Arcelor Mittal – Strength in steel

In October 2005, Roger Guy and Guillaume Rambourg, co Managers of Gartmore’s £2 billion European Selected Opportunities Fund raised their exposure to the French steel-maker Arcelor. The Funds have benefited from this decision ever since.

When Mittal Steel Co. acquired Arcelor in August last year the world’s largest steelmaker by sales was created, one three times larger than its nearest rival. The new group was viewed as very compelling by Gartmore’s European analysts and investment was again raised shortly after the merger. “Capturing 10% of the steel market and targeting the fastest growing and most populous developing economies, Arcelor Mittal is perfectly placed to take advantage of the current infrastructure boom and is in our opinion the best steel stock to be invested in at this point in time”, according to Guy and Rambourg.

Consolidation in the steel industry has credited regional steel providers with enough power to keep prices high and enforce long term contracts with their clients. A symbiotic relationship has also emerged between the producer and the buyer allowing steelmakers such as Arcelor Mittal to operate according to client demand, thereby avoiding excess or insufficient capacity.

The Gartmore European Selected Opportunities Fund is rated AAA by Standard & Poor’s.