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Arcelor (ARLOF) billing itself as the world’s largest and most global steel company reported Q3 earnings. Their claim is that guidance will be maintained and everything is on track. As they are the world’s largest they should become a good proxy for the steel market.

Despite all the positive spin one comment was disconcerting. “On October 31, 2006, the Company announced that it plans to temporarily reduce output from its European Flat Carbon Steel mills in response to short term developments in the steel market.”

European Flat Carbon is too large a market to let this one hide in the tall grass of verbiage. If guidance is re-affirmed they should indicate the guidance takes into account the supposed short-term developments.

Steel is a major industrial commodity. What is the nature of short term? Steel generally is a component in long-term capital projects and is not subject to fickle consumer whims.

This consolidation is very large and very bold. Integration will be a major concern for quite some time. Market wobbles will only accentuate nervousness.

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