Bombardier must pay penalties for late delivery.Judging by their balance sheets, both companies appear to be in trouble. ThyssenKrupp has just 2.2 billion euros in net assets, while Bombardier’s liabilities far exceed its reported assets.However, unlike Bombardier’s, ThyssenKrupp’s bonds still trade well above par and its 7.4 billion euros market capitalization is almost four times that of the Canadian company. That’s because ThyssenKrupp still has something of value to sell: The elevators unit could fetch more than 15 billion euros if management decides to part with all of it (the sale process is ongoing and ThyssenKrupp might opt to keep a majority stake).Bombardier doesn’t face an immediate cash crunch thanks to the proceeds of recent asset sales and no big debt maturities this year. But having already offloaded its ageing Q400 turboprop aircraft line and its Belfast wing factory, it’s not exactly overburdened with stuff to sell to meet future liabilities.Neither of Bombardier’s two remaining core divisions, trains and private jets, is worth as much as ThyssenKrupp’s elevators. In 2015 Bombardier sold a 30% stake in its rail division to the Quebec public pension fund, valuing the whole unit at $5 billion. The business aviation division would probably fetch more.For both businesses, the difficulty with flogging more silverware is that what’s left over probably won’t generate much profit.The moral of these twin corporate calamities is simple: If tens of thousands of people depend on you for employment, don’t bite off more than you can chew. And make sure the higher-ups know what’s going on.To contact the author of this story: Chris Bryant at firstname.lastname@example.orgTo contact the editor responsible for this story: James Boxell at email@example.comThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Chris Bryant is a Bloomberg Opinion columnist covering industrial companies. 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