By Kanchi Gandhi, CNBC-TV18

Meanwhile, ArcerlorMittal has announced its Q1 CY08 results. The results are slightly below expectations, forecasts higher earnings in Q2 on strong demand. Their sales are up 22% at USD29.8 billion versus USD24.5 billion. Their OPM is at 12.12% versus 14.12%, while net income is up 5% at USD2.4 billion versus $2.3 billion.

Their merger synergies of USD1.6 billion have been achieved by end of quarter. Their depreciation is at USD 1129 million versus USD891 million. Their depreciation is higher, mainly due to purchase price adjustments in 2007. The company has increased net financing costs at USD736 million. Their forex and other financing loss is at USD88 million in Q1CY08 versus gain of USD 207 million (YoY).

The company continues to see strong demand for steel and healthy pricing dynamics. It is supported by continued industrialisation in key emerging economies.

In Q208, their EBITDA guidance will exceed USD6.5 billion versus USD 5.0 billion in Q108 and USD 5.3 billion in Q207. The company expects EBITDA to be higher on account of strong demand for products across all regions and supply constraints. It also announced a price increase for its flat carbon products in Europe, for new bookings with delivery scheduled for July and August 2008. Their total shipments are expected to increase as compared with the first quarter of 2008. Their EBITDA levels across all divisions are expected to increase, benefiting from improved volumes and steel selling price levels, partially offset by unprecedented input price increases. In Asia, Africa and CIS (Commonwealth of Indian States), their EBITDA is expected to be at record levels due to good volume recovery, price increases and upstream integration.

Arcelor Mittal has again delivered a strong set of numbers for this quarter.

But are rising steel prices a concern for the company?

The company’s CFO, Aditya Mittal said, “ (The rising prices have) not just impacted the global steel industry, but will eventually impact the average consumer because we are going to see this higher cost increase in the cars we buy and the appliances we buy and the homes that we want to build. If we allow further mining consolidation, I think the further cost pressures in all of these sectors is going to be every significant and clearly we are every concerned about this; the BHP-Rio further consolidates the mining sector which will lead to higher prices which is not the best thing.”

Mittal added, “Probably the steel industry is in a strong position; we are seeing healthy signs globally and fundamentally what we are seeing is industrialisation occurring in Russia, China India and Brazil - there are around two billion people and clearly they are fuelling the demand for steel. The US economy remains weak but as you see from our results, it does not affect us.”