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Interim Management Report 1

Interim Financial ReportHalf Year ended June 30, 2017

2 Interim Management Report

Table of contents

Interim Management ReportCompany overview ________________________________________________________________ 3Message from the Chairman and CEO __________________________________________________ 4Business overview _________________________________________________________________ 5Recent developments ______________________________________________________________ 23Corporate governance _____________________________________________________________ 24Cautionary statement regarding forward-looking statements ______________________________ 26Chief Executive Officer and Chief Financial Officer’s responsibility statement __________________ 27

Financial statementsCondensed consolidated financial statements for the six months ended June 30, 2017Condensed consolidated statements of financial position _________________________________ 28Condensed consolidated statements of operations _______________________________________ 29Condensed consolidated statements of other comprehensive income _______________________ 30Condensed consolidated statements of changes in equity _________________________________ 31Condensed consolidated statements of cash flows _______________________________________ 32Notes to the condensed consolidated financial statements ________________________________ 33

Report of the Réviseur d’entreprises agréé - interim financial statements _____________________ 47

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Company overview

Company overview ArcelorMittal including its subsidiaries (“ArcelorMittal” or the “Company”) is the world’s leading steel and mining company, with a presence in 60 countries and an industrial footprint in 18 countries, as described further below. ArcelorMittal had sales of $33.3 billion, steel shipments of 42.5 million tonnes, crude steel production of 46.8 million tonnes, iron ore production from own mines of 28.7 million tonnes and coal production from own mines of 3.3 million tonnes in the six months ended June 30, 2017 as compared to sales of $28.1 billion, steel shipments of 43.6 million tonnes, crude steel production of 46.3 million tonnes, iron ore production from own mines of 27.6 million tonnes and coal production from own mines of 2.9 million tonnes in the six months ended June 30, 2016.

ArcelorMittal has steelmaking operations in 18 countries on four continents, including 51 integrated and mini-mill steelmaking facilities. ArcelorMittal is the largest steel producer in the Americas, Africa and Europe and is the fifth largest steel producer in the Commonwealth of Independent States (“CIS”) region. ArcelorMittal produces a broad range of high-quality steel finished and semi-

finished products. Specifically, ArcelorMittal produces flat steel products, including sheet and plate, and long steel products, including bars, rods and structural shapes. ArcelorMittal also produces pipes and tubes for various applications. ArcelorMittal sells its steel products primarily in local markets and through its centralized marketing organization to a diverse range of customers in approximately 160 countries including the automotive, appliance, engineering, construction and machinery industries.

ArcelorMittal has a global portfolio of 14 operating units with mines in operation and development and is among the largest iron ore producers in the world. The Company currently has iron ore mining activities in Brazil, Bosnia, Canada, Kazakhstan, Liberia, Mexico, Ukraine and the United States. The Company currently has coal mining activities in Kazakhstan and the United States. The Company also produces various types of mining products including iron ore lump, fines, concentrate, pellets, sinter feed, coking coal, Pulverized Coal Injection (“PCI”) and thermal coal.

Corporate and other informationArcelorMittal is a public limited liability company (société anonyme) that was incorporated for an unlimited period under the laws of the Grand Duchy of Luxembourg on June 8, 2001. ArcelorMittal is registered with the Luxembourg Register of Commerce and Companies (Registre du Commerce et des Sociétés) under number B 82.454.

Individual investors who have any questions or document requests may contact: [email protected].

Institutional investors who have any questions or document requests may contact: [email protected].

The mailing address and telephone number of ArcelorMittal’s registered office are: ArcelorMittal, 24-26 boulevard d’Avranches, L-1160 Luxembourg, Grand Duchy of Luxembourg, telephone: +352 4792-1.


Dear Shareholders,

I would like to begin by commenting on health and safety. We are pleased with the progress we have made over the years but there is still more to do. Our lost time injury frequency rate at the end of the first half was 0.78x, which was stable year on year. We are committed to make further progress and have introduced new, specifically tailored programs for different segments such as Take Care in Europe. Safety remains a topic that requires daily dedication and focus and this is what I reinforce to my leadership teams on the ground on a very regular basis. Turning my attention to our financial performance, we have enjoyed a solid start to the year. EBITDA for the first half was $4.3 billion, which is a 61 percent improvement compared with the first half of 2016. EBITDA per tonne for the first half was $102, compared with $62 in the first half of 2016. I would also like to highlight our net income, which at $2.3 billion was more than three times higher than in the same period of 2016. This improvement is due to a combination of factors including improving market conditions and our internal measures to make ArcelorMittal a stronger company. On a shipment weighted basis, the ArcelorMittal PMI reading in June was 54.3. This is the strongest indicator of demand in the markets we are operating that we have seen since the first half of 2011. Due to stronger than expected demand in China in the first half of year, we have now upgraded our apparent steel consumption forecasts for the year. We now expect Chinese demand to be up between 2.5% and 3.5% for the year compared with a previous forecast of -1.0% to 0%. Globally we now anticipate apparent steel consumption to grow by approximately +2.5% to +3.0%, significantly higher than our previous forecast of +0.5% to 1.5%. With strong demand in our core markets supporting healthy order books, we expect shipments in the second half of the year to follow a stronger than normal seasonal pattern. Together with healthy steel spreads, this provides a supportive outlook for the second half of the year. Overcapacity in China does remain an issue that needs to be addressed for long-term sustainability, but China has acknowledged this must be addressed and is starting to make progress in shutting obsolete and excess capacity. Until this is fully addressed, we will continue to face the challenge of significant imports into our markets, which is why we continue to call for a comprehensive trade solution.

We continue to focus on a number of clear priorities; namely strengthening our balance sheet, completing the Ilva acquisition, implementing our strategy, adapting for the future and improving our safety performance.

We continue to make good progress on net debt reduction. In recent years, the Company has transformed its balance sheet. Despite a healthy investment in working capital during the first half of the year, net debt at the end of June 2017 was the lowest mid-year level since the ArcelorMittal merger in 2006 at $11.9 billion, $800 million lower than at the same point in 2016. We expect to release working capital throughout the remainder of the year which should support a further reduction in net debt by the year end. Furthermore, we now expect the cash needs of the business to be approximately $4.6 billion as compared to our previous guidance of $5.0 billion. Regaining our investment grade rating remains a clear priority for the Company.

As you will be aware, the Italian government announced during the second quarter that ArcelorMittal had been selected as the new owner of Ilva, Italy’s largest steel producer. This is an important strategic opportunity for our Company as Italy is Europe’s second largest steel market and we do not have any primary steelmaking capacity in Italy today. Ilva is an asset with significant potential. Taranto is Europe’s largest single site steelmaking facility, very well positioned in terms of cost competitiveness. It is complemented by two high quality finishing facilities at Genova and Novi Liguri. We are now working on regulatory approvals and aim to complete the transaction as soon as practically possible.

Turning to the implementation of our strategy, we are now a year and a half into our five-year plan Action 2020. I will take this opportunity to remind you that Action 2020 is a unique plan to ArcelorMittal that has the ability to generate $3 billion of additional structural EBITDA and $2 billion of additional free cash flow. It is designed to ensure we are able to make sustainable progress versus the competition. We continue to make good progress across all segments. In Europe, the Transformation Program is progressing well; we are now operating from a more efficient, resized footprint and utilizing enhanced digitalization of operation to drive productivity improvements and support maintenance excellence. In the Americas, the footprint optimization program is underway with project completion expected in 2018. In Calvert, utilization has reached almost 90% and the hot strip mill continues to progress, both in terms of reliability and productivity. Our Mining segment also continues to make good progress, continuing to cut costs and increase market-priced tonnage. All areas of the business remain focused on structurally improving costs, capturing the volume opportunities and increasing the share of high added value products.

Continuing to evolve our product portfolio is a critical component of adapting for the future. Led by our world-class research and development team, I believe we are recognized as being at the forefront of developing new grades of steel for the most demanding customers, such as automotive. Recent product launches include Usibor2000 and Ductibor1000, our latest generation of press hardenable steels which are today commercially available in Europe and available for qualification testing in North America. Our first third generation AHSS for cold forming, Fortiform, which was commercially launched in Europe in 2014 will soon be available in North America through investments made in Calvert. In a great victory for steel, Audi, which had been experimenting with aluminum in its luxury models, recently announced it is returning to steel. Scheduled for release in 2018, the body structure of the new A8 will be made up of over 40% steel, of which 17% will be press hardenable steel. We are delighted with this and other similar developments. A clear trend we are seeing in automotive is the shift towards electric which is gathering significant momentum. We have been collaborating with the electric car manufacturers and have a strong understanding of their requirements for steel in electric vehicles, which is critical for the development of our dedicated electric iCare range. We are confident ArcelorMittal is well positioned to respond to this fast-growing shift.

In conclusion, I am pleased with the Company’s performance in the first half of the year. We have a clear view of the future and whilst the global steel and mining industries will continue to be volatile, particularly when there is overcapacity in China, we have the assets, the strategy and the people to be able to continue to perform well against the targets we set ourselves. I would also like to take this opportunity to thank you for your support.

Lakshmi N. Mittal Chairman and CEO

Message from the Chairman and CEO


Business overview

The following discussion and analysis should be read in conjunction with ArcelorMittal’s consolidated financial statements and related notes appearing in its Annual Report for the year ended December 31, 2016 and the unaudited condensed consolidated financial statements for the six months ended June 30, 2017 included in this report.

Key factors affecting results of operationsThe steel industry, and the iron ore and coal mining industries, which provide its principal raw materials, have historically been highly cyclical. They are significantly affected by general economic conditions, as well as by worldwide production capacity and fluctuations in international steel trade and tariffs. In particular, this is due to the cyclical nature of the automotive, construction, machinery and equipment and transportation industries that are the principal consumers of steel. A telling example in recent years of the industry’s cyclicality was the sharp downturn in 2008/2009, as a result of the global economic crisis, after several years of strong growth.

The North American and European markets together accounted for over 66% of ArcelorMittal’s deliveries in the first six months of 2017 and, consequently, weakness in these markets has a significant impact on ArcelorMittal’s results. The onset of the Eurozone crisis caused underlying European steel demand to weaken in 2012 and, coupled with significant destocking, apparent steel demand fell by over 10%. Since then, deliveries have increased in each of the past four years, and while 2016 demand was finally above 2011 levels, it remained around 22% below 2007 peak levels. Demand has continued to rise during the first half of 2017, growing just over 1% year-on-year from January to April. While demand has increased since 2012, imports into the European Union (“EU”) have risen more strongly, meaning domestic European deliveries have hardly

grown, impacting the ability of ArcelorMittal to serve one of its largest markets. Underlying steel demand in North America increased strongly post-crisis, but recently apparent demand has been impacted by inventory movements, particularly during 2014 when inventories rose significantly as imports rose almost 40% over 2013. This led to stockists purchasing over six million fewer tonnes in 2015, as compared to 2014, as they sought to reduce inventory levels as steel prices declined. Although underlying steel demand continued to rise in 2015, apparent demand declined significantly, negatively impacting the Company’s deliveries and profitability. Apparent demand in the United States was still down year-on-year in the first three quarters of 2016 as inventories continued to decrease and demand for Oil and Country Tubular Goods (“OCTG”) in particular, was still very weak. However, the situation began to improve with apparent steel demand growing year-on-year since November 2016, estimated to be up over 5% year-on-year in the first half of 2017, mainly due to a sharp rebound in demand for pipes in the energy sector.

Demand dynamics in China have also substantially affected the global steel business. After growing strongly since 2000, Chinese steel demand in 2015 declined as a result of weaker real estate sector construction and machinery production. This decline in domestic demand led to a surge in Chinese steel exports, which more than doubled between 2012 and 2015, increasing by over 56 million tonnes to 112 million tonnes in 2015. This increase in Chinese exports was greater than the growth in world ex-China steel demand over the same period, and had the effect of curtailing domestic production in countries outside of China. Although Chinese exports continued to rise during the first half of 2016, up 10% year-on-year, a rebound in domestic demand and the beginning of a capacity reduction plan has led to exports declining by 14% year-on-year in

the second half of 2016 and by 3% for the year as whole. While the majority of exports were directed to Asia, and exports to the U.S. were reduced due to the impact of trade cases, a declining but still significant proportion were directed toward ArcelorMittal’s core European markets in 2016. While not a sustainable long-term strategy, Chinese exports in 2015 were increasingly being sold at prices below cost as the Chinese Iron and Steel Association (“CISA”) reported CISA mills losing an accumulated RMB 65 billion ($10 billion) in 2015), negatively impacting prices and therefore margins in many regions. Chinese producers continued to accumulate losses until April 2016 when domestic and export prices rose sharply as domestic demand surprised producers on the upside, increasing capacity utilization. During the second half of 2016, demand continued to support higher capacity utilization and an improved domestic spread of steel prices over raw material costs, which translated into higher export prices. This led to a further decline in Chinese exports during 2017, falling to 83 million tonnes annualized during the first half of the year from 109 million tonnes in 2016, causing utilization rates to rise in the world ex-China.

Unlike many commodities, steel is not completely fungible due to wide differences in its shape, chemical composition, quality, specifications and application, all of which affect sales prices. Accordingly, there is still limited exchange trading and uniform pricing of steel, whereas there is increasing trading of steel raw materials, particularly iron ore. Commodity spot prices can vary, which causes sale prices from exports to fluctuate as a function of the worldwide balance of supply and demand at the time sales are made.

ArcelorMittal’s sales are made on the basis of shorter-term purchase orders as well as some longer-term contracts to certain industrial customers, particularly in the

automotive industry. Steel price surcharges are often implemented on steel sold pursuant to long-term contracts in order to recover increases in input costs. However, spot market steel, iron ore and coal prices and short-term contracts are more driven by market conditions.

One of the principal factors affecting the Company’s operating profitability is the relationship between raw material prices and steel selling prices. Profitability depends in part on the extent to which steel selling prices exceed raw material prices, and, in particular the extent to which changes in raw material prices are passed through to customers in steel selling prices. Complicating factors include the extent of the time lag between (a) the raw material price change and the steel selling price change and (b) the date of the raw material purchase and of the actual sale of the steel product in which the raw material was used (average cost basis). In recent periods, steel selling prices have tended to react quickly to changes in raw material prices, due in part to the tendency of distributors to increase purchases of steel products early in a rising cycle of raw material prices and to hold back from purchasing as raw material prices decline. With respect to (b), as average cost basis is used to determine the cost of the raw materials incorporated, inventories must first be worked through before a decrease in raw material prices translates into decreased operating costs. In some of ArcelorMittal’s segments, in particular Europe and NAFTA, there are several months between raw material purchases and sales of steel products incorporating those materials. Although this lag has been reduced recently by changes to the timing of pricing adjustments in iron ore contracts, it cannot be eliminated and exposes these segments’ margins to changes in steel selling prices in the interim (known as a “price-cost squeeze”). In addition, decreases in steel prices may outstrip decreases in raw material costs in absolute terms, as has occurred numerous times over the


past few years, for example in the second quarter of 2013 and fourth quarters of 2015 and 2016.

The Company’s operating profitability has been particularly sensitive to fluctuations in raw material prices, which have become more volatile since the iron ore industry moved away from annual benchmark pricing to quarterly pricing in 2010. Iron ore prices were relatively stable in 2013, averaging $135 per tonne (“/t”), but fell sharply in 2014, reaching lows of $68/t in December 2014. Volatility on steel margins aside, the results of the Company’s mining segment (which sells externally as well as internally) are also directly impacted by iron ore prices, which were weaker again in 2015, ending the year at $40/t (December 2015 average) and averaging only $56/t. Iron ore prices then rebounded from $40/t during December 2015 to an average of $52/t in the first half of 2016, and an average of $65/t during the second half of the year after reaching their highest levels (above $80/t) of 2016 in December. In the first half of 2017, average iron ore pricing remained higher than in 2015 and 2016, averaging $74/t, but with weaker pricing in the second quarter than in the first quarter. A continued reversal of the 2016 upward trend in iron ore prices due (among other things) to strong growth of seaborne supply or any decline in Chinese steel demand would negatively impact ArcelorMittal’s revenues and profitability.

Economic environment1

Global GDP growth dipped to 2.4 percent year-on-year in 2016 from 2.6 percent in 2015 but is predicted to increase to 2.8 percent in 2017. This is attributed to a recovery in industrial activity, firming trade and strengthening investments. This increase in global GDP growth is helped, in part, by moderate increases in commodity prices

and an upward trending oil price that, along with improving market expectations, are supporting a gradual recovery of commodity exporters following recent stagnation.

U.S. GDP growth is expected to recover in 2017 following a slowdown to 1.6 percent in 2016 that reflected investment and export weakness. Despite one-off factors subduing consumer spending, increased consumer confidence, business confidence, and employment increased first quarter 2017 real GDP growth to 2.1 percent year-on-year. Estimates expect similar growth rates for the remaining quarters in 2017 on the back of stable private consumption growth, an appreciable pickup in private investment, and a rebound in oil and gas capital expenditure following two years of heavy retrenchment. Citing these improvements in the labor market, the Federal Reserve has raised the federal funds rate by 75 basis points since 2016 and is expected to continue to tighten policy rates - albeit at a more gradual pace - as well as begin balance sheet reduction starting in September. Contrasted with increasing certainty in monetary policy, uncertainty over the U.S. administration’s fiscal policy presents both upside and downside risks to growth, especially in the realms of tax, infrastructure, and trade openness.

EU real GDP growth declined from 2.1 percent year-on-year in 2015 to 1.9 percent in 2016 but accelerated slightly in the first quarter of 2017 to 2.1 percent. This is mainly credited to increased manufacturing activity and goods exports following the strengthening of global trade and firming external demand. Growth is estimated to have strengthened further in the second quarter, particularly industrial output which is estimated to have grown over 1% quarter-on-quarter and over 3% year-on-year. The recovery in private investment and export growth is projected to continue, while

private consumption is supported by increasing employment but growth is likely to decelerate on weaker real income growth owing to increasing inflation. However, prospects remain clouded by elevated policy uncertainty, the direction of Brexit negotiations, and financial sector fragilities such as high levels of non-performing bank loans in Italy and Spain. Although the Eurozone unemployment rate fell to 9.3 percent in the second quarter of 2017, core inflation and inflation expectations remain below the European Central Bank (“ECB”) target, pointing to prospects of continued monetary policy support. Accommodative monetary policy is expected to help sustain domestic demand in the near term, while fiscal policy is expected to be broadly neutral to growth in 2017.

Chinese GDP grew 6.7 percent in 2016, a slowdown from 6.9 percent in 2015. While growth in the first half of 2017 exceeded expectations at 6.9 percent due to increasing property prices and investment and credit expansion, growth is expected to continue to moderate as monetary policy tightens, net exports decrease, and fiscal policies used to support growth become more intermittent. In the short-term, however, until the Party Congress in October, the priority will be to keep growth around 6.5 percent. Reflecting that agenda, the economy saw a reversal toward the end of 2016 in the trend of domestic rebalancing from investment and exports to private consumption, as infrastructure spending by state-owned companies and the public sector accelerated to offset a sharp slowdown in the private sector investment. While consumer price inflation remains below target, producer price inflation has increased sharply, reflecting higher commodity prices and reduced overcapacity in heavy industry. Major drivers of growth remain steady with robust private consumption and an expansion in real estate sales, despite a housing market correction in the

largest (Tier 1 and Tier 2) cities to curb prices, tightening regulation, and the imposition of purchase restrictions in 2016. Exchange rate pressures have eased from late 2016, partly because of a tightening of capital controls and measures to encourage inward foreign direct investment (“FDI”), which are also helping maintain reserves at around $3 trillion.

Brazil is expected to slowly emerge from recession in 2017 after real GDP contractions of 3.8 and 3.6 percent year-on-year in 2015 and 2016, respectively. Real GDP grew 1 percent quarter-on-quarter in the first quarter of 2017, the first positive gain in two years, but is still down 0.4 percent year-on-year, pointing to GDP growth gradually trending up after having bottomed out. However, the optimistic outlook on growth given by improvements in industrial output growth and export growth is dampened in the context of intensifying political uncertainty following renewed scandal surrounding President Temer, which will invariably damage business confidence and investment. Policy decisions will remain central to growth prospects as lower inflation—underpinned by exchange rate appreciation, monetary policy tightening, and falling food prices— is allowing scope for a reduction in interest rates to support the recovery. However, significant impediments to growth remain, notably the high levels of public and private sector debt accumulated prior to the 2015–16 recession.

Real GDP in Russia grew 0.5 percent year-on-year in the first quarter of 2017, after a two-year recession. Growth was helped by easing inflationary pressures, contributing to growth in consumption through real incomes, and a positive contribution from exports after increasing currency stability. Rebounding oil prices and looser monetary policy, as inflation approaches the target of 4 percent, will support growth in the near

1 GDP and industrial production data and estimates sourced from Oxford Economics July 19, 2017

Business overviewcontinued


term but economic sanctions, demographic pressures, and slow implementation of structural reforms all weigh on potential growth.

Global industrial production (“IP”) growth increased to 1.8 percent year-on-year in 2016 from 1.6 percent in 2015. IP growth in the first quarter of 2017 accelerated this upward swing, increasing to 2.9 percent year-on-year with estimated second quarter growth increasing to 3.2 percent. The 2016 IP growth was primarily a product of a pickup in non-Organization for Economic Co-operation and Development (“OECD”) countries, where it increased by 5.7 percent year-on-year in 2016 compared to 3.9 percent in 2015. However, going forward, OECD countries are expected to bounce back to around their 2015 growth rate at 2.9 percent year-on-year after a dip to 1.8 percent in 2016, while non-OECD countries remain around 2016 levels of growth.

Global apparent steel consumption (“ASC”) is estimated to have increased by 1 percent year-on-year in 2016, after declining by around 2.5 percent in 2015. This was mainly due to a rebound in Chinese consumption which grew 1.3 percent in 2016, after two years of decline. Elsewhere, world-ex-China ASC grew by just 0.6 percent as growth in EU28 (3%), Asia ex-China & Japan (5%), Turkey (3%) and certain other regions was largely offset by significant declines in Latin America (-12%), U.S. (-4%), CIS (-3%), and Africa (-5%). During the first half of 2017, the pick-up in demand accelerated, with Chinese demand stronger than anticipated supported by real estate and machinery, growing by around 7.5 percent year-on-year. ASC in the U.S. has increased over 5% year-on-year in the first half of 2017 but most of this increase was concentrated in pipes and tubes for the U.S. shale oil and gas industry. CIS demand has now also begun to rebound after two years of decline, up

approximately 4 percent during the first half of 2017, while in Europe, ASC continues to grow, albeit slower than during 2014, 2015 or 2016.

Steel production2

After reaching a peak of over 1.67 billion tonnes in 2014, world crude steel production declined by 3% in 2015 to 1.62 billion tonnes in 2015 as output fell in every major steel producing market except India. Production recovered to 1.63 billion tonnes in 2016, up 0.8% year on year, with Chinese production growing 1.2%. China, the world’s single largest steel producer, broadly kept its market share steady at 50% in 2016, despite output falling by 14.4 million tonnes since its peak in 2014, to 0.81 billion tonnes. World ex-China growth which had fallen by 3.6% year-on-year in 2015, rose by 0.4% in 2016 due to higher output from developing countries such as India, Turkey and Ukraine, partially offset by lower output from Europe, South America and developed Asia.

Global crude steel production grew 0.8% year-on-year in 2016, as growth of 3.3% in the second half of the year more than offset the declines seen in the first half. India’s production growth was the fastest among the top ten producing countries, with crude steel production rising 7.4% to 95.6 million tonnes in 2016. Growth was also supported by Chinese steel production which grew over 3% in the second half of the year helped by government stimulus and an improvement in the real estate market. Growth elsewhere was driven by Mexico (up 4.3% year-on-year) and Canada (up 1.6% year-on-year). However, production in the U.S. declined by 0.3% to 78.6 million tonnes, as domestic demand remained weak. Meanwhile, EU28 steel production growth was down 2.3% year-on-year due to a particularly weak first half of 2016.

Global crude steel output picked up further during the first half of 2017, up 5% year-on year, in line with a

strengthening global economy and increasing momentum in trade. This was supported by higher output in the largest steel producers China, U.S. and EU28, while Turkey, Mexico and Brazil all recorded double-digit growth of over 10% year-on-year. Chinese steel output rose over 4% year-on-year in the first half of 2017, primarily to supply rising domestic demand as exports fell by a third year-on-year. However, this figure overstates growth in Chinese crude steel output as actual output figures last year were higher than reported due to significant production from induction furnaces that was not recorded officially. Induction furnaces are now closed and production has been switched to mills that fully disclose production. Meanwhile, U.S. output grew 1.3% year-on-year in the first half of 2017 to almost 82 million tonnes annualized, despite domestic demand rising 7% year-on-year as finished imports and re-rolling (fed by rising imports of semi-finished steel) increased more strongly. European steel production rose by over 4% year-on-year in the first half of 2017 to 73.8 million tonnes annualized, compared to the 6% decline recorded over the same period in 2016. Elsewhere, Turkish steel production has increased since falling to a low of 31.5 million tonnes in 2015 and was up almost 12% year-on-year in the first half of 2017 to 36.5 million tonnes annualized.

The only region to experience lower output year-on-year was the CIS, where output fell by 2%, due to Ukrainian steel production dropping by 15% in the first half of the year.

World ex-China production fell to a record low of 760 thousand tonnes in December 2015 but has strongly rebounded since to 845 thousand tonnes in June 2017. This has coincided with falling net exports from China since the second half of 2016 and in the first half of 2017, as described above. The lack of Chinese supplies in the market

have been met by increasing world ex-China production, increasing utilization rates.

Steel prices3

Steel prices for flat products in Europe were stable in euro terms in Southern Europe and on a slight upward trend in Northern Europe, at the beginning of the first quarter of 2017 as compared to the level in December 2016, followed by an increase toward the end of February/beginning of March 2017. The price of hot rolled coil (“HRC”) in Northern Europe ranged between €565-572/t in the first quarter of 2017, representing a €69/t quarter-on-quarter increase, while in Southern Europe the range was between €532-542/t, representing an increase of €63/t quarter-on-quarter. In the second quarter of 2017, prices weakened in euro terms due to the strengthening euro, while there was an increase during May in USD terms. The spot HRC price averaged between €519-526/t in Northern Europe and between €485-496/t in Southern Europe in the second quarter of 2017, corresponding to an average price decline of €47/t in the North as well as in the South of Europe. The average HRC prices for the first half of 2017 were at €545/t in Northern Europe and €513/t in Southern Europe as compared to the first half of 2016 at €371/t in Northern Europe, and €351/t in Southern Europe.

In the United States, spot HRC prices increased during the first quarter of 2017, ranging between $685-702/t, an increase of $106/t in average quarter-on-quarter. Price levels improved sharply in January to an average of $681/t, stabilized close to $690/t in February and peaked at $725/t at the end of March 2017. During the second quarter of 2017, HRC spot prices ranged between $672-693/t, decreasing $11/t quarter-on-quarter and progressively declined until


2 Annual global production data is for all 95 countries for which production data is published by World Steel. The first half of 2017 data includes only those countries (67 in total but accounting for around 99% of global steel production) where data is collected monthly and excludes countries for which data is collected annually.

3 Source: Steel Business Briefing (SBB)


the first week of June, with a floor of $648/t, followed by a price improvement that reached $661-683/t by the end of June, sustained by declining inventories and improved international market sentiment. The average HRC price for the first half of 2017 in the United States was $688/t as compared to $547/t (an increase of $141/t year-on-year) for the first half of 2016.

In China, spot HRC prices increased during the first quarter of 2017, against 2016 fourth quarter averages, fluctuating with an upward trend until the first part of February 2017, but deteriorating afterwards. Domestic HRC prices ranged between $536-538/t VAT excluded, during the first quarter of 2017, for an increase of $44/t quarter-on-quarter, with peaks in February at $558/t VAT excluded, but falling to $483/t VAT excluded by the end of March. Prices continued to slide, hitting a floor of $439/t VAT excluded by mid-May 2017, followed however by a rapid recovery to an average of $513/t VAT excluded during June, supported by a new upward trend in raw materials cost, positive market sentiment and local mills interest in ramping up production and maximizing profits. As a result, the HRC spot price in the second quarter of 2017 ranged between $462-465/t VAT excluded, corresponding to a decrease of $74/t quarter-on-quarter. The HRC domestic price in China averaged $500/t VAT excluded for the first half of 2017, as compared to $373/t VAT excluded for the first half of 2016.

Long steel products prices increased in Europe in the beginning of 2017, followed by a decline mid-February, but recovered by the end of March. Medium sections averaged between €510-520/t in the first quarter of 2017, representing an increase of €27/t as compared to the fourth quarter of 2016.

Similarly, rebar prices ranged between €458-469/t during the first quarter of 2017, corresponding to a quarter-on-quarter price increase of €38/t. Prices weakened during the second quarter of 2017 in euro terms, both for medium sections and rebar, but prices appeared to reach a floor at the end of June 2017. Meanwhile, the strengthening of the euro against the USD limited the effect of the decline in USD terms, underlining the price floor toward the end of the second quarter of 2017. Medium sections prices ranged between €496-505/t in the second quarter of 2017, while the price for rebar averaged between €436-446/t in the second quarter of 2017 representing a quarter-on-quarter decline of €15/t and €22/t, respectively. The average medium sections price in Europe for the first half of 2017 was €508/t as compared to an average of €481/t for the first half of 2016. The average rebar price in Europe for the first half of 2017 was €452/t as compared to €404/t for the first half of 2016.

In Turkey, imported scrap HMS 1&2 during the first quarter of 2017 improved by $18/t as compared to the fourth quarter of 2016 to an average level of $275/t CFR from $257/t CFR. Rebar export prices closely followed the evolution of Turkey imported scrap HMS 1&2, declining in the beginning of 2017 from the $430/t FOB level in December 2016, to reach a floor of close to a monthly average of $390/t FOB level by end of January, and continued fluctuating towards the end of March 2017. The range of Turkish rebar export price during the first quarter of 2017 was between $420-427/t FOB, for a quarter-on-quarter improvement of $14/t. The price fluctuation continued during the second quarter of 2017, but increased towards the end of June, with a range between $424-430, representing an increase of $4/t quarter-on-quarter. The

average rebar export price from Turkey for the first half of 2017 was $425/t FOB as compared to an average of $388/t FOB for the first half of 2016.

Current and anticipated trends in steel production and pricesSteel output improved in 2016 as global steel demand began to rebound. Output grew year-on-year in the second half of the year after declines in the first half. During 2017, demand has continued to pick up at the same time as steel exports from China have declined sharply. This has led to steel production in the world ex-China growing strongly by 4.5% year-on-year during the first half of the year. Demand has stopped declining in the Commonwealth of Independent states (“CIS”) this year but steel production continues to decline due to a lack of raw materials in the blockaded eastern region, limiting overall Ukrainian steel production (down 15% year-on-year in the first half of 2017). It is unclear when this situation will be resolved and when Ukrainian production and exports will recover.

In China, ArcelorMittal expects demand to be slightly down year-on-year in the second half of 2017 as the economy eventually slows, but to remain up significantly compared to the second half of 2015. Although Chinese steel exports slumped by 28% year-on-year in the first half of 2017, ArcelorMittal expects exports to be slightly higher in the second half of 2017 compared to the first, but to remain down year-on-year. Overall, with both demand and exports projected to decline, albeit moderately, steel production is expected to also be slightly down year-on-year in the second half of 2017. The Chinese HRC spread (difference between raw material costs and finished steel prices) has rebounded recently to over $200/t as demand has rebounded and capacity reduced.

ASC in the U.S. rebounded during the first half of 2017 (up over 5% year-on-year), mainly due to a sharp rebound in demand for energy pipes. We expect demand for both flats and longs to increase this year, albeit much slower than pipes and tubes, and that it should support continued growth in domestic steel production during the second half of 2017. EU steel production has rebounded, up over 4% year-on-year during the first half of 2017 but due to the declines seen last year is still down relative to levels seen during the first half of 2015 as import penetration continues to increase. However, mills output should continue to grow year-on-year in the second half of 2017 as imports slow due to trade protection but steel production growth rates should decline from those seen during the first half of the year.

Raw materialsThe primary inputs for a steelmaker are iron ore, solid fuels, metallics (e.g., scrap), alloys, electricity, natural gas and base metals. ArcelorMittal is exposed to price volatility in each of these raw materials with respect to its purchases in the spot market and under its long-term supply contracts. In the longer term, demand for raw materials is expected to continue to correlate closely with the steel market, with prices fluctuating according to supply and demand dynamics. Since most of the minerals used in the steelmaking process are finite resources, they may also rise in response to any perceived scarcity of remaining accessible supplies, combined with the evolution of the pipeline of new exploration projects to replace depleted resources.

The spot markets for iron ore and coking coal were in a downward price trend from the first half of 2014 until the beginning of 2016. In 2015, the downward trend gained momentum with a slower growth rate in China, recession



in developing economies such as Brazil and Russia and continued robust seaborne supply from major miners. In the first half of 2016, as compared to the beginning of 2014, the iron ore and coking coal spot prices decreased by 53% and 27% respectively (Platts H1-2014 vs. H1-2016). Over 2016, raw material prices became even more volatile and were impacted by short term changes in sentiment, mainly related to Chinese market demand sentiment for crude steel and how the government might deal with excess steelmaking capacity. In the first half of 2017, the volatility trend continued, with iron ore prices exhibiting first an upward trend supported by tightening emission controls and bullish demand sentiment in China followed by a downward trend influenced by higher Chinese port inventory levels. Coking coal prices were also very volatile, first decreasing due to the temporary relief of the Chinese working days restriction and then sharply increasing again due to Australian supply disruption caused by the unexpected cyclone.

Since 2012, quarterly and monthly pricing systems have been the main type of contract pricing mechanisms, but spot purchases also appear to have gained a greater share of pricing mechanisms as steelmakers developed strategies to benefit from increasing spot market liquidity and volatility. In 2016 as well as the first half of 2017, the trend for using shorter-term pricing cycles seems to continue as in previous years.

Iron ore In the first half of 2016, iron ore spot prices reflected a high level of volatility. After falling to the lowest level for the first half of 2016 at $39.25/t on January 14, 2016, prices spiked to $70.50/t on April 21, 2016, and then declined to $49.50/t on June 1, 2016. The price of iron ore recovered in June

and was $55.00/t (CFR China, Platts index, 62% Fe) on June 30, 2016, averaging at $52.07/t for the first half of 2016, compared to an average of $60/t for the first half of 2015. The volatility has reflected bullish sentiment on demand due to improved steel margins in China as well as higher than expected crude steel output in China and announcements by Chinese officials on possible reductions in excess steelmaking capacity, which all contributed to sustaining iron ore price at levels above those seen in the fourth quarter of 2015 and in January 2016.

For the third quarter of 2016, the average spot price was $58.60/t (CFR China, Platts index, 62% Fe) with a slight downward trend throughout September. During the fourth quarter of 2016, the spot price index increased from a low of $54.85/t on October 4, 2016 to reach a high of $83.95/t on December 12, 2016, the average for the fourth quarter was $70.76/t and was marked by high volatility and bullish market sentiment influenced by bullish steel prices as well as the Chinese authorities closure announcements regarding obsolete induction furnaces using mostly scrap as raw materials.

Iron ore prices in the first quarter of 2017 averaged $85.64/t reaching their year-to-date high of $93.70/t on February 22, 2017. Monthly averages in the first quarter for January, February and March were $80.89/t, $88.72/t and $87.11/t (CFR China, Platts index, 62% Fe), respectively. These prices were supported by bullish steel demand, as well as the impact of boosted demand for higher grade iron ores due to tightening emissions control in China.

In the second quarter of 2017, iron ore prices averaged $62.90/t (CFR China, Platts index, 62% Fe), with monthly averages of

$70.67/t in April, $61.55/t in May and $57.20/t in June. This downward trend was influenced by higher Chinese port inventory levels.

Coking coal and cokeIn the first quarter of 2016, the premium HCC FOB Australia quarterly contract price settled at $81/t (down $8/t compared to the previous quarter). By the end of the first quarter, the spot price increased to $82/t. During the second quarter of 2016, the coking coal spot price was on an upward trend supported by higher volume imports from China (January-May 2016 up 27% year-on-year versus January-May 2015). In the second quarter of 2016, the premium HCC FOB Australia quarterly contract price settled at $84/t (up $3/t compared to the previous quarter). The spot price (Premium LV HCC, FOB Australia) was quite volatile in the second quarter of 2016 ranging from $84 to $100/t, driven by the bullish sentiment from steel demand and end-user drivers, such as housing demand and prices in China. The premium HCC FOB Australia quarterly contract price was settled at $92.5/t in the third quarter of 2016 (up $8.5/t compared to the previous quarter) and the spot index traded between $92 and $96/t for the first 15 days but averaged $136/t for the third quarter (Premium LV HCC, FOB Australia, Platts index). During the fourth quarter of 2016, the spot price reached a high of $310/t on November 8, 2016 and decreased through the closing of the year to $230/t on December 30, 2016. The average spot price for the fourth quarter of 2016 was $266.10/t. The spot index’s high volatility over the second half of 2016 was influenced by the Chinese domestic supply reduction (originating from weather/logistic issues combined with regulations issued by the Chinese government on lower mining working days, from an annual rate of 330 days per year

to a lower rate at 276 days) as well as several maintenance and mining operational issues in Australian coking coal mines during that period. Consequently, the premium HCC FOB Australia quarterly contract price was settled at $200/t for the fourth quarter of 2016 and at $285/t for the first quarter of 2017.

In the first quarter of 2017, the spot price (Premium LV HCC, FOB Australia, Platts index) sharply dropped from $263/t in December 2016 (monthly average) to $158.3/t in March 2017 (monthly average) with the average spot price for the first quarter of $168.3/t. The temporary relief of the Chinese working days restriction and fully recovered supply from Australia, as well as expected additional seaborne supply from North America allowed such a sharp drop of prices by the end of the first quarter of 2017.

At the beginning of the second quarter of 2017, cyclone Debbie hit Australia causing supply disruptions and the spot price spiked up to $304/t on April 17, 2017. The upward trend of April was followed by a downward trend in May and June as Australia’s mining-rail-port system recovered earlier than expected from the cyclone disruption. The spot price decreased through the second quarter to $171.1/t in May (monthly average) and $146.5/t in June 2017 (monthly average) with the average spot price for the second quarter of 2017 at $190.3/t.

For the second quarter 2017, a new index-based system was adopted for the premium HCC FOB Australia quarterly contract price between some Japanese steel makers and Australian HCC suppliers. As of the date of this report, the new system’s methodology has not been disclosed and the extent of its potential application and adoption is uncertain.



ArcelorMittal continues to leverage its extensive supply chain, diversified supply portfolio and contracts flexibility to capture a maximum value from the market price volatility and rapidly changing pricing environment.

Scrap During the first half of 2017, European scrap prices for quality E3 (old thick scrap) recovered from an average of €195/t in 2016 up to an average of €249/t in the first half of 2017, with a low of €235/t in February, while the other months were globally stable. Export prices for scrap grade HMS 80:20 were up by $35/t, from an average of $216/t (Rotterdam FOB) for the full year 2016 to an average of $251/t in the first half of 2017. In the United States, East Coast FOB average prices increased by $33/t, from $225/t for 2016 to $258/t for the first half of 2017.

Turkey, the biggest scrap importer in the deep sea market, also experienced increases in average scrap prices of $40/t CFR for HMS 80:20 in the first half of 2017 compared to the full year 2016. Average scrap prices for U.S. originated material increased from $236/t for the full year of 2016 to $277/t in the first half of 2017 (CFR Turkey) and average prices for EU originated scrap increased from $228/t to $268/t (CFR Turkey) during the same period. These price increases were still supported by higher imports of scrap, due to the significant decrease of billet imports from China-based iron ore production. Steel production increased in Turkey in the first six months of 2017 by 11.4% compared to the first six months of 2016, scrap imports increased by 10.9% during the first five months of 2017 compared to the first five months of 2016, and billet imports decreased by 56.8% during the first five months of 2017 compared to the first

five months of 2016. Business in Turkey is currently moving towards more scrap and less billet, due to certain competitive advantages of scrap. The HMS 80:20 index increased to $315/t at the end of July 2017 for EU origin scrap.

In the domestic U.S. market, average scrap prices increased 32% ($66/t) in the first half of 2017 compared to the full year of 2016. The Midwest Index for HMS 1 increased from an average of $208/t for the full year of 2016 to an average of $274/t in the first half of 2017.

In Europe, the German suppliers’ index (“BDSV”) increased by €54/t, from €195/t for the full year of 2016 to €249/t for the first half of 2017 for reference grade E3. In the first half of 2017, the European E3 price was $4/t lower on average than the U.S. HMS 1MidWest price; for the full year of 2016, the European E3 price was $9/t higher than the U.S. HMS 1MidWest price. In July 2017, even with maintenance shutdowns in place and the seasonal decrease in scrap demand, the European E3 prices were €7.5/t higher than the German Index in June, which was €243/t. Billet prices were at a high level due to high Chinese prices; domestic Chinese billet prices increased by $22/t in July 2017 to $514/t EXW Chinese Mills.

Alloys (manganese) and base metals The underlying price driver for manganese alloys is the price of manganese ore, which decreased by 23% from $7.88 per dry metric tonne unit (“dmtu”) (for 44% lump ore) on Cost, Insurance and Freight (“CIF”) China in January 2017 to $6.06 per dmtu in June 2017, as a result of high stocks at Chinese ports and lower demand from major importers, in particular China.

The average price of high carbon ferro manganese in the first half of 2017 was $1,411/t, representing an increase of 71.5% as compared to the average price in the first half of 2016 ($823/t). The average price of silicon manganese in the first half of 2017 was $1,335/t, representing an increase of 55.3% as compared to the average price in the first half of 2016 ($860/t). The average price of medium carbon ferro manganese in the first half of 2017 was $1,933/t, representing an increase of 57.7% as compared to the average price in the first half of 2016 ($1,226/t).

The base metals used by ArcelorMittal are mainly zinc and tin for coating, and aluminum for the deoxidization of liquid steel. ArcelorMittal partially hedges its exposure to its base metal inputs in accordance with its risk management policies.

The average price of zinc in the first half of 2017 was $2,690/t, representing an increase of 49.7% as compared to the average price in the first half of 2016 of $1,797/t. The January average price was $2,713/t while the June average price was $2,572/t, with a first half of 2017 low of $2,435/t on June 7, 2017 and high of $2,971/t on February 13, 2017. Stocks registered at the London Metal Exchange (“LME”) warehouses stood at 289,275 tonnes as of June 30, 2017, representing a decrease of 138,575 (32.4%) tonnes compared to December 31, 2016 (when stocks registered stood at 427,850 tonnes).

EnergyElectricityIn most of the countries where ArcelorMittal operates, electricity prices have moved in line with other hydrocarbon fuels. In North America, the continuous downward pressure on oil prices brought natural gas prices to a minimum level since 1998

(spot price at $1.48/MM British thermal unit (“BTU”) on March 4, 2016. Warmer than average summer forecasts and better than expected balanced gas market in 2017 has maintained the forecasted price for 2017 in the PJM4 electricity market, which was 4% higher compared to 2016 (2016 actual: $36.72 per Megawatt hours (“MWh”); 2017 forecast: $38.14/MWh). In Europe, electricity prices reached low levels (e.g. for calendar year 2018, electricity prices were at approximately 20 €/MWh for Germany and approximately 25 €/MWh in France) and oil prices were below $30 per barrel (“bbl”) in February 2016. Since then, prices have steadily increased following the commodities price recovery (oil, gas and coal).

There are several other factors that explain the increase of prices including:

i. difficulties for the French nuclear fleet to restart after summer 2016 maintenance, which was amplified by the decision of the French nuclear regulator (ASN: Autorité de sûreté nucléaire) to stop 12 nuclear reactor plants in order to test their steam generators which were linked to high carbon levels that could weaken their mechanical resistance. The shortfall of available French power capacity created a significant disruption in electricity and gas prices, bringing prices up fourfold compared to pre-tension levels. This event forced gas power plants (CCGT) and the hydraulic reserves to compensate for the lack of nuclear capacity. The effect in the gas market was bullish and changed the expected gas landscape for the remaining portion of 2017;

ii. the arrival of a late cold snap during the second quarter of 2017 put pressure on gas

4 PJM Interconnection is a regional transmission organization (RTO) that coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.




consumption and brought gas storage levels to a minimum of 10 bcm (Germany, France, Italy and Belgium storage capacity/amount remaining);

iii. Centrica’s, a British utility company, decision to halt Rough gas storage, the UK’s biggest reservoir which will increase the UK’s reliance on imports from the EU during next winter; and

iv. the outcome of French elections: initial announcements from the new government focused on the CO2 minimum price (€30/ton) for electricity production and potential shutdown of up to 17 nuclear reactors in France (one-third of the nuclear installed capacity). The market priced this risk and the forward curve in 2019 and 2020 increased by €2-3/MWh (up from €35/MWh to €37/MWh). While these factors primarily impact the French market, neighboring countries like Belgium and to a lesser extent Germany are also affected.

Overall, production capacity in Europe remains comfortable in the short-term, but increasing environmental regulatory constraints, low market prices and cost barriers to regular positive cash flow from gas power plants (negative CSS – Clean Spark Spread), are pushing utilities to close gas plants and the oldest coal power plants. The electricity price decrease at the end of 2015 and beginning of 2016 was unsustainable for power producers and has accelerated decisions to mothball unprofitable units. Even with electricity market prices having recovered from low levels, the gas power plants remain low on cash, beaten by lower coal power plant marginal prices. This market price driven cut is

inconsistent with the need for more flexible power generation to cope with increasingly intermittent renewable capacity. This has fueled “capacity market” debates and other market mechanisms between utilities, Transport System Operators (TSO), energy regulators and governments that could be needed to guarantee the required investments ensuring security of supply or at least avoiding further closures that could jeopardize electricity grid security.

The vote for Brexit has brought additional volatility and risk aversion, but the long-term impact in the electricity markets is still uncertain.

In the absence of increasing demand, mainly linked to energy efficiency actions on both the residential and industrial sectors, the continuous closing of thermal capacity and possible policy decisions on capacity markets and CO2 remain potential triggers for price increases.

Natural gasNatural gas is priced regionally. European prices were historically linked with petroleum prices but continuous spot market development and increasing liquidity now prevail in almost all countries except in poorly integrated markets (e.g., Spain, Portugal) or markets in transition from a tariff based system (e.g., Poland). With increasing liquid natural gas (“LNG”) flows in Spain, Poland, Italy, Portugal, Greece and Lithuania, definitive movement towards a more liquid and integrated market could be experienced by the end of 2017, but greater integration could be expected during 2018-2019 as a higher number of LNG liquefaction capacities enter their production phase. This

trend is continuously reducing the correlation and sensibility of the Western European market to oil price volatility. North American natural gas prices trade independently of oil prices and are set by spot and future contracts, traded on the NYMEX exchange or over-the-counter. Elsewhere, prices are set on an oil derivative or bilateral basis, depending on local market conditions. International oil prices are dominated by global supply and demand conditions and are also influenced by geopolitical factors.

In 2015 and 2016, the LNG market continued to grow in Asia, although at a slower pace than in 2013. Excess supply is developing in that market as new liquefaction capacities are coming on stream or ramping up from Australia, Papuasia, Malaysia and the United States. This increase is partially being absorbed by new developing markets like India, China and South America, resulting in slightly higher shipments to Europe (compounded by the fact that Japanese nuclear power plants have slowly initiated the ramp-up in generating power, resulting in less LNG demand). On the other hand, Japan is planning to launch total capacity of 4 GW of gas power plants during 2017 and 2018, which, if running at full capacity, could increase their LNG gas needs by 65 TWh/year or roughly the equivalent of 4.5 million ton/year liquefaction train. Increasing supply (due to, among other things, North American shale oil and past lack of OPEC discipline) pushed oil prices down, which resulted in: (i) the decrease in Asian oil indexed LNG prices (JKM5) to $4/MMbtu for spot LNG cargos at the beginning of the second quarter of 2016, recovering to $5/MMbtu in July 2016), (ii) the closure of the arbitrage window between Europe and Asia (no

strong window is expected in the medium term) and (iii) reduction of the number of rigs in use in the U.S. to produce shale gas.

Following successful oil production cuts announced by the OPEC in November 2016, oil prices increased to $55/bbl in the first quarter of 2017. This brought another wave of drilling both for oil and gas wells in the U.S. The market has seen the resilience of U.S. gas and oil production and its agility to revert the trend when price market conditions are higher than their production cost. The U.S. increase of oil production combined with continuous boosted production from Libya and Nigeria to put pressure on oil prices as production is outpacing global demand growth for next year. Reducing the oil glut has proved more difficult than anticipated by all market participants. Even OPEC’s successful agreement in May 2017 to extend its oil production cut for an additional 8 months did not outweigh the bearish sentiment.

In 2016, in the United States, a record buildup of gas in storage occurred during the 2015/2016 winter with a surplus of approximately 15% compared to the 5-year average (decreasing the risk premium for winter months). The June 2017 surplus has been reduced by 10% compared to June 2016 but this still gives a comfortable cushion to face 2017/2018 winter. Gas power plants are taking the lead and increasing their market share in the production mix, triggering volatility in the summer period (many of the U.S. regions are experiencing above average temperatures and heat waves). New liquefaction facilities for export to Europe or Asia are entering the LNG market, potentially pushing U.S. gas

5 LNG benchmark price assessment for spot physical cargoes delivered ex-ship into Japan and South Korea


prices up to keep up with the new export demand.

Ocean freight6

Ocean freight prices increased in the first half of 2017 compared to the same period in 2016 primarily due to an increase in iron ore activity from Brazil and increased imports of both iron ore and coal into China.

Bulk Carrier demolition activity slowed considerably as freight prices increased but orders for new ships reduced, hence net fleet growth started to slow.

Coal shipments from Australia were hampered somewhat during March and April 2017 due to Cyclone Debbie which led to an increase in coal shipments from the U.S. reflecting the temporary shift of supply. Meanwhile, Chinese imports of iron ore increased due to the country’s real estate expansion and lower stockpiles at the beginning of the year.

The Baltic Dry Index (“BDI”) averaged 975 points in the first half of 2017, representing a 101% increase compared to the first half of 2016. The Capesize sector averaged $11,596/day in the first half of 2017 (compared to $4,717/day in the first half of 2016). The Panamax sector averaged $8,536/day (compared to $3,991/day in the first half of 2016).

Impact of exchange rate movements Because a substantial portion of ArcelorMittal’s assets, liabilities, sales and earnings are denominated in currencies other than the U.S. dollar (its reporting currency), ArcelorMittal has exposure to fluctuations in the values of these currencies relative to the U.S. dollar. These currency fluctuations, especially the fluctuations of the U.S. dollar relative to the euro, as well as fluctuations in the currencies of the other countries in which

ArcelorMittal has significant operations and sales, can have a material impact on its results of operations. In order to minimize its currency exposure, ArcelorMittal enters into hedging transactions to lock-in a set exchange rate, as per its risk management policies.

Although political risks remained present during the first half of 2017, the absence of any outright crisis contributed to six months of historically low volatility in the financial markets. As a result, Central Banks were able to continue dictating the pace and the world economy and the financial markets enjoyed a surge in confidence. Despite low oil prices where Brent crude dipped to $45 per barrel in June 2017, the world economy benefited from a period of growth, driven by strong growth in the U.S., solid export data from Asia and growing asset markets.

In the U.S., the uncertain effect of President Trump’s reflationary policies was the main risk factor weighing on the U.S. dollar strength. At the same time, the U.S. Federal Reserve Bank raised its key rates on March 15, 2017 and June 14, 2017, and began to discuss in detail a reduction in the size of its balance sheet as a measure to stabilize the U.S. dollar.

In the Eurozone, the markets started to anticipate the end of the European Central Bank’s (“ECB”) accommodating policy, although low inflation would call for a cautious reduction in the quantitative easing program. France’s presidential and parliamentary election results contributed to a strengthening of the euro against the U.S. dollar as political risk premiums reduced. As a result of these dynamics, the U.S. dollar depreciated against the euro from 1.0385 in January 2017 to 1.1412 at the end of June 2017.

Elsewhere in Europe, the currency floor of the Czech koruna against the euro was removed on April 6, 2017, in line with ECB guidance, and as a result the Czech koruna strengthened from 25.63 against the U.S. dollar to eventually reach its highest level of 22.96 against the U.S. dollar on June 30, 2017.

In the ACIS countries, the Ukrainian hryvnia strengthened progressively against the U.S. dollar from a low of 27.84 in January 2017 to its highest level of 25.77 in June 2017. The Kazakhstani tenge was also on a strengthening trend against the U.S. dollar, from a level of around 339.35 in early January 2017, to 322.04 at the end of June 2017, with a peak at 309.70 in May 2017. In South Africa, the rand strengthened from 13.72 at the beginning of the year to 13.07 at the end of June 2017.

In Canada, despite inflation running at a lower level than the 1-3% target, the Bank of Canada used a more optimistic tone about its monetary policy during the first half of 2017 than during the previous 3 years, and as a consequence the Canadian dollar strengthened from 1.3460 to 1.2956 against U.S. dollar during the period. In Brazil, despite political uncertainties, the Brazilian real remained relatively stable and stayed within a range of approximately 3.04 to 3.33 against the U.S. dollar.

Trade and import competitionEuropeIn 2015, strengthening industrial activity in Europe led to a 2% increase in real steel demand. However, the slowdown in global steel consumption coupled with excess capacity in China led to increased finished steel shipments into Europe, rising to approximately 25.2 million tonnes and import penetration rising to over 16%.

Although underlying steel demand remained healthy during 2016, ArcelorMittal estimates imports penetration increased to 17.6% as third country imports into Europe increased by approximately 25% year-on-year. This continues a trend of imports growing more strongly than domestic demand since 2012. Apparent steel consumption (“ASC”) has increased almost 13% while, over the same period, finished steel imports have increased 63%, taking market share from domestic producers.

This trend continued in the first half of 2017 as imports into Europe rose by approximately 12% year-on-year while apparent steel consumption increased by just 2%, resulting in import penetration rising further to 18.4%, a historical peak.

Traditionally, imports into Europe have come from CIS countries, with China, Turkey and developed Asia accounting for roughly 75% of imports over the past five years. During the first half of 2017, imports from the CIS fell by approximately 12%, causing their share to fall from almost 30% in 2016 to 23%. The share of Chinese origin imports also continued to decline from its peak of 22% in 2015 to 15% in the first half of 2017, with imports having fallen by over 20% year-on-year in the first half of 2017. Meanwhile, the share of other traditional importers into Europe such as East Asia and Turkey have seen their market share pickup in the first half of 2017 to 16% and 14% respectively, compensating for lower net exports from China since the start of 2016. The greatest beneficiary has been India, which has seen its market share in Europe double to 14% in the first half of 2017, and imports were up approximately 120% year-on-year.


6 References: Clarksons Research Dry Bulk Trade Outlook June-2017, Clarkson Shipping Intelligence Network, Baltic Index



United StatesSteel imports penetration increased during the first half of 2017 to 27.3% as imports increased 23.8% compared to only a 5.3% year-on-year increase in ASC. The share of imports is significantly higher than the 24.6% measured over the first half of 2016, but still below the peak of 31.8% during the first half of 2015. The increase in finished steel imports was mainly due to pipe and tube imports rebounding sharply by over 70% year-on-year due to a revival in the U.S. shale oil and gas industry. Imports of flats and longs also increased but by a much smaller rate of 2.6% and 7.9% year-on-year, respectively. Imports of semi-finished steel products also increased strongly up over 55% year-on-year during the first half of 2017.

Steel import penetration had risen to over 28% in both 2014 and 2015 compared to the 22.5% average between 2007 and 2013 driven by healthy domestic demand, restocking activity and attractive prices in the U.S. relative to international markets.

Almost three quarters of U.S. imports originate from other NAFTA countries (Canada and Mexico), developed Asia, Brazil and EU28. However, trade measures against Italy, UK and China have resulted in reduced shipments from those countries with China’s share dropping to 3% over the first half of 2017 from a peak of 10% in 2014. CIS origin imports contributed around 4% of U.S. imports over the first half of 2017 due to existing trade restrictions against Russia and Ukraine. However, Turkey’s contribution to U.S. imports has more than doubled in the last four years to around 10% over the first half of 2017 from the benefits of stringent trade restrictions imposed elsewhere.

Consolidation in the steel and mining industriesConsolidation transactions decreased significantly in terms of number and value in the past few years in the context of economic uncertainties in developed economies combined with a slowdown in emerging markets. However, in an effort to reduce the worldwide structural overcapacity, some consolidation steps might finally happen in 2017 and 2018, specifically in China and in Europe.

Steel industry consolidation slowed down substantially in China since 2012. As a key initiative of the Chinese central government’s five-year plan issued in March 2011, the concentration process of the steel industry was expected to reduce overcapacity, rationalize steel production based on obsolete technology, improve energy efficiency, achieve environmental targets and strengthen the bargaining position of Chinese steel companies in price negotiations for iron ore. However, it has not been very effective. In 2015, China dropped its target objective for the top ten Chinese steel producers to account for 60% of national production and for at least two producers to reach 100 million tonne capacity in the next few years. A new industry consolidation plan published by China aims at simplifying approval procedures and facilitating acquisition financing for firms in sectors like steel. In late 2016, Baosteel Group and Wuhan Iron and Steel Group completed their merger, creating Baowu Steel Group with an annual production capacity of around 60 million tonnes, also making it the world’s second largest steelmaker. In addition, in Europe, Tata Steel and Thyssenkrupp have confirmed they are in discussions for the

consolidation of their European steel mills and in the first half of 2017, a significant stumbling block to merge the two firms’ European steel assets was largely resolved, when Tata said it had agreed the main terms of a deal with the British regulator to cut benefits for its UK pension scheme.

On June 28, 2017, the consortium formed by ArcelorMittal and Marcegaglia signed a lease and obligation to purchase agreement with the Italian Government for Ilva, Europe’s largest single steel site and only integrated steelmaker in Italy with its main production facility based in Taranto. Ilva also has significant steel finishing capacity in Taranto, Novi Ligure and Genova. The closing of the transaction is subject to certain conditions precedent, including receipt of anti-trust approvals.

Further future consolidation should allow the steel industry to perform more consistently through industry cycles by achieving greater efficiencies and economies of scale, and improve bargaining power with customers and, crucially, suppliers, who tend to have higher levels of consolidation.

Operating results ArcelorMittal reports its operations in five segments: NAFTA, Brazil, Europe, ACIS and Mining.

Key indicatorsThe key performance indicators that ArcelorMittal’s management uses to analyze performance and operations are the lost time injury frequency (“LTIF”) rate, sales, average steel selling prices, crude steel production, steel shipments, iron ore and coal production and operating income. Management’s analysis of liquidity and capital resources is driven by operating cash flows.

Six months ended June 30, 2017 as compared to six months ended June 30, 2016Health and safetyThrough the Company’s core values of sustainability, quality and leadership, it operates responsibly with respect to the health, safety and wellbeing of its employees, contractors and the communities in which it operates.

Health and safety performance, based on the Company’s personnel figures and contractors LTIF rate, was stable at 0.78 for the six months ended June 30, 2017 and June 30, 2016, with improvements within NAFTA, Brazil, ACIS and Mining, offset by deterioration in the Europe segment. The Company’s efforts to improve the health and safety record continues and remains focused on both further reducing the rate of severe injuries and preventing fatalities.


Own personnel and contractors For the six months ended June 30,Lost time injury frequency rate (per million hours) 2017 2016Mining 0.58 0.83NAFTA 0.75 0.84Brazil 0.40 0.42Europe 1.15 0.97ACIS 0.52 0.61Total Steel 0.81 0.77Total (Steel and Mining) 0.78 0.78

Sales, operating income, crude steel production, steel shipments, average steel selling prices and mining productionThe following tables and discussion summarize ArcelorMittal’s performance by reportable segment for the six months ended June 30, 2017 as compared with the six months ended June 30, 2016:

Segment Sales for the six months ended June 30,* Operating income/(loss) for the six months ended June 30,*(in $ millions) 2017 2016 2017 2016NAFTA 9,065 7,742 774 1,414 Brazil 3,444 2,743 303 238Europe 17,402 14,961 1,288 469ACIS 3,641 2,773 167 147Mining 2,045 1,409 594 60 Other and eliminations (2,267) (1,486) (160)** (180)**Total 33,330 28,142 2,966 2,148

* Segment amounts are prior to inter-segment eliminations.** Total adjustments to segment operating income and other reflects certain adjustments made to operating income of the segments to reflect corporate costs, income from non-

steel operations (e.g., logistics and shipping services) and the elimination of stock margins between the segments. See table below.

Total adjustments to segment operating income and other Six months ended June 30,(in $ millions) 2017 2016Corporate and shared services 1 (95) (77)Financial activities (13) (9)Shipping and logistics (15) (54)Intragroup stock margin eliminations (26) (25)Depreciation and impairment (11) (15)Total adjustments to segment operating income and other (160) (180) 1 Includes primarily staff and other holding costs and results from shared service activities.

SalesArcelorMittal’s sales increased to $33.3 billion for the six months ended June 30, 2017, from $28.1 billion for the six months ended June 30, 2016, primarily due to 23% higher average steel selling prices and 43% higher seaborne iron ore reference prices.

Cost of salesCost of sales consists primarily of purchases of raw materials necessary for steelmaking (iron ore, coke and coking coal, scrap and alloys) and electricity cost. Cost of sales for the six months ended June 30, 2017 was $29.2 billion, increasing as compared to $24.9 billion for the six months ended June 30, 2016, mainly driven by the increase in raw material prices. Cost of sales for the six months ended June 30, 2016 was positively affected by $832 million relating to a one-time gain on employee benefits following the signing of a U.S. labor contract. Selling, general and administrative expenses (“SG&A”) remained stable at $1.1 billion for the six months ended June 30, 2017 and June 30, 2016. SG&A represented 3.4% and 3.8% of sales for the six months ended June 30, 2017 and June 30, 2016, respectively.

Operating incomeArcelorMittal’s operating income for the six months ended June 30, 2017 amounted to $2,966 million, compared to operating income of $2,148 million for the six months ended June 30, 2016. Despite a decrease in shipments, operating income increased driven by higher average steel selling prices partially offset by higher raw material prices. Operating income as a percentage of sales was 9% and 8% for the six months ended June 30, 2017 and June 30, 2016, respectively.

Operating income for the six months ended June 30, 2017 was negatively affected by an impairment of $46 million related to a downward revision of cash flow projections of the Long Carbon business in South Africa. Operating income for the six months ended June 30, 2016 was positively affected by $832 million relating to a one-time gain on employee benefits following the signing of a U.S. labor contract, partially offset by an impairment charge of $49 million related to the held for sale classification of the ArcelorMittal Zaragoza facility in Spain.




Shipments and average steel selling priceArcelorMittal’s steel shipments declined 2.4% to 42.5 million tonnes for the six months ended June 30, 2017, from 43.6 million tonnes for the six months ended June 30, 2016. The decrease in shipments includes the effect of the sale of LaPlace and Vinton (U.S.) which were sold in April 2016, the disposal of ArcelorMittal Zaragoza (Europe) in the second half of 2016 and the idling of Zumarraga (Europe) in 2016 and the other impacts described for each segment below.

Average steel selling prices increased 23% for the six months ended June 30, 2017 as compared to the six months ended June 30, 2016 in line with international prices. NAFTA Performance for the six months ended June 30,(in millions of USD unless otherwise shown) 2017 2016Sales 9,065 7,742Operating income 774 1,414Depreciation 256 270Crude steel production (thousand tonnes) 11,978 11,379Steel shipments (thousand tonnes) 11,029 10,906Average steel selling price (USD/tonne) 739 647

SalesSales in the NAFTA segment increased 17% to $9.1 billion for the six months ended June 30, 2017, from $7.7 billion for the six months ended June 30, 2016, mainly due to a 14% increase in average steel selling prices.

Operating income Operating income for the NAFTA segment for the six months ended June 30, 2017 was $774 million, as compared to $1,414 million for the six months ended June 30, 2016. Operating income for the six months ended June 30, 2016 was positively affected by a one-time gain of $832 million on employee benefits following the signing of the U.S. labor contract.

Crude steel production, steel shipments and average steel selling priceCrude steel production in the NAFTA segment increased 5% to 12.0 million tonnes for the six months ended June 30, 2017 as compared to 11.4 million tonnes for the six months ended June 30, 2016, in line with improved demand.

Total steel shipments in the NAFTA segment increased 1% to 11.0 million tonnes for the six months ended June 30, 2017, from 10.9 million tonnes for the six months ended June 30, 2016 as a result of the increased production noted above. Additionally, shipments for the six months ended June 30, 2016 included shipments from LaPlace and Vinton which were sold in April 2016.

Average steel selling prices in the NAFTA segment increased 14% to $739/t for the six months ended June 30, 2017 from $647/t for the six months ended June 30, 2016 in line with international prices.

Brazil Performance for the six months ended June 30,(in millions of USD unless otherwise shown) 2017 2016Sales 3,444 2,743Operating income 303 238Depreciation 144 120Crude steel production (thousand tonnes) 5,424 5,467Steel shipments (thousand tonnes) 4,848 5,161Average steel selling price (USD/tonne) 666 495

SalesSales in the Brazil segment increased 26% to $3.4 billion for the six months ended June 30, 2017 as compared to $2.7 billion for the six months ended June 30, 2016, primarily due to 34% higher average steel selling prices partially offset by 6% lower steel shipments.

Operating income Operating income for the Brazil segment for the six months ended June 30, 2017 was $303 million, as compared to $238 million for the six months ended June 30, 2016. Operating income increased 27% driven primarily by the increased sales described above partially offset by higher raw material cost.

Operating income for the six months ended June 30, 2016 was negatively affected by lower average steel selling prices and lower steel shipments as well as continued currency devaluation which impacted the tubular operations in Venezuela.


Crude steel production, steel shipments and average steel selling priceCrude steel production remained relatively stable at 5.4 million tonnes for the six months ended June 30, 2017 as compared to 5.5 million tonnes for the six months ended June 30, 2016.

Total steel shipments in the Brazil segment decreased 6% to 4.8 million tonnes for the six months ended June 30, 2017 as compared to 5.2 million tonnes for the six months ended June 30, 2016 primarily driven by the weak construction market. Steel shipments for the six months ended June 30, 2016 were positively affected by increased slab exports from Brazil.

Average steel selling prices in the Brazil segment increased 34% to $666/t for the six months ended June 30, 2017 from $495/t for the six months ended June 30, 2016 in line with international prices and currency appreciation.

Europe Performance for the six months ended June 30,(in millions of USD unless otherwise shown) 2017 2016Sales 17,402 14,961Operating income 1,288 469Depreciation 563 570Impairment - 49Crude steel production (thousand tonnes) 22,209 21,891Steel shipments (thousand tonnes) 20,674 21,330Average steel selling price (USD/tonne) 674 546

SalesSales in the Europe segment increased 16% to $17.4 billion for the six months ended June 30, 2017 as compared to $15.0 billion for the six months ended June 30, 2016, primarily due to a 23% increase in average steel selling prices in line with international prices, partially offset by a 3% decrease in shipments.

Operating income Operating income for the Europe segment for the six months ended June 30, 2017 significantly increased to $1,288 million, as compared to operating income of $469 million for the six months ended June 30, 2016, primarily due to higher average steel selling prices, partially offset by higher raw material cost, which resulted in operating income as a percentage of sales increasing to 7% from 3%.

Operating income for the six months ended June 30, 2016 was negatively impacted by a $49 million impairment charge related to the held for sale classification of the ArcelorMittal Zaragoza facility in Spain.

Crude steel production, steel shipments and average steel selling priceCrude steel production for the Europe segment increased 1.5% to 22.2 million tonnes for the six months ended June 30, 2017, from 21.9 million tonnes for the six months ended June 30, 2016, reflecting better operational performance.

Total steel shipments in the Europe segment decreased 3% to 20.7 million tonnes for the six months ended June 30, 2017, from 21.3 million tonnes for the six months ended June 30, 2016, due to weaknesses in long market demand. The decrease in shipments includes the effect of the disposal of ArcelorMittal Zaragoza, which was sold in the second half of 2016 and the idling of Zumarraga.

Average steel selling prices in the Europe segment increased 23% to $674/t for the six months ended June 30, 2017 from $546/t for the six months ended June 30, 2016 in line with higher international prices.

ACIS Performance for the six months ended June 30,(in millions of USD unless otherwise shown) 2017 2016Sales 3,641 2,773Operating income 167 147Depreciation 152 156Impairment 46 -Crude steel production (thousand tonnes) 7,177 7,594Steel shipments (thousand tonnes) 6,478 6,768Average steel selling price (USD/tonne) 500 365

SalesSales in the ACIS segment increased 31% to $3.6 billion for the six months ended June 30, 2017 as compared to $2.8 billion for the six months ended June 30, 2016, primarily due to a 37% increase in average steel selling prices partially offset by a 4% decrease in steel shipments.



Operating income Operating income for the ACIS segment for the six months ended June 30, 2017 increased 14% to $167 million, as compared to operating income of $147 million for the six months ended June 30, 2016, primarily due to better performance in CIS, partially offset by lower operating performance in South Africa and an impairment of $46 million for property, plant and equipment of the Long Carbon business in South Africa resulting from a downward revision of cash flow projections.

Crude steel production, steel shipments and average steel selling priceCrude steel production for the ACIS segment decreased 5% to 7.2 million tonnes for the six months ended June 30, 2017, from 7.6 million tonnes for the six months ended June 30, 2016 in line with lower shipments in South Africa and planned maintenance in Ukraine.

Total steel shipments in the ACIS segment decreased 4% to 6.5 million tonnes for the six months ended June 30, 2017, from 6.8 million tonnes for the six months ended June 30, 2016 due to weak market conditions in South Africa and planned maintenance in Ukraine.

Average steel selling prices in the ACIS segment increased 37% to $500/t for the six months ended June 30, 2017 from $365/t for the six months ended June 30, 2016 in line with international prices.

Mining Performance for the six months ended June 30,(in millions of USD unless otherwise shown) 2017 2016Sales 2,045 1,409Operating income 594 60Own iron ore production (million tonnes) 28.7 27.6Iron ore shipped externally and internally at market price (million tonnes) 1, 2 18.1 17.4Iron ore shipment - cost plus basis (million tonnes) 1 10.5 11.1Own coal production (million tonnes) 3.3 2.9Coal shipped externally and internally at market price (million tonnes) 1, 2 1.6 1.6Coal shipment - cost plus basis (million tonnes) 1 1.8 1.7

1 There are three categories of sales: (1) “External sales”: mined product sold to third parties at market price; (2) “Market-priced tonnes”: internal sales of mined product to ArcelorMittal facilities reported at prevailing market prices; (3) “Cost-plus tonnes”: internal sales of mined product to ArcelorMittal facilities on a cost-plus basis. The determinant of whether internal sales are reported at market price or reported at cost-plus is whether or not the raw material could practically be sold to third parties (i.e., there is a potential market for the product and logistics exist to access that market).

2 Market-priced tonnes represent amounts of iron ore and coal from ArcelorMittal mines that could practically be sold to third parties. Market-priced tonnes that are transferred from the Mining segment to the Company’s steel producing segments are reported at the prevailing market price. Shipments of raw materials that do not constitute market-priced tonnes are transferred internally on a cost-plus basis.

Iron ore production Six months ended June 30, (million metric tonnes) Type Product 2017 2016Own minesNorth America 2 Open pit Concentrate, lump, fines and pellets 19.1 17.3South America Open pit Lump and fines 1.5 1.6Europe Open pit Concentrate and lump 0.8 0.8Africa Open pit / Underground Fines 0.8 1.5Asia, CIS & Other Open pit / Underground Concentrate, lump, fines and sinter feed 6.5 6.4Total own iron ore production 28.7 27.6Strategic long-term contracts - iron oreNorth America 3 Open pit Pellets 0.9 2.0Africa Open pit Lump and fines - 0.8Total strategic long-term contracts - iron ore 0.9 2.8Total 1 29.6 30.4

1 Total of all finished production of fines, concentrate, pellets and lumps.2 Includes own mines and share of production from Hibbing (United States, 62.31%) and Peña (Mexico, 50%).3 Consists of a long-term supply contract with Cliffs Natural Resources.



Coal production (million metric tonnes) Six months ended June 30, 2017 2016

Own mines North America 1.0 0.8Asia, CIS & Other 2.3 2.1Total own coal production 3.3 2.9

SalesSales in the Mining segment increased 45% to $2.0 billion for the six months ended June 30, 2017 from $1.4 billion for the six months ended June 30, 2016. Sales to external customers were $0.55 billion for the six months ended June 30, 2017, representing a 68% increase compared to $0.33 billion for the six months ended June 30, 2016. The increase in sales to external customers was primarily due to higher average iron ore and coal selling prices and a 1% increase in external iron ore shipments.

Iron ore market priced shipments increased 4% to 18.1 million tonnes for the six months ended June 30, 2017 from 17.4 million tonnes for the six months ended June 30, 2016. ArcelorMittal Mines and Infrastructure Canada’s shipments increased 5% to 13.2 million tonnes for the six months ended June 30, 2017 from 12.6 million tonnes for the six months ended June 30, 2016. Coal market priced shipments increased 4% to 1.62 million tonnes for the six months ended June 30, 2017 from 1.56 million tonnes for the six months ended June 30, 2016. With respect to average selling prices, the average iron ore spot price of $74.45/t CFR China and the average spot price for hard coking coal FOB Australia at $179.13/t were 43% and 113% higher for the six months ended June 30, 2017 than for the six months ended June 30, 2016, respectively. It should be noted, however, that there may be no direct correlation between spot prices and actual selling prices in various regions at a given time.

Operating incomeOperating income attributable to the Mining segment for the six months ended June 30, 2017 was $594 million, as compared with an operating income of $60 million

for the six months ended June 30, 2016, primarily due to higher selling prices which resulted in an increase in operating income as a percentage of sales to 29% from 4% for the six months ended June 30, 2017 and June 30, 2016, respectively.

ProductionOwn iron ore production (not including supplies under strategic long-term contracts) in the six months ended June 30, 2017 was 28.7 million metric tonnes, a 4% increase as compared to 27.6 million metric tonnes for the six months ended June 30, 2016, primarily due to increased production in Mexico (Volcan mine restarted in February 2017) and Canada, partially offset by lower production in Liberia, consistent with the second half of 2016 and planned to continue until the transition to the Gangra deposit ramps up, and in the U.S.

Own coal production (not including supplies under strategic long-term contracts) in the six months ended June 30, 2017 was 3.3 million metric tonnes, representing an increase of 16% compared to the six months ended June 30, 2016, mainly due to increases in both the Kazakhstan and Princeton mines.

Investments in associates, joint ventures and other investmentsIncome from investments in associates, joint ventures and other investments was $206 million for the six months ended June 30, 2017, compared to income of $492 million for the six months ended June 30, 2016, primarily relating to improved performance of the Calvert joint venture and Chinese investees, partially offset by a $44 million loss (net of $23 million recycling of cumulative foreign exchange losses) on dilution of the Company’s stake in China Oriental which decreased from 47% to 39%.

The income for the six months ended June 30, 2016 was positively affected by the $329 million gain on disposal of the Company’s 35% stake in Gestamp Automoción. The income for the six months ended June 30, 2017 and June 30, 2016 also included the annual dividend received from Erdemir of $45 million and $44 million, respectively.

Financing costs – net Net interest expenseNet interest expense (interest expense less interest income) was lower at $430 million for the six months ended June 30, 2017 as compared to $638 million for the six months ended June 30, 2016 driven by debt reduction including early and at maturity bond repayments.

Foreign exchange and other net financing (loss)/gainForeign exchange and other net financing gain (which includes foreign currency swaps, bank fees, interest on pension obligations, impairments of financial instruments, revaluation of derivative instruments, and other charges that cannot be directly linked to operating results) amounted to $77 million for the six months ended June 30, 2017, as compared to a loss of $441 million for the six months ended June 30, 2016. Foreign exchange and other net financing costs include a foreign exchange gain of $282 million as compared to a gain of $60 million for the six months ended June 30, 2016 mainly on account of the U.S. dollar depreciation against the euro resulting in a foreign exchange gain on the euro denominated deferred tax assets, partially offset by a foreign exchange loss on euro denominated debt.

Foreign exchange and other net financing (loss)/gain include $159 million and $237 million for premium expenses on the early redemption of bonds and $276 million and $82 million mark-to-market gains on derivatives (primarily mandatory convertible bonds call options following the market price increase in the

underlying shares), each for the six months ended June 30, 2017 and 2016, respectively.

Income taxArcelorMittal’s consolidated income tax expense (benefit) is affected by the income tax laws and regulations in effect in the various countries in which it operates and the pre-tax results of its subsidiaries in each of these countries, which can vary from year to year. ArcelorMittal operates in jurisdictions, mainly in Eastern Europe and Asia, which have a structurally lower corporate income tax rate than the statutory tax rate as in effect in Luxembourg (26.01%), as well as in jurisdictions, mainly in Western Europe and the Americas which have a structurally higher corporate income tax rate.

ArcelorMittal recorded a consolidated income tax expense of $480 million for the six months ended June 30, 2017, as compared to a consolidated income tax expense of $853 million for the six months ended June 30, 2016. The tax expense of $480 million for the six months ended June 30, 2017 is driven by improved results worldwide. The tax expense for the six months ended June 30, 2016 included a de-recognition charge of $712 million relating to previously recognized deferred tax assets with respect to the Luxembourg tax integration as the revised taxable income projections no longer included the effect of the anticipated elimination of the USD exposure of certain euro denominated deferred tax assets.

Non-controlling InterestsNet income attributable to non-controlling interests for the six months ended June 30, 2017 was $15 million as compared to $12 million for the six months ended June 30, 2016. Net income attributable to non-controlling interests in the six months ended June 30, 2017 primarily relates to the minority shareholders’ share of net income recorded in ArcelorMittal Mines and Infrastructure Canada and Belgo Bekaert Arames in Brazil offset in



part by losses generated by ArcelorMittal South Africa.

Net income or loss attributable to equity holders of the parentArcelorMittal’s net income attributable to equity holders of the parent for the six months ended June 30, 2017 was $2.3 billion as compared to $696 million for the six months ended June 30, 2016, for the reasons discussed above.

Liquidity and capital resources ArcelorMittal’s principal sources of liquidity are cash generated from its operations and its credit facilities at the corporate level.

Because ArcelorMittal is a holding company, it is dependent upon the earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to pay expenses and meet its debt service obligations. Significant cash or cash equivalent balances may be held from time to time at the Company’s international operating subsidiaries, in particular those in France and in the United States, where the Company maintains cash management systems under which most of its cash and cash equivalents are centralized, and in Argentina, Brazil, Canada, Morocco, South Africa and Ukraine. Some of these operating subsidiaries have debt outstanding or are subject to acquisition agreements that impose restrictions on such operating subsidiaries’ ability to pay dividends, but such restrictions are not significant in the context of ArcelorMittal’s overall liquidity. Repatriation of funds from operating subsidiaries may also be affected by tax and foreign exchange policies in place from time to time in the various

countries where the Company operates, though none of these policies is currently significant in the context of ArcelorMittal’s overall liquidity.

In management’s opinion, ArcelorMittal’s credit facilities are adequate for its present requirements.

As of June 30, 2017, ArcelorMittal’s cash and cash equivalents, including restricted cash of $224 million, amounted to $2.3 billion as compared to $2.6 billion, including restricted cash of $114 million, as of December 31, 2016. In addition, ArcelorMittal had available borrowing capacity of $5.5 billion under its credit facilities as of June 30, 2017, as compared to $5.5 billion as of December 31, 2016.

As of June 30, 2017, ArcelorMittal’s total debt, which includes long-term debt and short-term debt, was $14.2 billion, as compared to $13.7 billion as of December 31, 2016. Net debt (defined as long-term debt ($10.22 billion) plus short-term debt ($3.94 billion), less cash and cash equivalents and restricted cash ($2.27 billion)) was $11.9 billion as of June 30, 2017, up from $11.1 billion at December 31, 2016 (comprised of long-term debt ($11.8 billion) plus short-term debt ($1.9 billion) less cash and cash equivalents and restricted cash ($2.6 billion)). Net debt increased period on period primarily due to foreign exchange impacts on euro denominated debt following the depreciation of the U.S. dollar against the euro from a rate of 1.054 to 1.141. Most of the external debt is borrowed by the parent company on an unsecured basis and bears interest at varying levels

based on a combination of fixed and variable interest rates. Gearing (defined as net debt divided by total equity) at June 30, 2017 was 33% as compared to 34% at December 31, 2016.

The margin applicable to ArcelorMittal’s principal credit facilities ($5.5 billion revolving credit facility and certain other credit facilities) and the coupons on certain of its outstanding bonds are subject to adjustment in the event of a change in its long-term credit ratings. On February 24, 2017, Moody’s upgraded ArcelorMittal’s credit rating to Ba1 and placed ArcelorMittal on stable outlook. On April 13, 2017, Fitch affirmed its credit rating of ArcelorMittal at BB+ and upgraded its outlook to stable. On May 24, 2017, Standard & Poor’s upgraded ArcelorMittal’s credit rating to BB+ and placed it on stable outlook. On July 28, 2017, Fitch upgraded its outlook from stable to positive.

ArcelorMittal’s $5.5 billion revolving credit facility, which incorporates a first tranche of $2.3 billion maturing on December 21, 2019, and a second tranche of $3.2 billion maturing on December 21, 2021, contains restrictive covenants. Among other things, these covenants limit encumbrances on the assets of ArcelorMittal and its subsidiaries, the ability of ArcelorMittal’s subsidiaries to incur debt and the ability of ArcelorMittal and its subsidiaries to dispose of assets in certain circumstances. These agreements also require compliance with a financial covenant, as summarized below.

The Company must ensure that the ratio of “Consolidated Total Net

Borrowings” (consolidated total borrowings less consolidated cash and cash equivalents) to “Consolidated EBITDA” (the consolidated net pre-taxation profits of ArcelorMittal for a Measurement Period, subject to certain adjustments as set out in the facilities) does not, at the end of each “Measurement Period” (each period of 12 months ending on the last day of a financial half-year or a financial year of the Company), exceed a certain ratio, referred to by the Company as the “Leverage ratio”. ArcelorMittal’s principal credit facilities set this ratio to 4.25 to 1, whereas one facility has a ratio of 4.0 to 1. As of June 30, 2017, the Company was in compliance with both ratios.

Non-compliance with the covenants in the facilities described above would entitle the lenders under such facilities to accelerate the Company’s repayment obligations. The Company was in compliance with the financial covenants in the agreements related to all of its borrowings as of June 30, 2017.

As of June 30, 2017, ArcelorMittal had guaranteed approximately $0.1 billion of debt of its operating subsidiaries. ArcelorMittal’s debt facilities have provisions whereby the acceleration of the debt of another borrower within ArcelorMittal could, under certain circumstances, lead to acceleration under such facilities.

The following table summarizes the repayment schedule of ArcelorMittal’s outstanding indebtedness, which includes short-term and long-term debt, as of June 30, 2017.


Repayment amounts per year (in billions of $)Type of Indebtedness as of June 30, 2017 2017 2018 2019 2020 2021 2022 >2022 Total

Bonds 0.6 1.5 0.9 1.9 1.3 1.9 2.9 11.0Long-term revolving credit lines - $2.3 billion tranche of $5.5 billion revolving credit facility - - - - - - - -- $3.2 billion tranche of $5.5 billion revolving credit facility - - - - - - - -Other loans* 1.5 0.4 0.3 0.2 0.2 0.2 0.4 3.2Total Debt 2.1 1.9 1.2 2.1 1.5 2.1 3.3 14.2

*Other loans in 2017 include $0.5 billion drawn under the ArcelorMittal USA $1 billion asset based loan (facility available until 2021) and $258 million drawn under the ZAR 4.5 billion revolving borrowing base finance facility in South Africa (facility available until 2020).

The average debt maturity of the Company was 6.4 years as of June 30, 2017, as compared to 7 years as of December 31, 2016.



Financings Principal credit facilities On December 21, 2016, ArcelorMittal signed an agreement for a $5.5 billion revolving credit facility (the “Facility”). This Facility amends and restates the $6 billion revolving credit facility dated April 30, 2015. The amended agreement incorporates a first tranche of $2.3 billion maturing on December 21, 2019, and a second tranche of $3.2 billion maturing on December 21, 2021, restoring the tranches’ original 3- and 5-year maturities, respectively. The Facility may be used for general corporate purposes. As of June 30, 2017, the $5.5 billion revolving credit facility was fully available. The Company makes drawdowns from and repayments on this facility in the framework of its cash management.

On September 30, 2010, ArcelorMittal entered into the $500 million revolving multi-currency letter of credit facility (the “Letter of Credit Facility”). The Letter of Credit Facility is used by the Company and its subsidiaries for the issuance of letters of credit and other instruments and matures on September 30, 2018. The terms of the letters of credit and other instruments contain certain restrictions as to duration. The Letter of Credit Facility was amended on October 26, 2012 to reduce its amount to $450 million. On September 30, 2014, the Company refinanced its Letter of Credit Facility by entering into a $350 million revolving multi-currency letter of credit facility.

2017 Capital markets transactionsOn April 3, 2017, ArcelorMittal redeemed all of its outstanding $1.5 billion 9.85% Notes due June 1, 2019 for a total aggregate purchase price including accrued interest and premium on early repayment of $1,040 million, which was financed with existing cash and liquidity.

Other loans and facilitiesOn May 25, 2017, ArcelorMittal South Africa signed a 4.5 billion South African rand revolving borrowing base finance facility maturing on May 25, 2020. Any borrowings under the facility will be secured by certain eligible inventory and receivables, as well as certain other working capital and related assets of ArcelorMittal South Africa. The facility will be used for general corporate purposes. The facility is not guaranteed by ArcelorMittal. As of June 30, 2017, $258 million (3.4 billion rand) was drawn.

On December 16, 2016, ArcelorMittal signed a €350 million finance contract with the European Investment Bank to finance European research, development and innovation projects over the 2017-2020 period within the European Union, predominantly in France, Belgium and Spain, but also in Czech Republic, Poland, Luxembourg and Romania. This transaction benefits from a guarantee from the European Union under the European Fund for Strategic Investments. As of June 30, 2017, the facility was fully drawn.

On May 23, 2016, ArcelorMittal USA LLC signed a $1 billion senior secured asset-based revolving credit facility maturing on May 23, 2021. Any borrowings under the facility will be secured by inventory and certain other working capital and related assets of ArcelorMittal USA and certain of its subsidiaries in the United States. The facility will be used for general corporate purposes. The facility is not guaranteed by ArcelorMittal. As of June 30, 2017, $500 million was drawn.

During the first half of 2014, ArcelorMittal entered into certain short-term committed bilateral credit facilities. The facilities were extended in 2015, 2016 and in 2017. As of June 30, 2017, the facilities, totaling approximately $0.7 billion, remain fully available.

Additional information regarding the Company’s outstanding loans and debt securities is set forth in note 6 of ArcelorMittal’s consolidated financial statements for the year ended December 31, 2016 and note 9 of ArcelorMittal’s condensed consolidated financial statements for the period ended June 30, 2017.

True sale of receivables (“TSR”) programsThe Company has established a number of programs for sales without recourse of trade accounts receivable to various financial institutions (referred to as True Sale of Receivables (“TSR”)) for an aggregate amount of $5,986 million as of June 30, 2017. This

amount represents the maximum amount of unpaid receivables that may be sold and outstanding at any given time. Of this amount, the Company has utilized $5,522 million and $4,708 million as of June 30, 2017 and December 31, 2016, respectively. Through the TSR programs, certain operating subsidiaries of ArcelorMittal surrender the control, risks and benefits associated with the accounts receivable sold; therefore, the amount of receivables sold is recorded as a sale of financial assets and the balances are removed from the consolidated statements of financial position at the moment of sale. The total amount of receivables sold under TSR programs and derecognized in accordance with IAS 39 for the six months ended June 30, 2017 and 2016 was $19.6 billion and $16.5 billion, respectively (with amounts of receivables sold converted to U.S. dollars at the monthly average exchange rate). Expenses incurred under the TSR programs (reflecting the discount granted to the acquirers of the accounts receivable) recognized in the consolidated statements of operations for the six months ended June 30, 2017 and 2016 were $56 million and $56 million, respectively.

Sources and uses of cashThe following table summarizes cash flows of ArcelorMittal for the six months ended June 30, 2017 and 2016:

Summary of Cash Flows for the six months ended June 30,(in $ millions) 2017 2016

Net cash provided by operating activities 915 179 Net cash used in investing activities (1,336) (34)Net cash used in financing activities (78) (1,717)

Net cash provided by operating activities For the six months ended June 30, 2017, net cash provided by operating activities increased to $0.9 billion as compared with net cash provided by operating activities of $0.2 billion for the six months ended June 30, 2016 mainly as a result of improved operating performance.

Net cash provided by operating activities for the six months ended June 30, 2017 includes a $2.7 billion increase in “operating working capital” mainly due to higher sales and inventory as well as the effects of higher raw material prices and seasonal investment in “operating working capital” in the first quarter of 2017. “Operating working capital” included an increase in cash flows for trade receivable of $1.1 billion

and inventory of $2.1 billion, partly offset by a decrease in accounts payable of $0.5 billion.

Net cash used in investing activities Net cash used in investing activities for the six months ended June 30, 2017 was $1.3 billion as compared with net cash used in investing activities of $34 million for the six months ended June 30, 2016.

Capital expenditures remained stable at $1.1 billion for the six months ended June 30, 2017 and June 30, 2016, respectively. The Company currently expects that capital expenditures for the year ended 2017 will amount to approximately $2.9 billion.



The following tables summarize the Company’s principal growth and optimization projects involving significant capital expenditures (including those invested by the Company’s joint ventures) completed in the second half of 2016 and in the current year, as well as those that are ongoing.

Completed projects in most recent quartersSegment Site Project Capacity / particulars Actual completionNAFTA Indiana Harbor Indiana Harbor "footprint

optimization project"New caster at No.3 Steelshop installed Q4 2016 1

NAFTA AM/NS Calvert Phase 2: Slab yard expansion (Bay 5)

Increase coil production level from 4.6 million tonnes/year to 5.3 million tonnes/year coils

Q2 2017

NAFTA ArcelorMittal Dofasco (Canada)

Phase 2: Convert the current galvanizing line #4 to a Galvalume line

Allow the galvaline #4 to produce 160 thousand tonnes galvalume and 128 thousand tonnes galvanize and closure of galvanize line #1 (capacity 170 thousand tonnes of galvalume)

Q2 2017

Europe ArcelorMittal Krakow (Poland)

HSM extension Increase HRC capacity by 0.9 million tonnes/year Commissioned Q2 2017 2

Europe ArcelorMittal Krakow (Poland)

HDG increase Increasing HDG capacity by 0.4 million tonnes/year CommissionedQ2 2017 2

Ongoing Projects

Segment Site Project Capacity / particularsForecast Completion

Europe Gent & Liège (Europe Flat Automotive UHSS Program)

Gent: Upgrade HSM and new furnace Liège: Annealing line transformation

Increase approximately 400 thousand tonnes in Ultra High Strength Steel capabilities

2017

Europe ArcelorMittal Differdange Modernization of finishing of "Grey rolling mill"

Revamp finishing to achieve full capacity of Grey mill at 850 thousand tonnes/year.

Q1 2018

NAFTA Indiana Harbor Indiana Harbor "footprint optimization project"

Restoration of 80" HSM and upgrades at Indiana Harbor finishing and logistics

20181

ACIS ArcelorMittal Kryvyi Rih New LF&CC 2&3 Facilities upgrade to switch from ingot to continuous caster route. Additional billets of 290 thousand tonnes over ingot route through yield increase.

Q4 2018

NAFTA Burns Harbor New Walking Beam Furnace Two new walking beam reheat furnaces bringing benefits on productivity, quality and operational cost

2021

Brazil ArcelorMittal Vega Do Sul Expansion project Increase HDG capacity by 0.6 million tonnes/year and cold rolling (CR) capacity by 0.7 million tonnes/year

On hold

Brazil Juiz de Fora Meltshop expansion Increase in meltshop capacity by 0.2 million tonnes/year On hold3

Brazil Monlevade Sinter plant, blast furnace and meltshop

Increase in liquid steel capacity by 1.2 million tonnes/year; Sinter feed capacity of 2.3 million tonnes/year

On hold

Mining Liberia Phase 2 expansion project Increase production capacity to 15 million tonnes/year Under review4

1 In support of the Company’s Action 2020 program that was launched at its fourth quarter and full-year 2015 earnings announcement, the footprint optimization project at ArcelorMittal Indiana Harbour is now underway, which has resulted in structural changes required to improve asset and cost optimization. The plan involves idling redundant operations including the #1 aluminize line, 84” hot strip mill (HSM), and #5 continuous galvanizing line (CGL) and No.2 steel shop (idled in the second quarter of 2017) whilst making further planned investments totalling approximately $200 million including a new caster at No.3 steelshop (completed in the fourth quarter of 2016, restoration of the 80” hot strip mill, logistics and Indiana Harbor finishing are ongoing. The full project scope is expected to be completed in 2018.

2 On July 7, 2015, ArcelorMittal Poland announced it was restarting preparations for the relining of blast furnace No. 5 in Krakow, which was commissioned in the third quarter of 2016. Total investments in the primary operations in the Krakow plant will amount to more than €40 million, which also includes modernization of the basic oxygen furnace No. 3. Additional projects in the downstream operations will also be implemented. These include the extension of the hot rolling mill capacity by 0.9 million tonnes per annum and increasing the hot dip galvanizing capacity by 0.4 million tonnes per annum commissioned in the second quarter of 2017. In total, the Company has invested more than €120 million in its operations in Krakow, including both upstream and downstream installations.

3 Although the Monlevade wire rod expansion project and Juiz de Fora rebar expansion were completed in 2015, the Juiz de Fora melt shop project is currently on hold and is expected to be completed upon Brazil domestic market recovery, and the Company does not expect to increase shipments until domestic demand improves.

4 ArcelorMittal Liberia is moving ore extraction from its depleting DSO (direct shipping ore) deposit at Tokadeh to the nearby, low strip ratio and higher grade DSO Gangra deposit where planned ramp up will occur in the second half of 2017. Following a period of exploration cessation caused by the onset of Ebola, ArcelorMittal Liberia recommenced drilling for DSO resource extensions in late 2015. During 2016, the operation at Tokadeh was right-sized to focus on its “natural” Atlantic markets. The nearby Gangra deposit is now the next development in a staged approach as opposed to the originally planned phase 2 step up to 15 million tonnes per year of concentrate sinter fine ore product that was delayed in August 2014 due to the declaration of force majeure by contractors following the Ebola virus outbreak, and then reassessed following rapid iron ore price declines over the period since. The Gangra mine, haul road and related existing plant and equipment upgrades are on track. ArcelorMittal remains committed to Liberia where it operates a full value chain of mine, rail and port and where it has been operating the mine on a DSO basis since 2011. The Company believes that ArcelorMittal Liberia presents a strong, competitive source of product ore for the international market based on continuing DSO mining and then moving to a long-term sinter feed concentration phase.


Cash used in investing activities other than capital expenditures for the six months ended June 30, 2017 amounted to $190 million and included primarily $44 million cash consideration (net of cash acquired for $14 million and $5 million to be paid upon conclusion of certain business restructuring measures) for the acquisition of a 55.5% stake in Bekaert Sumaré (a tire cord manufacturer in Brazil) and $110 million deposited in a restricted cash account in ArcelorMittal South Africa in connection with various environmental obligations and true sales of receivables programs. Cash flow from investing activities other than capital expenditures for the six months ended June 30, 2016 amounted to $1.1 billion and included primarily an inflow of $971 million for the sale of the Company’s 35% stake in Gestamp Automoción, $94 million for the sale of the La Place and Vinton US Long facilities and $46 million for the second and third tranche of the share buy-back option in Stalprodukt.

Net cash used in financing activities Net cash used in financing activities was $78 million for the six months ended June 30, 2017 as compared to net cash used in financing activities of $1.7 billion for the six months ended June 30, 2016.

During the six months ended June 30, 2017, the Company used $851 million to early redeem the 9.85% Notes due June 1, 2019 and received proceeds from the European Investment Bank loan of €350 million ($373 million) and $0.3 billion of commercial paper issuances. During the six months ended June 30, 2016, the Company received $3.1 billion proceeds from its equity offering and made repayments of short-term and long-term debt totaling $5.0 billion.

Dividends paid to ArcelorMittal shareholders and to non-controlling shareholders in subsidiaries were nil and $40 million for the six months ended

June 30, 2017, respectively, and nil and $47 million for the six months ended June 30, 2016, respectively.

EquityEquity attributable to the equity holders of the parent increased to $34.0 billion at June 30, 2017, compared with $30.1 billion at December 31, 2016, primarily due to the net income attributable to the equity holders of the parent of $2.3 billion and a foreign exchange translation reserve gain of $1.6 billion.

Treasury shares ArcelorMittal held, indirectly and directly, 2.3 million shares in treasury at June 30, 2017, down from 2.4 million shares (corresponding to 7.2 million shares prior to the reverse stock split) at December 31, 2016. At June 30, 2017, the number of treasury shares represented 0.22% of the total issued number of ArcelorMittal shares.

Research and development, patents and licenses Research and development expense (included in selling, general and administrative expenses) was $128 million for the six months ended June 30, 2017 as compared to $105 million for the six months ended June 30, 2016.

Trend information All of the statements in this “Trend information” section are subject to and qualified by the information set forth under the “Cautionary statement regarding forward-looking statements”. See also “ Key factors affecting results of operations” above.

OutlookBased on the current economic outlook, ArcelorMittal has raised its 2017 global steel demand forecasts. 2017 global ASC is now expected to grow by approximately 2.5% to 3.0% (revised up from previous forecast of 0.5% to 1.5%). By region: ASC in the U.S. (excluding pipes & tubes) is now expected to grow by 2.0% to 3.0% (revised down from previous forecast of 3.0% to 4.0%) reflecting lower automotive production

impacting flat products. In Europe, ArcelorMittal expects the pick-up in underlying demand to continue, driven primarily by strength of the construction and machinery markets, and apparent demand is expected to remain at 0.5% to 1.5% in 2017 on top of around 3% growth in 2016. In Brazil, ASC is expected to grow by 2.0% to 3.0% in 2017 (revised down from previous forecast 3.0% to 4.0%) as the continued weakness in construction is partially offset by mild improvement in consumer confidence and automotive demand. In the CIS, ASC is expected to grow 2.0% to 2.5% (revised up from previous forecast of negative 0.5% to 0.5%) reflecting stronger economic growth in Russia. In China, ASC growth of 2.5% to 3.5% is expected in 2017 (revised up from previous forecast of negative 1.0% to 0%), primarily due to strength in real estate and machinery.

Current market conditions are improved compared to twelve months ago with steel spreads currently at healthy levels. The demand environment is positive, as evidenced by the highest readings from the ArcelorMittal weighted PMI Index since April 2011, which suggests that steel shipments in the second half of 2017 will be higher than would normally be suggested by seasonality alone.

The Company now expects that the cash needs of the business (excluding working capital and premiums paid to retire debt early of $0.2 billion (not included in previous guidance)) in 2017 to be approximately $4.6 billion (as compared to $5.0 billion in previous guidance). Given the liability management exercise and lower average debt the Company now expects interest expense in 2017 to decline to $0.8 billion (as compared to $0.9 billion as disclosed in the 2016 annual report on Form 20-F and compared to $1.1 billion for 2016). While capital expenditures for 2017 remain at $2.9 billion (from $2.4 billion in 2016), the Company expects lower cash payments for taxes and

contributions to fund pensions and other cash requirements to be lower than previous guidance.

Given the improved market conditions, the Company now expects a full year 2017 investment in working capital of approximately $1.5 billion (as compared to previous guidance of approximately $1 billion).



Recent developments

Recent developments• Duringthefirsthalfof2017,ArcelorMittalcompletedseveralfinancingtransactions.PleaserefertotheBusinessOverview–Liquidityand

Capital Resources and Business Overview – Financings sections of this report for a summary of the transactions.

• OnJune28,2017,theconsortiumformedbyArcelorMittalandMarcegagliasignedaleaseandobligationtopurchaseagreementwiththe Italian Government for Ilva S.p.A. and certain of its subsidiaries (“Ilva”). Intesa Sanpaolo will formally join the consortium before the transaction closes. Ilva is Europe’s largest single steel site and only integrated steelmaker in Italy with its main production facility based in Taranto. Ilva also has significant steel finishing capacity in Taranto, Novi Ligure and Genova. The purchase price amounts to €1.8 billion, with annual leasing costs of €180 million to be paid in quarterly installments. The assets will be transferred to AM Investco free of long term liabilities and financial debt and includes €1 billion of net working capital, subject to adjustment. Ilva’s assets will be initially leased with rental payments qualifying as down payments against the purchase price. The lease is for a minimum period of two years. The closing of the transaction is subject to certain conditions precedent, including receipt of anti-trust approvals. The agreement includes over a seven-year period industrial capital expenditure commitments of approximately €1.3 billion with an investment program focused on blast furnaces, steel shops and finishing lines, environmental capital expenditure commitments of approximately €0.8 billion and environmental remediation commitments of approximately €0.3 billion, the latter of which will be funded with funds seized by the Italian Government from the former shareholder. The Company has identified synergies of €310 million which are targeted by 2020 (excludes impact from fixed cost reductions and volume improvements).

• OnJune21,2017,asaresultoftheextensionofthepartnershipbetweenArcelorMittalandBekaertGroupinthesteelcordbusinessin Brazil, the Company completed the acquisition from Bekaert of a 55.5% controlling interest in Bekaert Sumaré Ltda. subsequently renamed ArcelorMittal Bekaert Sumaré Ltda., a manufacturer of metal ropes for automotive tires located in the municipality of Sumaré/SP, Brazil. The Company agreed to pay a total cash consideration of €56 million ($63 million).

• OnMay22,2017,followingtheapprovaloftheExtraordinaryGeneralMeetingofshareholdersofArcelorMittalheldonMay10,2017,ArcelorMittal completed a reverse stock split (refer to “Corporate governance” below for further information) and consolidated each three existing shares in the Company without nominal value into one share without nominal value.

• OnMarch1,2017,ArcelorMittal’sBoardofDirectorstooknoteofMr.WilburRoss’resignationfromtheBoardasaconsequenceofhisconfirmation as United States Secretary of Commerce.

• OnFebruary23,2017,ArcelorMittalandVotorantimS.A.announcedthesigningofanagreement,pursuanttowhichVotorantim’slongsteel businesses in Brazil, Votorantim Siderurgia, will become a subsidiary of ArcelorMittal Brasil and Votorantim will hold a non-controlling interest in ArcelorMittal Brasil. The combined operations include ArcelorMittal Brasil’s production sites at Monlevade, Cariacica, Juiz de Fora, Piracicaba and Itaúna, and Votorantim Siderurgia’s production sites at Barra Mansa, Resende and its participation in Sitrel, in Três Lagoas. The transaction is subject to regulatory approvals in Brazil, including the approval of the Brazilian anti-trust authority CADE. Until closing, ArcelorMittal Brasil and Votorantim Siderurgia will remain fully separate and independent companies.

Legal proceedingsArcelorMittal is currently and may in the future be involved in litigation, arbitration or other legal proceedings. Provisions related to legal and arbitration proceedings are recorded in accordance with the principles described in note 1 to the condensed consolidated financial statements included in this report. Please refer to note 13 to the condensed consolidated financial statements included in this report for an update of the legal proceedings as included in note 8.2 to the consolidated financial statements in the Company’s 2016 annual report on Form 20-F.


Corporate Governance

Corporate governance

Please refer to the “Corporate Governance” section of the Company’s 2016 Annual Report for a complete overview of the Company’s corporate governance practices. The purpose of the present section is solely to describe the events and changes affecting the corporate governance of the Company between December 31, 2016 and June 30, 2017.

For a description of the changes to the board of directors of the Company (the “Board of Directors”) after the annual general meeting of shareholders held on May 10, 2017, please refer to the Board of Directors section below.

Annual general meeting of shareholders held on May 10, 2017Equity-based compensation The May 10, 2017 annual general meeting of shareholders authorized the Board of Directors, in particular to allocate up to 3 million of the Company’s fully paid-up ordinary shares (the “2017 Cap”) and to adopt any rules or measures to implement the CEO Office Performance Share Unit Plan (the “PSU Plan”) and other retention plan based grants below the level of the CEO Office that the Board of Directors may at its discretion consider appropriate. Such authorization is valid until the annual general meeting of shareholders to be held in 2018.

The Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”) of the Company (jointly, the “CEO Office”) will be eligible for PSU grants under the PSU Plan (the “PSU Plan”). The PSU Plan is designed to enhance the long-term performance of the Company and align the members of the CEO Office to the Company’s objectives. The PSU Plan complements ArcelorMittal’s existing program of annual performance-related bonuses

which is the Company’s reward system for short-term performance and achievements. The main objective of the PSU Plan is to be an effective performance-enhancing scheme based on the achievement of ArcelorMittal’s strategy aimed at creating measurable long-term shareholder value.

The CEO Office PSU Plan provides for cliff vesting on the third-year anniversary of the grant date, under the condition that the relevant CEO Office member continues to be actively employed by ArcelorMittal on that date. Awards under the CEO Office PSU Plan are subject to the fulfillment of cumulative performance criteria over a three-year period from the date of the PSU grant. The value of the grant at grant date will equal one year of base salary for the Chief Executive Officer and for the Chief Financial Officer. Each PSU may give right to up to one (1) share of the Company.

The allocation of PSUs to the CEO Office will be reviewed by the Appointments Remuneration and Corporate Governance Committee, which is comprised of three independent directors and which makes a recommendation to the Board of Directors. Such committee will also determine the criteria for granting PSUs and make its recommendation to the Board of Directors. The vesting criteria of the PSUs are also monitored by the Appointments, Remuneration and Corporate Governance Committee.

An explanatory presentation, including a description of the performance targets applicable to the PSU Plan is available on www.arcelormittal.com under Investors – Equity investors – Shareholders’ meetings – General Meetings 10 May 2017.

Board of DirectorsMr. Lakshmi N. Mittal, Mr. Bruno Lafont and Mr. Michel Wurth were re-elected as directors at the May 10, 2017 annual general meeting of shareholders, each of them for a three-year term that will automatically expire at the annual general meeting of shareholders to be held in 2020.

The Board of Directors is composed of nine directors, of whom eight are non-executive directors and five are independent directors. The nine directors are Mr. Lakshmi N. Mittal, Mrs. Vanisha Mittal Bhatia, Mr. Bruno Lafont, Mr. Jeannot Krecké, Mr. Tye Burt, Mrs. Suzanne Nimocks, Mr. Michel Wurth, Mrs. Karyn Ovelmen and Mr. Karel de Gucht. The four non independent directors are Mr. Lakshmi N. Mittal, Mrs. Vanisha Mittal Bhatia, Mr. Jeannot Krecké and Mr. Michel Wurth. The Board of Directors comprises one executive director: Mr. Lakshmi N. Mittal, the Chairman and Chief Executive Officer of the Company. None of the members of the Board of Directors, including the executive director, have entered into service contracts with the Company or any of its subsidiaries that provide for benefits upon the termination of their mandate. For additional information on the functioning of the Board of Directors and the composition of its committees, please refer to the 2016 annual report of the Company available on www.arcelormittal.com under “Investors Financial reports, Annual reports.”

Extraordinary general meeting of shareholders The May 10, 2017 extraordinary general meeting of the Company’s shareholders approved the four resolutions on the agenda:

i. Implement a share consolidation with respect to all outstanding shares of the

Company by means of a 1-for-3 reverse stock split on the effective date and to amend article 5.1 of the articles of association accordingly.

This reverse stock split - that was completed on May 22, 2017, was to be viewed as a simplification which should result in a better understanding by investors and other stakeholders of the market capitalization, earnings per share and dividend per share of the Company. The other expected benefit was to reduce the number of outstanding shares to a level more closely aligned with the average number of shares outstanding for members of EuroStoxx 600 and the CAC40.

Following the reverse stock split, shareholders hold one consolidated share for every three shares held before the reverse stock split, but their relative position in the Company’s equity has not changed. The reverse stock split was a valuation neutral event with no impact on the Company’s market capitalization.

ii. Adjust, renew and extend the scope of the authorized share capital of the Company, to authorize the Board of Directors to limit or cancel the preferential subscription rights of existing shareholders and to amend articles 5.2 and 5.5 of the articles of association accordingly.

The historical flexibility granted to the Board of Directors to issue ordinary shares with the power to limit or cancel the preferential subscription rights of existing shareholders was 10% of the issued share capital.

iii. Amend articles 4, 5, 7, 8, 9, 11, 13, 14 and 15 of the articles of association was necessary to reflect recent changes in Luxembourg law.


iv. Compulsory dematerialization of all the shares in the Company in accordance with the law of 06 April 2013 on dematerialized securities and delegation of powers to the Board of Directors to inter alia determine the effective date of such compulsory dematerialization. Proposal to proceed with the dematerialization for the following reasons: facilitate the clearing and settlement of all the Company’s shares; and benefit from a modernized ownership structure of shares enabling the Company to identify its shareholders, eliminate the share register and its administrative and regulatory burden as well as its associated costs. The compulsory dematerialization will be implemented after the required clearing infrastructure has been put in place by third parties and is not imminent.

Share buy-backThe share buy-back authorization approved by the annual general meeting of shareholders in May 2010 was cancelled by a resolution of the general meeting of shareholders on May 5, 2015. The share buy-back authorization approved by the annual general meeting of shareholders on May 5, 2015 will remain valid for a five-year period, i.e., until May 5, 2020, or until the date of its renewal by a resolution of the general meeting of shareholders if such renewal date is prior to the expiration of the five-year period.

The maximum number of shares that may be held or acquired is the maximum allowed by the Luxembourg law of August 10, 1915 on commercial companies, as amended (the “Law”), in such manner that the accounting par value of the Company’s shares held by the Company do not in any event exceed 10% of the Company’s issued share capital.

The maximum number of own shares that the Company may hold at any time directly or indirectly may not have the effect of reducing its net assets (“actif net”) below the amount mentioned in paragraphs 1 and 2 of Article 72-1 of the Law.

The purchase price per share to be paid shall not represent more than 110% of the trading price of the shares on the markets where the Company is listed, and no less than one cent.

For off-market transactions, the maximum purchase price shall be 110% of the reference price on the Euronext markets where the Company is listed. The reference price will be deemed to be the average of the final listing prices per share on these markets during thirty (30) consecutive days on which these markets are open for trading preceding the three trading days prior to the date of purchase. In the event of a share capital increase by incorporation of reserves or issue premiums and the free allotment of shares, as well as in the event of the division or regrouping of the shares, the purchase price indicated above shall be adjusted by a multiplying coefficient equal to the ratio between the number of shares comprising the issued share capital prior to the transaction and such number following the transaction.

All powers were granted to the Board of Directors, with the power to delegate, to effectuate the implementation of this authorization.

Corporate Governancecontinued


Cautionary statement regarding forward-looking statements

Cautionary statement regarding forward-looking statements

This document may contain forward-looking information and statements about ArcelorMittal and its subsidiaries. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future

performance. Forward-looking statements may be identified by the words “believe,” “expect,” “anticipate,” “target” or similar expressions. Although ArcelorMittal’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors and holders of ArcelorMittal’s securities are cautioned that forward-looking information and statements are subject to numerous risks and uncertainties, many of which are

difficult to predict and generally beyond the control of ArcelorMittal, that could cause actual results and developments to differ materially and adversely from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the filings with the Luxembourg financial and stock market regulator (Commission de Surveillance du Secteur

Financier) and the United States Securities and Exchange Commission. ArcelorMittal undertakes no obligation to publicly update its forward-looking statements, whether as a result of new information, future events, or otherwise.


Chief Executive Officer and Chief Financial Officer’s responsibility statement

We confirm, to the best of our knowledge, that:

1. the condensed consolidated financial statements of ArcelorMittal presented in this Half Year Report 2017, prepared in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position, profit or loss of the Company and significant off balance sheet arrangements.

2. the interim management report includes a fair review of the material events that occurred in the first six months of the financial year 2017 and their impact on the interim condensed consolidated financial statements, of the main related party transactions, and a description of the principal risks and uncertainties for the remaining six months of the year.

By order of the Board of Directors

Chairman of the Board of Directors and Chief Executive Officer of ArcelorMittalMr. Lakshmi N. Mittal July 31, 2017

Chief Financial Officer of ArcelorMittal, Investor Relations and Chief Executive Officer of ArcelorMittal Europe Mr. Aditya Mittal July 31, 2017

28 Interim Financial Statements

(in millions of U.S. dollars)(unaudited)

Condensed consolidated statements of financial position

ASSETS June 30, 2017 December 31, 2016

Current assets:Cash and cash equivalents 2,048 2,501Restricted cash 224 114Trade accounts receivable and other (including 471 and 322 from related parties at June 30, 2017 and December 31, 2016, respectively) 4,263 2,974Inventories (note 4) 17,458 14,734Prepaid expenses and other current assets 2,286 1,665Assets held for sale 127 259Total current assets 26,406 22,247Non-current assets:Goodwill and intangible assets 5,769 5,651Property, plant and equipment and biological assets (note 6) 35,765 34,831Investments in associates and joint ventures (note 2) 4,679 4,297Other investments 1,168 926Deferred tax assets 6,470 5,837Other assets 1,203 1,353Total non-current assets 55,054 52,895Total assets 81,460 75,142

Liabilities and equity June 30, 2017 December 31, 2016

Current liabilities:Short-term debt and current portion of long-term debt (note 9) 3,936 1,885Trade accounts payable and other (including 159 and 179 to related parties at June 30, 2017 and December 31, 2016, respectively) 12,555 11,633Short-term provisions (note 11) 404 426Accrued expenses and other liabilities 4,198 3,943Income tax liabilities 328 133Liabilities held for sale 39 95Total current liabilities 21,460 18,115Non-current liabilities:Long-term debt, net of current portion (note 9) 10,220 11,789Deferred tax liabilities 2,690 2,529Deferred employee benefits 8,636 8,297Long-term provisions (note 11) 1,515 1,521Other long-term obligations 687 566Total non-current liabilities 23,748 24,702Total liabilities 45,208 42,817Commitments and contingencies (note 13 and note 14)Equity (note 7):Equity attributable to the equity holders of the parent 34,027 30,135Non-controlling interests 2,225 2,190Total equity 36,252 32,325Total liabilities and equity 81,460 75,142

The accompanying notes are an integral part of these condensed consolidated financial statements.

Interim Financial Statements 29

(in millions of U.S. dollars, except share and per share data)(unaudited)

Condensed consolidated statements of operations

Six months ended June 30, 2017


Sales (including 3,588 and 2,959 of sales to related parties for the six months ended, June 30, 2017 and June 30, 2016, respectively) 33,330 28,142Cost of sales (including depreciation and impairment of 1,377 and 1,381 and purchases from related parties of 491 and 629 for the six months ended June 30, 2017 and June 30, 2016, respectively) 29,219 24,912Gross margin 4,111 3,230Selling, general and administrative expenses 1,145 1,083Operating income 2,966 2,148Income from investments in associates, joint ventures and other investments 206 492Financing costs - net (note 9 and note 10) (353) (1,079)Income before taxes 2,819 1,561Income tax expense (note 8) 480 853Net income (including non-controlling interests) 2,339 708Net income (loss) attributable to:Equity holders of the parent 2,324 696Non-controlling interests 15 12Net income (loss) (including non-controlling interests) 2,339 708



Earnings per common share (in U.S. dollars)1:Basic 2.28 0.88Diluted 2.27 0.88Weighted average common shares outstanding (in millions):Basic 1,020 792Diluted 1,023 7931 Following the completion of the Company’s share consolidation of each three existing shares into one share without nominal value on May 22, 2017,

the earnings per common share for prior period has been recast in accordance with IFRS. Please refer to note 7 for more information.




Condensed consolidated statements of other comprehensive income

Six months ended June 30, 2017 Six months ended June 30, 2016

Net income (including non-controlling interests) 2,339 708 Items that can be recycled to the condensed consolidated statements of operationsAvailable-for-sale investments:Gain arising during the period 216 191 Derivative financial instruments: Loss arising during the period (322) (129)Reclassification adjustments for gain included in the condensed consolidated statements of operations (56) (8)

(378) (137)Exchange differences arising on translation of foreign operations:Gain arising during the period 1,426 749 Reclassification adjustments for gain included in the condensed consolidated statements of operations (21) -

1,405 749 Share of other comprehensive income related to associates and joint ventures:Gain arising during the period 204 58 Reclassification adjustments for (gain) loss included in the condensed consolidated statements of operations (23) 80

181 138 Income tax benefit (expense) related to components of other comprehensive income that can be recycled to the condensed consolidated statements of operations 162 (9)Items that cannot be recycled to the condensed consolidated statements of operationsEmployee benefitsRecognized actuarial losses - (335)Total other comprehensive income 1,586 597 Total other comprehensive income attributable to:Equity holders of the parent 1,546 553 Non-controlling interests 40 44

1,586 597 Total comprehensive income 3,925 1,305 Total comprehensive income attributable to: Equity holders of the parent 3,870 1,249 Non-controlling interests 55 56 Total comprehensive income 3,925 1,305 The accompanying notes are an integral part of these condensed consolidated financial statements.



Condensed consolidated statements of changes in equity

Reserves

Items that can be recycled to the condensed consolidated statements of operations

Items that cannot be

recycled to the

condensed consolidated

statements of operations

Shares 1, 2, 3Share

capitalTreasury

shares

Mandatorily convertible

notes

Additional paid-in capital

Retained earnings

Foreigncurrency

translationadjustments

Unrealized gains (losses) on derivative

financial instruments

Unrealized gains (losses) on available-

for-sale securities

Recognized actuarial

losses

Equity attributable

to the equity holders of the parent

Non-controlling

interests Total equity

Balance at December 31, 2015 553 10,011 (377) 1,800 20,294 13,902 (15,793) 114 51 (4,730) 25,272 2,298 27,570

Net income (including non-controlling interests) - - - - - 696 - - - - 696 12 708 Other comprehensive income (loss) - - - - - - 827 (135) 196 (335) 553 44 597 Total comprehensive income (loss) - - - - - 696 827 (135) 196 (335) 1,249 56 1,305 Equity offering 421 144 - - 2,971 - - - - - 3,115 - 3,115 Reduction of the share capital accounting par value - (10,376) - - 10,376 - - - - - - - - Conversion of mandatorily convertible notes 46 622 - (1,800) 1,178 - - - - - - - - Recognition of share-based payments - - 3 - 10 - - - - - 13 - 13 Dividend - - - - - - - - - - - (47) (47)Equity offering in ArcelorMittal South Africa - - - - - 437 (301) - - - 136 (80) 56 Other movements - - - - - (57) - - - 28 (29) 22 (7)Balance at June 30, 2016 1,020 401 (374) - 34,829 14,978 (15,267) (21) 247 (5,037) 29,756 2,249 32,005

Balance at December 31, 2016 1,020 401 (371) - 34,826 16,049 (16,544) 142 322 (4,690) 30,135 2,190 32,325 Net income (including non-controlling interests) - - - - - 2,324 - - - - 2,324 15 2,339 Other comprehensive income (loss) - - - - - - 1,610 (283) 219 - 1,546 40 1,586 Total comprehensive income (loss) - - - - - 2,324 1,610 (283) 219 - 3,870 55 3,925 Recognition of share-based payments - - 3 - 15 - - - - - 18 - 18 Dividend - - - - - - - - - - - (49) (49)Non-controlling interests arising on acquisition of Sumaré (note 3) - - - - - - - - - - - 29 29 Other movements - - - - 4 - - - - 4 - 4 Balance at June 30, 2017 1,020 401 (368) - 34,841 18,377 (14,934) (141) 541 (4,690) 34,027 2,225 36,252

1 Excludes treasury shares2 In million of shares3 On May 22, 2017, ArcelorMittal completed the consolidation of each three existing shares in ArcelorMittal without nominal value into one share without nominal value. As a result

of this reverse stock split, the number of outstanding shares decreased from 3,058 to 1,020 and all prior periods have been recast in accordance with IFRS. Please refer to note 7 for further information.




Condensed consolidated statements of cash flows



Operating activities:Net income (including non-controlling interests) 2,339 708 Adjustments to reconcile net income to net cash provided by operations and payments:Depreciation and impairment 1,377 1,381Interest expense 455 668Interest income (25) (30)Income tax expense 480 853Income from associates, joint ventures and other investments (206) (492)Provisions for labor agreements and separation plans 254 174Remeasurement gain relating to US deferred employee benefits - (832)Change in fair value adjustment on call options on Mandatory Convertible Bonds (308) (80)Foreign exchange effects, write-downs (reversals) of inventories to net realizable value, provisions and other non-cash operating expenses (net) 135 (48)Changes in assets and liabilities that provided (required) cash:Interest paid (504) (835)Interest received 31 32 Cash contributions to plan assets and benefits paid for pensions and OPEB (173) (201)VAT and other amounts from public authorities (25) 160 Dividends received from associates, joint ventures and other investments 146 136 Taxes paid (110) (138)Working capital, provision movements and other liabilities (note 4) (2,951) (1,277)Net cash provided by operating activities 915 179 Investing activities:Purchase of property, plant and equipment and intangibles (1,146) (1,107)Disposal (acquisition) of net assets of subsidiaries, net of cash acquired of 292 and nil for the six months ended June 30, 2017 and June 30, 2016, respectively (note 3) (19) 94 Disposals of associates and joint ventures - 1,017 Other investing activities (net) (note 10) (171) (38)Net cash used in investing activities (1,336) (34)Financing activities:Proceeds from short-term and long-term debt 1,126 360 Payments of short-term and long-term debt (1,109) (5,200)Equity offering - 3,115 Dividends paid (40) (47)Other financing activities (net) (55) 55 Net cash used in financing activities (78) (1,717)Net decrease in cash and cash equivalents (499) (1,572)Effect of exchange rate changes on cash 33 (141)Cash and cash equivalents:At the beginning of the period 2,501 4,002 Reclassification of the period-end cash and cash equivalents from (to) assets held for sale 13 - At the end of the period 2,048 2,289




Note 1 – Basis of presentation and accounting policiesPreparation of the condensed consolidated financial statements

The condensed consolidated financial statements of ArcelorMittal and Subsidiaries (“ArcelorMittal” or the “Company”) as of June 30, 2017 and for the six months then ended (the “Interim Financial Statements”) have been prepared in accordance with International Accounting Standard (“IAS”) No. 34, “Interim Financial Reporting”. They should be read in conjunction with the annual consolidated financial statements and the notes thereto in the Company’s Annual Report for the year ended December 31, 2016, which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union. The Interim Financial Statements are unaudited and were authorized for issuance on July 31, 2017 by the Company’s Board of Directors.

Accounting policiesThe Interim Financial Statements have been prepared on a historical cost basis, except for available-for-sale financial assets, derivative financial instruments and certain assets and liabilities held for sale, which are measured at fair value less cost to sell, inventories, which are measured at the lower of net realizable value or cost and the financial statements of the Company’s Venezuelan operations, for which hyperinflationary accounting is applied. Unless specifically described herein, the accounting policies used to prepare the Interim Financial Statements are the policies described in the consolidated financial statements for the year ended December 31, 2016.

The preparation of condensed consolidated financial statements in conformity with IFRS recognition and measurement principles

requires the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Management reviews its estimates on an ongoing basis using currently available information. Changes in facts and circumstances or obtaining new information or more experience may result in revised estimates, and actual results could differ from those estimates.

Note 2 – Investments in associates and joint venturesOn January 27, 2017, China Oriental Group Company Limited (“China Oriental”), a Chinese integrated iron and steel producer listed on the Hong Kong Stock Exchange (“HKEx”) in which ArcelorMittal held a 47% interest, announced the completion of a share placement in order to restore the minimum 25% free float HKEx listing requirement. The trading of China Oriental’s shares, which had been suspended since April 29, 2014, resumed on February 1, 2017. Following the share placement, ArcelorMittal’s interest in China Oriental decreased to 39%. As a result, ArcelorMittal recorded a loss of 67 upon dilution offset by a gain of 23 following the recycling of accumulated foreign exchange translation gains in income from investments in associates, joint ventures and other investments.

Note 3 – AcquisitionsOn June 28, 2017, AM Investco Italy S.r.l., a consortium formed by ArcelorMittal and Marcegaglia with respective interests of 85% and 15%, signed a lease agreement with the Italian Government with an obligation to purchase Ilva S.p.A. and certain of its subsidiaries (“Ilva”). Intesa Sanpaolo will formally join the consortium before the transaction closing. Ilva is Europe’s largest single steel site and only integrated steelmaker in Italy with its main production facility based in Taranto. Ilva also has significant steel finishing capacity in Taranto, Novi Ligure and Genova. The

purchase price amounts to €1.8 billion subject to certain adjustments, with annual leasing costs of €180 million to be paid in quarterly installments. Ilva’s business units will be initially leased with rental payments qualifying as down payments against the purchase price and will be part of the Europe segment. The lease period is for a minimum of two years. The closing of the transaction is subject to certain conditions precedent, including receipt of anti-trust approvals. The agreement includes industrial capital expenditure commitments of approximately €1.3 billion over a seven-year period focused on blast furnaces, steel shops and finishing lines, environmental capital expenditure commitments of approximately €0.8 billion and environmental remediation commitments of approximately €0.3 billion, the latter of which will be funded with funds seized by the Italian Government from the former shareholder.

On June 21, 2017, as a result of the extension of the partnership between ArcelorMittal and Bekaert Group (“Bekaert”) in the steel cord business in Brazil, the Company completed the acquisition from Bekaert of a 55.5% controlling interest in Bekaert Sumaré Ltda. subsequently renamed ArcelorMittal Bekaert Sumaré Ltda. (“Sumaré”), a manufacturer of metal ropes for automotive tires located in the municipality of Sumaré/SP, Brazil. The Company agreed to pay a total cash consideration of €56 million (49 net of cash acquired of 14) of which €52 million (58) settled on closing date and €4 million (5) to be paid subsequently upon conclusion of certain business restructuring measures by Bekaert. Sumaré is part of the Brazil reportable segment. The Company will complete the recognition and measurement of the acquired identifiable assets and liabilities during the second half of 2017.

On February 23, 2017, ArcelorMittal and Votorantim S.A. announced the signing of an agreement, pursuant to which Votorantim’s long steel businesses in Brazil, Votorantim

Siderurgia, will become a subsidiary of ArcelorMittal Brasil and Votorantim will hold a non-controlling interest in ArcelorMittal Brasil. The combined operations include ArcelorMittal Brasil’s production sites at Monlevade, Cariacica, Juiz de Fora, Piracicaba and Itaúna, and Votorantim Siderurgia’s production sites at Barra Mansa, Resende and its participation in Sitrel, in Três Lagoas. The transaction is subject to regulatory approvals in Brazil, including the approval of the Brazilian anti-trust authority CADE. Until closing, ArcelorMittal Brasil and Votorantim Siderurgia will remain fully separate and independent companies.

On January 18, 2017 and May 18, 2017, the Company acquired from Parfinada B.V. and from Crédit Agricole Assurances the reinsurance companies Artzare S.A. and Crédit Agricole Reinsurance S.A. for consideration of €43 million (45; cash inflow was 5, net of cash acquired of 50) and €186 million (208; cash inflow was 20, net of cash acquired of 228), respectively. Both reinsurance companies are incorporated in Luxembourg and will operate through a series of reinsurance agreements with the Company’s subsidiaries. The Company concluded that both acquisitions were not business combinations as the transactions did not include the acquisition of any strategic management processes, operational and resource management processes.

Notes to the condensed consolidated financial statements for the six months ended June 30, 2017



Notes to the condensed consolidated financial statements for the six months ended June 30, 2017continued

Note 4 – Inventories Inventory, net of the allowance for slow-moving inventory, excess of cost over net realizable value and obsolescence as of June 30, 2017 and December 31, 2016, is comprised of the following:

June 30, 2017 December 31, 2016

Finished products 6,059 4,861Production in process 4,028 3,264Raw materials 5,749 5,141Manufacturing supplies, spare parts and other 1,622 1,468Total 17,458 14,734

The amount of write-downs of inventories to net realizable value and slow moving items recognized as an expense was 196 both during the six months ended June 30, 2017 and 2016.

During 2016, the Company modified the consolidated statements of cash flows to present the change in inventories at their net realizable value within “working capital, provision movements and other liabilities”. Accordingly, amounts for the six months ended June 30, 2016 were reclassified for (686) from “Foreign exchange effects, write-downs (reversals) of inventories to net realizable value, provisions and other non-cash operating expenses (net)” to “working capital, provision movements and other liabilities”.

Note 5 – DivestmentsOn February 10, 2017, ArcelorMittal completed the sale of certain ArcelorMittal Downstream Solutions entities in the Europe segment.

On March 13, 2017, ArcelorMittal and the management of ArcelorMittal Tailored Blanks Americas (“AMTBA”), comprising the Company’s tailored blanks operations in Canada, Mexico and the United States, entered into a joint venture agreement following which the Company recognized an investment of 65 in AMTBA accounted for under the equity method. AMTBA was part of the NAFTA reportable segment and was classified as held for sale at December 31, 2016.

The table below summarizes the significant divestments made in 2017:

AMTBA Downstream Solutions EuropeCash and cash equivalents 13 -Other current assets 46 38Property, plant and equipment 55 2Other assets 10 17Total assets 124 57Current liabilities 52 18Other long-term liabilities 7 12Total liabilities 59 30Total net assets disposed of 65 27Consideration 65 6Reclassification of foreign exchange differences - 21Gain (loss) on disposal - -

Note 6 – Property, plant and equipmentDuring the six months ended June 30, 2017, the Company recognized an impairment charge for property, plant and equipment amounting to 46 relating to the Long Carbon cash-generating unit of ArcelorMittal South Africa in the ACIS reportable segment as a result of a downward revision of cash flow projections. The pre-tax discount rate was 17.12% (2016 pre-tax discount rate was 16.63%) and the remaining carrying value of property, plant and equipment was 325 as of June 30, 2017.



Note 7 – Equity and non-controlling interestsAuthorized sharesAt the extraordinary general meeting held on May 10, 2017, the shareholders approved a reverse stock split and an increase of the authorized share capital to €345 million. Following this approval, on May 22, 2017 ArcelorMittal completed the consolidation of each three existing shares in ArcelorMittal without nominal value into one share without nominal value. As a result, the authorized share capital increased with a decrease in representative shares from €337 million represented by 3,372,281,956 ordinary shares without nominal value as of December 31, 2016 to €345 million represented by 1,151,576,921 ordinary shares without nominal value.

Share capitalAs a result of the above mentioned reverse stock split, on May 22, 2017, the aggregate number of shares issued and fully paid up decreased from 3,065,710,869 to 1,021,903,623. There was no change in the share capital of ArcelorMittal which continues to amount to €306 million (401).

Treasury sharesArcelorMittal held, indirectly and directly, 2.3 million and 2.4 million treasury shares (corresponding to 7.2 million shares prior to the reverse stock split) as of June 30, 2017 and December 31, 2016, respectively.

Note 8 – Income taxThe tax expense for the period is based on an estimated annual effective rate, which requires management to make its best estimate of annual pre-tax income for the year. During the year, management regularly updates its estimates based on changes in various factors such as geographical mix of operating profit, prices, shipments, product mix, plant operating performance and cost estimates, including labor, raw materials, energy and pension and other postretirement benefits.

The income tax expense was 480 and 853 for the six months ended June 30, 2017 and 2016, respectively. The tax expense of 480 million for the six months ended June 30, 2017 was driven by the improved results worldwide. The tax expense for the six months ended June 30, 2016 included a de-recognition charge of 712 relating to previously recognized deferred tax assets with respect to the Luxembourg tax integration as the revised taxable income projections no longer included the effect of the anticipated elimination of the USD exposure of such euro denominated deferred tax assets.

Note 9 – Short-term and long-term debt Short-term debt, including the current portion of long-term debt, consisted of the following:

June 30, 2017 December 31, 2016

Short-term bank loans and other credit facilities including commercial paper* 1,644 1,123Current portion of long-term debt 2,224 697Lease obligations 68 65Total 3,936 1,885

* The weighted average interest rate on short-term borrowings outstanding was 3.9% and 2.7% as of June 30, 2017 and December 31, 2016 respectively.

Short-term bank loans and other credit facilities include short-term loans, overdrafts and commercial paper.

During the six months ended June 30, 2014, ArcelorMittal entered into certain short-term committed bilateral credit facilities. The facilities were extended in 2015, 2016 and 2017. As of June 30, 2017, the facilities totaling approximately 0.7 billion remain fully available.

The Company has a commercial paper program enabling borrowings of up to €1 billion. As of June 30, 2017, the outstanding amount was 682.





The Company’s long-term debt consisted of the following:

Year of maturity Type of interest Interest rate1 June 30, 2017 December 31, 2016

Corporate5.5 billion Revolving Credit Facility - 2.3 billion tranche 2019 Floating - - 5.5 billion Revolving Credit Facility - 3.2 billion tranche 2021 Floating - - €1.0 billion Unsecured Bonds2 2017 Fixed 5.88% 616 568 €500 million Unsecured Notes2 2018 Fixed 5.75% 380 351 €400 million Unsecured Notes 2018 Floating 1.70% 456 421 1.5 billion Unsecured Notes2, 5 2018 Fixed 6.13% 646 648 €750 million Unsecured Notes 2019 Fixed 3.00% 853 788 1.5 billion Unsecured Notes3, 5, 7 2019 Fixed 10.60% - 842 500 Unsecured Notes4, 5 2020 Fixed 5.13% 323 323 CHF 225 million Unsecured Notes 2020 Fixed 2.50% 234 220 €600 million Unsecured Notes 2020 Fixed 2.88% 680 627 1.0 billion Unsecured Bonds4, 5 2020 Fixed 5.75% 621 620 1.5 billion Unsecured Notes4, 5 2021 Fixed 6.00% 752 752 €500 million Unsecured Notes 2021 Fixed 3.00% 567 523 €750 million Unsecured Notes 2022 Fixed 3.13% 852 786 1.1 billion Unsecured Notes 2022 Fixed 6.75% 1,093 1,092 500 Unsecured Notes 2025 Fixed 6.13% 497 497 1.5 billion Unsecured Bonds 2039 Fixed 7.50% 1,466 1,466 1.0 billion Unsecured Notes 2041 Fixed 7.25% 984 984 Other loans 2020 - 2021 Fixed 1.25% - 3.46% 55 29 EIB loan 2025 Fixed 1.46% 399 - ICO loan 2017 Floating 2.18% 7 Other loans 2017 - 2035 Floating 0.01% - 3.60% 309 250 Total Corporate 11,783 11,794 AmericasOther loans 2017 - 2025 Fixed/Floating 1.72% - 11.15% 142 198 Total Americas 142 198 Europe, Asia & Africa Other loans 2018 - 2027 Fixed/Floating 0.00% - 4.82% 81 30 Total Europe, Asia & Africa 81 30 Total 12,006 12,022 Less current portion of long-term debt (2,224) (697)Total long-term debt (excluding lease obligations) 9,782 11,325 Lease obligations 6 438 464 Total long-term debt, net of current portion 10,220 11,789

1 Rates applicable to balances outstanding at June 30, 2017, including the effect of step-ups following downgrades/upgrades. For debt that has been redeemed in its entirety during 2017, the interest rate refers to the rates at the repayment date. On February 24, 2017, Moody’s upgraded ArcelorMittal’s credit rating and placed ArcelorMittal on stable outlook. On April 13, 2017, Fitch affirmed its credit rating of ArcelorMittal, and upgraded its outlook to stable. On May 24, 2017, Standard & Poor’s upgraded ArcelorMittal’s credit rating and placed it on stable outlook . On July 28, 2017, Fitch upgraded its outlook from stable to positive.

2 Bonds or Notes partially repurchased on April 19, 2016, pursuant to cash tender offers.3 Notes partially repurchased in May, 2016, pursuant to cash tender offer.4 Bonds or Notes partially repurchased on June 29, 2016, pursuant to cash tender offers.5 Bonds or Notes partially repurchased on September 23, 2016, pursuant to cash tender offers.6 Net of current portion of 68 and 65 as of June 30, 2017 and December 31, 2016, respectively. 7 Early redeemed on April 3, 2017.




Corporate

5.5 billion revolving credit facility On December 21, 2016, ArcelorMittal signed an agreement for a 5.5 billion revolving facility (“The Facility”). This Facility amends and restates the 6 billion revolving facility dated April 30, 2015. The amended agreement incorporates a first tranche of 2.3 billion maturing on December 21, 2019, and a second tranche of 3.2 billion maturing on December 21, 2021, restoring the Facility to the original tenors of 3 years and 5 years. The Facility may be used for general corporate purposes. As of June 30, 2017, the 5.5 billion revolving credit facility remains fully available.

NotesOn April 3, 2017, ArcelorMittal redeemed all of its outstanding 1.5 billion 9.85% Notes due June 1, 2019 for a total aggregate purchase price of 1,040, including accrued interest and premiums on early repayment, which was financed with existing cash and liquidity. As a result of the redemptions mentioned above, net financing costs for the six months ended June 30, 2017, included 159 of premiums and other fees.

European Investment Bank (“EIB”) loanOn December 16, 2016, ArcelorMittal signed a €350 million finance contract with the European Investment Bank in order to finance European research, development and innovation projects over the period 2017-2020 within the European Union, predominantly France, Belgium and Spain, but also in Czech Republic, Poland, Luxembourg and Romania. This operation benefits from a guarantee from the European Union under the European Fund for Strategic Investments. As of June 30, 2017, €350 million (399) was fully drawn down.

Americas

1 billion senior secured asset-based revolving credit facilityOn May 23, 2016, ArcelorMittal USA LLC signed a 1 billion senior secured asset-based revolving credit facility maturing on May 23, 2021. Any borrowing under the facility is secured by inventory and certain other working capital and related assets of ArcelorMittal USA and certain of its subsidiaries in the United States. The facility will be used for general corporate purposes. The facility is not guaranteed by the ArcelorMittal parent company. As of June 30, 2017, 500 was drawn down.

South Africa

South African rand revolving borrowing base finance facilityOn May 25, 2017, ArcelorMittal South Africa signed a 4.5 billion South African rand revolving borrowing base finance facility maturing on May 25, 2020. Any borrowings under the facility is secured by certain eligible inventory and receivables, as well as certain other working capital and related assets of ArcelorMittal South Africa. The facility will be used for general corporate purposes. The facility is not guaranteed by the ArcelorMittal parent company. As of June 30, 2017, 3.4 billion South African rand (258) was drawn down.

Other

Certain debt agreements of the Company or its subsidiaries contain certain restrictive covenants. Among other things, these covenants limit encumbrances on the assets of ArcelorMittal and its subsidiaries, the ability of ArcelorMittal’s subsidiaries to incur debt and the ability of ArcelorMittal and its subsidiaries to dispose of assets in certain circumstances. Certain of these agreements also require compliance with a financial covenant.

The other loans relate to various debt with banks and public institutions.




Note 10 – Financial instruments The Company enters into derivative financial instruments to manage its exposure to fluctuations in interest rates, exchange rates and the price of raw materials, energy and emission rights allowances arising from operating, financing and investing activities.

Fair values versus carrying amounts The estimated fair values of certain financial instruments have been determined using available market information or other valuation methodologies that require judgment in interpreting market data and developing estimates. The following tables summarize assets and liabilities based on their categories at June 30, 2017.

Carrying amount in

statements of financial

position

Non-financial assets and

liabilitiesLoan and

receivables

Liabilities at amortized

cost

Fair value recognized in

profit or lossAvailable-for-

sale assets Derivatives

ASSETS

Current assets:Cash and cash equivalents 2,048 - 2,048 - - - - Restricted cash * 224 - 224 - - - - Trade accounts receivable and other 4,263 - 4,263 - - - - Inventories 17,458 17,458 - - - - - Prepaid expenses and other current assets 2,286 1,290 444 - - - 552 Assets held for sale 127 127 - - - - - Total current assets 26,406 18,875 6,979 - - - 552

Non-current assets:Goodwill and intangible assets 5,769 5,769 - - - - - Property, plant and equipment and biological assets 35,765 35,721 - - 44 - - Investments in associates and joint ventures 4,679 4,679 - - - - - Other investments 1,168 - - - - 1,168 - Deferred tax assets 6,470 6,470 - - - - - Other assets 1,203 371 828 - - - 4 Total non-current assets 55,054 53,010 828 - 44 1,168 4 Total assets 81,460 71,885 7,807 - 44 1,168 556

LIABILITIES AND EQUITY

Current liabilities:Short-term debt and current portion of long-term debt 3,936 - - 3,936 - - - Trade accounts payable and other 12,555 - - 12,555 - - - Short-term provisions 404 394 - 10 - - - Accrued expenses and other liabilities 4,198 1,074 - 2,650 - - 474 Income tax liabilities 328 328 - - - - - Liabilities held for sale 39 39 - - - - - Total current liabilities 21,460 1,835 - 19,151 - - 474

Non-current liabilities:Long-term debt, net of current portion 10,220 - - 10,220 - - - Deferred tax liabilities 2,690 2,690 - - - - - Deferred employee benefits 8,636 8,636 - - - - - Long-term provisions 1,515 1,514 - 1 - - - Other long-term obligations 687 214 - 329 - - 144 Total non-current liabilities 23,748 13,054 - 10,550 - - 144

Equity:Equity attributable to the equity holders of the parent 34,027 34,027 - - - - - Non-controlling interests 2,225 2,225 - - - - - Total equity 36,252 36,252 - - - - - Total liabilities and equity 81,460 51,141 - 29,701 - - 618

* Restricted cash of 224 and 114 includes a cash deposit of 110 and nil in connection with various environmental obligations and true sales of receivables programs in ArcelorMittal South Africa and 75 and 75 in connection with the mandatory convertible bonds as of June 30, 2017 and December 31, 2016, respectively. The increase during the six months ended June 30, 2017 was presented in “Other investing activities (net)” in the condensed consolidated statements of cash flows.




The following tables summarize the bases used to measure certain assets and liabilities at their fair value.

As of June 30, 2017 As of December 31, 2016 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 TotalAssets at fair value:Available-for-sale financial assets 1,142 - - 1,142 1 894 - - 894 2

Derivative financial current assets - 69 483 552 - 243 - 243Derivative financial non-current assets - 4 - 4 - 14 175 189Total assets at fair value 1,142 73 483 1,698 894 257 175 1,326Liabilities at fair value:Derivative financial current liabilities - 474 - 474 - 226 - 226Derivative financial non-current liabilities - 100 44 144 - 37 33 70Total liabilities at fair value - 574 44 618 - 263 33 296

1 The balance does not include equity investments of 26 carried at cost.2 The balance does not include equity investments of 32 carried at cost.

Available-for-sale financial assets classified as Level 1 refer to listed securities quoted in active markets. A quoted market price in an active market provides the most reliable evidence of fair value and is used without adjustment to measure fair value whenever available, with limited exceptions. The total fair value is either the price of the most recent trade at the time of the market close or the official close price as defined by the exchange on which the asset is most actively traded on the last trading day of the period, multiplied by the number of units held without consideration of transaction costs. The increase in the available-for-sale financial assets is primarily related to the share price evolution of Ereĝli Demir ve Çelik Fabrikalari T.A.S. (“Erdemir“).

Derivative financial assets and liabilities classified as Level 2 refer to instruments to hedge fluctuations in interest rates, foreign exchange rates, raw materials (base metal), freight, energy, and emission rights. The total fair value is based on the price a dealer would pay or receive for the security or similar securities, adjusted for any terms specific to that asset or liability. Market inputs are obtained from well-established and recognized vendors of market data and the fair value is calculated using standard industry models based on significant observable market inputs such as foreign exchange

rates, commodity prices, swap rates and interest rates.

Derivative financial assets classified as Level 3 refer to the call option on the 1,000 mandatory convertible bonds. As at June 30, 2016, the Hunan Valin securities were classified as Level 3 derivative financial assets, which were subsequently disposed. The fair valuation of Level 3 derivative instruments is established at each reporting date including an analysis of changes in the fair value measurement since the last period. ArcelorMittal’s valuation policies for Level 3 derivatives are an integral part of its internal control procedures and have been reviewed and approved according to the Company’s principles for establishing such procedures. In particular, such procedures address the accuracy and reliability of input data, the accuracy of the valuation model and the knowledge of the staff performing the valuations.

ArcelorMittal estimates the fair value of the call option on the 1,000 mandatory convertible bonds through the use of binomial valuation models. Binomial valuation models use an iterative procedure to price options, allowing for the specification of nodes, or points in time, during the time span between the valuation date and the option’s expiration date. In contrast to the Black-Scholes model, which provides a

numerical result based on inputs, the binomial model allows for the calculation of the asset and the option for multiple periods along with the range of possible results for each period.

Observable input data used in the valuations include zero coupon yield curves, stock market prices, European Central Bank foreign exchange fixing rates and Libor interest rates. Unobservable inputs are used to measure fair value to the extent that relevant observable inputs are not available. Specifically, the Company computes unobservable volatility data based mainly on the movement of stock market prices observable in the active market over 90 working days.

Derivative financial non-current liabilities classified as Level 3 relate to an iron ore supply agreement that contains a special payment that varies according to the price of steel in the United States domestic market (“domestic steel price”). The Company concluded that this payment feature was an embedded derivative not closely related to the host contract. ArcelorMittal establishes the fair valuation of the special payment by comparing the current forecasted domestic steel price to the projected domestic steel price at the inception of the contract. Observable input data includes third-party forecasted domestic steel prices. Unobservable inputs are used to measure fair value to

the extent that relevant observable inputs are not available or not consistent with the Company’s views on future prices and refer specifically to domestic steel prices beyond the timeframe of available third-party forecasts.



Portfolio of derivatives The Company manages the counter-party risk associated with its instruments by centralizing its commitments and by applying procedures which specify, for each type of transaction and underlying, risk limits and/or the characteristics of the counter-party. The Company does not generally grant to or require from its counter-parties guarantees of the risks incurred. Allowing for exceptions, the Company’s counterparties are part of its financial partners and the related market transactions are governed by framework agreements (mainly the International Swaps and Derivatives Association agreements which allow netting only in case of counterparty default). Accordingly, derivative assets and derivative liabilities are not offset.

The portfolio associated with derivative financial instruments classified as Level 2 as of June 30, 2017 is as follows:

Assets Liabilities Notional Amount Fair Value Notional Amount Fair ValueForeign exchange rate instrumentsForward purchase of contracts 534 9 3,846 (226)Forward sale of contracts 583 11 376 (6)Currency swaps purchases 103 1 127 (20)Currency swaps sales - - 1,000 (94)Exchange option purchases 149 1 785 (4)Exchange options sales 285 3 560 (4)Total foreign exchange rate instruments 25 (354)Raw materials (base metal), freight, energy, emission rightsTerm contracts sales 178 10 250 (19)Term contracts purchases 398 37 881 (200)Options sales/purchases - 1 50 (1)Total raw materials (base metal), freight, energy, emission rights 48 (220)Total 73 (574)


The following table summarizes the reconciliation of the fair value of the call option on the 1,000 mandatory convertible bonds as of June 30, 2017 and June 30, 2016 and the fair value of the special payment as of June 30, 2017:

Call option on 1,000 mandatory convertible

bonds Special payment in an iron ore

supply agreement Hunan ValinBalance as of December 31, 2015 4 - -Reclassification from Level 1 - - 181 Change in fair value 80 - (21)Balance as of June 30, 2016 84 - 160 Disposal - - (160)Change in fair value 91 (33) - Balance as of December 31, 2016 175 (33) - Change in fair value 1 308 (11) - Balance as of June 30, 2017 483 (44) -

1 The mark-to-market is recorded in “Financing costs-net”.




The portfolio associated with derivative financial instruments classified as Level 2 as of December 31, 2016 is as follows:Assets Liabilities

Notional Amount Fair Value

Notional Amount Fair Value

Foreign exchange rate instrumentsForward purchase of contracts 3,784 153 658 (21)Forward sale of contracts 685 10 657 (26)Currency swaps purchases 138 6 44 (33)Currency swaps sales 500 4 500 (24)Exchange option purchases 169 1 37 - Exchange options sales 109 1 - - Total foreign exchange rate instruments 175 (104)Raw materials (base metal), freight, energy, emission rightsTerm contracts sales 329 18 312 (36)Term contracts purchases 416 64 841 (123)Option sales/purchases 6 - 6 - Total raw materials (base metal), freight, energy, emission rights 82 (159)Total 257 (263)

Note 11 – Provisions Provisions as of June 30, 2017 and December 31, 2016 are comprised of the following:

June 30, 2017 December 31, 2016

Environmental 775 745Asset retirement obligations 380 358Site restoration 44 43Staff related obligations 171 168Voluntary separation plans 55 79Litigation and other (see note 14) 344 413 Tax claims 164 211 Other legal claims 180 202Commercial agreements and onerous contracts 17 26Other 133 115Total 1,919 1,947Short-term provisions 404 426Long-term provisions 1,515 1,521Total 1,919 1,947




Note 12 – Segment and geographic informationReportable segments ArcelorMittal reports its operations in five segments: NAFTA, Brazil, Europe, ACIS and Mining.

• NAFTArepresentstheflat,longandtubularfacilitiesoftheCompanylocatedinNorthAmerica(Canada,UnitedStatesandMexico).NAFTAproduces flat products such as slabs, hot-rolled coil, cold-rolled coil, coated steel and plate. These products are sold primarily to customers in the following industries: distribution and processing, automotive, pipes and tubes, construction, packaging and appliances. NAFTA also produces long products such as wire rod, sections, rebar, billets, blooms and wire drawing, and tubular products;

• BrazilincludestheflatoperationsofBrazilandthelongandtubularoperationsofBrazilandneighboringcountriesincludingArgentina,CostaRica and Venezuela. Flat products include slabs, hot-rolled coil, cold-rolled coil and coated steel. Long products consist of wire rod, sections, bar and rebar, billets, blooms and wire drawing;

• EuropeisthelargestflatsteelproducerintheEuropeanregion,withoperationsthatrangefromSpaininthewesttoRomaniaintheeast,and covering the flat carbon steel product portfolio in all major countries and markets. Europe produces hot-rolled coil, cold-rolled coil, coated products, tinplate, plate and slab. These products are sold primarily to customers in the automotive, general industry and packaging industries. Europe also produces long products consisting of sections, wire rod, rebar, billets, blooms and wire drawing, and tubular products. In addition, it includes Downstream Solutions, primarily an in-house trading and distribution arm of ArcelorMittal. Downstream Solutions also provides value-added and customized steel solutions through further steel processing to meet specific customer requirements;

• ACISproducesacombinationofflat,longandtubularproducts.ItsfacilitiesarelocatedinAfricaandtheCommonwealthofIndependentStates; and

•MiningcomprisesallminesownedbyArcelorMittalintheAmericas(Canada,USA,MexicoandBrazil),Asia(Kazakhstan),Europe(UkraineandBosnia & Herzegovina) and Africa (Liberia). It supplies the Company and third party customers with iron ore and coal.

The following table summarizes certain financial data relating to ArcelorMittal’s operations in its different reportable segments:

NAFTA Brazil Europe ACIS Mining Others* Eliminations Total

Six months ended June 30, 2017Sales to external customers 9,040 3,045 17,192 3,472 548 33 - 33,330 Intersegment sales** 25 399 210 169 1,497 173 (2,473) - Operating income (loss) 774 303 1,288 167 594 (134) 26 2,966 Depreciation and amortization 256 144 563 152 205 11 - 1,331 Impairment - - - 46 - - - 46 Capital expenditures 187 112 500 148 184 17 (2) 1,146 Six months ended June 30, 2016Sales to external customers 7,740 2,564 14,837 2,653 326 22 - 28,142 Intersegment sales** 2 179 124 120 1,083 114 (1,622) - Operating income (loss) 1,414 238 469 147 60 (155) (25) 2,148 Depreciation and amortization 270 120 570 156 201 15 - 1,332 Impairment - - 49 - - - - 49 Capital expenditures 209 112 467 164 142 13 - 1,107

* Others include all other operational and non-operational items which are not segmented, such as corporate and shared services, financial activities, and shipping and logistics.

** Transactions between segments are reported on the same basis of accounting as transactions with third parties except for certain mining products shipped internally and reported on a cost plus basis.

The reconciliation from operating income to net income is as follows:



Operating income 2,966 2,148Income from investments in associates, joint ventures and other investments 206 492Financing costs - net (353) (1,079)Income before taxes 2,819 1,561Income tax expense (480) (853)Net income (including non-controlling interests) 2,339 708



Geographical information Sales (by destination)



AmericasUnited States 7,277 6,039Brazil 1,889 1,599Canada 1,520 1,421Mexico 1,089 862Argentina 559 420Others 465 412Total Americas 12,799 10,753EuropeGermany 2,828 2,447France 2,076 1,961Spain 1,798 1,580Poland 1,758 1,572Italy 1,371 1,019Turkey 825 896Czech Republic 720 526United Kingdom 670 594Russia 637 278Netherlands 569 505Belgium 521 456Romania 300 279Others 2,353 1,968Total Europe 16,426 14,081Asia & AfricaSouth Africa 1,256 988Morocco 278 261Egypt 85 245Rest of Africa 493 303China 329 263Kazakhstan 182 177South Korea 157 99India 95 40Rest of Asia 1,230 932Total Asia & Africa 4,105 3,308Total 33,330 28,142

The table below presents sales to external customers by product type. In addition to steel produced by the Company, amounts include material purchased for additional transformation and sold through distribution services. Others include mainly non-steel sales and services.

Product segmentation Sales (by products)

Six months ended

June 30, 2017Six months ended

June 30, 2016

Flat products 21,360 16,744Long products 6,274 6,120Tubular products 873 742Mining products 548 326Others 4,275 4,210Total 33,330 28,142





Note 13 – CommitmentsThe Company’s commitments consist of the following:

June 30, 2017 December 31, 2016

Purchase commitments 24,121 24,432Guarantees, pledges and other collateral 5,201 4,424Non-cancellable operating leases 1,296 1,312Capital expenditure commitments 413 466Other commitments 1,184 1,432Total 32,215 32,066

Purchase commitments Purchase commitments consist primarily of major agreements for procuring iron ore, coking coal, coke and hot metal. The Company also has a number of agreements for electricity, industrial and natural gas, scrap and freight. In addition to those purchase commitments disclosed above, the Company enters into purchasing contracts as part of its normal operations which have minimum volume requirements but for which there are no take-or-pay or penalty clauses included in the contract. The Company does not believe these contracts have an adverse effect on its liquidity position.

Purchase commitments include commitments given to associates for 507 and 480 as of June 30, 2017 and December 31, 2016, respectively. Purchase commitments include commitments given to joint ventures for 1,505 and 1,386 as of June 30, 2017 and December 31, 2016, respectively. Commitments given to joint ventures include 1,430 and 1,314 related to purchase of the output from Tameh as of June 30, 2017 and December 31, 2016, respectively. Additionally, the Company has committed to purchase 50% of the output from its joint venture Kalagadi once production commences; however, the Company’s investment in Kalagadi is classified as held for sale pending completion of the closing conditions.

Guarantees, pledges and other collateral Guarantees related to financial debt and credit lines given on behalf of third parties were 159 and 131 as of June 30, 2017 and December 31, 2016, respectively. Additionally, 10 and 11 were related to guarantees given on behalf of associates and guarantees of 1,022 and 1,028 were given on behalf of joint ventures as of June 30, 2017 and December 31, 2016, respectively. Guarantees given on behalf of joint ventures include 435 and 463 for the guarantee issued on behalf of Calvert and 402 and 403 for the guarantees issued on behalf of Al Jubail as of June 30, 2017 and December 31, 2016, respectively.

Pledges and other collateral mainly relate inventories pledged to secure an asset-based revolving credit facility for the amount drawn of 500, inventories and receivables pledged to secure the South African rand revolving borrowing base finance facility for the amount drawn of 258, ceded bank accounts to secure environmental obligations, true sale of receivables programs and the revolving borrowing base finance facility in South Africa of 200 and mortgages entered into by the Company’s operating subsidiaries. Other sureties, first demand guarantees, letters of credit, pledges and other collateral included nil commitments given on behalf of associates as of June 30, 2017 and December 31, 2016 and 134 and 114 commitments given on behalf of joint ventures as of June 30, 2017 and December 31, 2016, respectively.

Non-cancellable operating leases

Non-cancellable operating leases mainly relate to commitments for the long-term use of various facilities, land and equipment belonging to third parties.

Capital expenditure commitmentsCapital expenditure commitments mainly relate to commitments associated with investments in expansion and improvement projects by various subsidiaries.

Other commitmentsOther commitments given comprise mainly commitments incurred for gas supply to electricity suppliers.

Commitments to sellIn addition to the commitments presented above, the Company has firm commitments to sell natural gas and electricity for 279 and 366 as of June 30, 2017 and December 31, 2016, respectively.



Note 14 – Contingencies ArcelorMittal may be involved in litigation, arbitration or other legal proceedings. Provisions related to legal and arbitral proceedings are recorded in accordance with the principles described in note 8.2 to the consolidated financial statements for the year ended December 31, 2016.

Most of these claims involve highly complex issues. Often these issues are subject to substantial uncertainties and, therefore, the probabilities of loss and an estimate of damages are difficult to ascertain. Consequently, for a large number of these claims, the Company is unable to make a reliable estimate of the expected financial effect that will result from ultimate resolution of the proceeding. In those cases, the Company has disclosed information with respect to the nature of the contingency. The Company has not accrued a provision for the potential outcome of these cases.

In cases in which quantifiable fines and penalties have been assessed or the Company has otherwise been able to reliably estimate the amount of probable loss, the Company has indicated the amount of such fine or penalty or the amount of provision accrued.

In a limited number of ongoing cases, the Company is able to make a reliable estimate of the expected loss or range of possible loss and has accrued a provision for such loss, but believe that publication of this information on a case-by-case basis would seriously prejudice the Company’s position in the ongoing legal proceedings or in any related settlement discussions. Accordingly, in these cases, the Company has disclosed information with respect to the nature of the contingency, but has not disclosed the estimate of the range of potential loss nor the amount recorded as a loss.

These assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions. These assessments are based on estimates and assumptions that have been deemed reliable by management. The Company believes that the aggregate provisions recorded for the above matters are adequate based upon currently available information. However, given the inherent uncertainties related to these cases and in estimating contingent liabilities, the Company could, in the future, incur judgments that could have a material effect on its results of operations in any particular period. The Company considers it highly unlikely, however, that any such judgments could have a material adverse effect on its liquidity or financial condition.

Tax claims

BrazilIn 2011, SOL Coqueria Tubarão S.A. received 21 tax assessments from the Revenue Service of the State of Espirito Santo for ICMS (a value-added tax) in the total amount of 35 relating to a tax incentive (INVEST) used by the Company. The dispute concerns the definition of fixed assets. In August 2015, the administrative tribunal of first instance upheld 21 of the tax assessments, while also issuing decisions partially favorable to the Company in two of the cases. In September 2015, ArcelorMittal Tubarão filed appeals with respect to each of the administrative tribunal’s decisions. As of May 2017, there have been final unfavorable decisions at the administrative tribunal level in 15 of the 21 cases, each of which ArcelorMittal Tubarão is appealing to the judicial instance. The other six cases are pending decision from the third administrative tribunal.

For over 18 years, ArcelorMittal Brasil has been challenging the basis of calculation of the Brazilian Cofins and Pis social security taxes (specifically, whether Brazilian VAT may be deducted from the base amount

on which the Cofins and Pis taxes are calculated). ArcelorMittal Brasil subsequently deposited the disputed amount in judicial escrow. The principal amount of the deposit bears interest at a rate applicable to judicial escrow deposits and was 54 as of June 30, 2017. In March 2017, the Supreme Court decided a separate case, not involving ArcelorMittal Brasil, on the same subject in favor of the relevant taxpayers. Such separate Supreme Court decision, which is of binding precedential value with respect to all similar cases, including those of ArcelorMittal Brasil, is subject to appeal by the Federal Revenue Service.

In May 2014, ArcelorMittal Comercializadora de Energia received a tax assessment from the state of Minas Gerais alleging that the Company did not correctly calculate tax credits on interstate sales of electricity from February 2012 to December 2013. The amount claimed totals 55. ArcelorMittal Comercializadora de Energia filed its defense in June 2014. Following an unfavorable administrative decision in November 2014, ArcelorMittal filed an appeal in December 2014. In March 2015, there was a further unfavorable decision at the second administrative level. Following the conclusion of this proceeding at the administrative level, the Company received the tax enforcement notice in December 2015 and filed its defense in February 2016. In April 2016, ArcelorMittal Comercializadora de Energia received an additional tax assessment in the amount of 79, regarding the same matter, for infractions which allegedly occurred during the 2014 to 2015 period, and filed its defense in May 2016. In May 2017, there was a further unfavorable decision at the second administrative level in respect of the tax assessment received in April 2016. In June 2017, ArcelorMittal Comercializadora de Energia filed an appeal to the second administrative instance.

On April 25, 2016, ArcelorMittal Brasil received a tax assessment in relation to (i) the amortization of goodwill resulting from Mittal Steel’s mandatory tender offer to the minority shareholders of Arcelor Brasil following Mittal Steel’s merger with Arcelor in 2007 and (ii) the amortization of goodwill resulting from ArcelorMittal Brasil’s acquisition of CST in 2008. While the assessment, if upheld, would not result in a cash payment as ArcelorMittal Brasil did not have any tax liability for the fiscal years in question (2011 and 2012), it would result in the write-off of 292 worth of ArcelorMittal Brasil’s net operating loss carryforwards and as a result could have an effect on net income over time. In May 2016, ArcelorMittal Brasil filed its defense which was not accepted at the first administrative instance. On March 10, 2017, ArcelorMittal Brasil filed an appeal to the second administrative instance.

Competition/Antitrust claimsRomaniaIn 2010 and 2011, ArcelorMittal Galati entered into high volume electricity purchasing contracts with Hidroelectrica, a partially state-owned electricity producer. Following allegations by Hidroelectrica’s minority shareholders that ArcelorMittal Galati (and other industrial electricity consumers) benefitted from artificially low tariffs, the European Commission opened a formal investigation into alleged state aid in April 2012. The European Commission announced on June 12, 2015 that electricity supply contracts signed by Hidroelectrica with certain electricity traders and industrial customers (including the one entered by ArcelorMittal Galati) did not involve state aid within the meaning of the EU rules. In March 2017, the European Commission’s decision was officially published. As no challenge was filed within two months of publication, the decision has become definitive.





GermanyIn the first half of 2016, the German Federal Cartel Office carried out unannounced investigations of ArcelorMittal Ruhrort GmbH and ArcelorMittal Commercial Long Deutschland GmbH following alleged breaches of antitrust rules concerning (i) collusion regarding scrap and alloy surcharges from the 1990s through November 2015 and (ii) impermissible exchanges of sensitive information between competitors since early 2003. ArcelorMittal Ruhrort GmbH and ArcelorMittal Commercial Long Deutschland GmbH are cooperating with the German Federal Cartel Office. ArcelorMittal is unable to assess the outcome of these proceedings or the amount of its potential liability, if any. In March 2017, the Federal Cartel Office formally notified ArcelorMittal SA, ArcelorMittal Commercial Sections SA and certain other parties that they are also being included in the investigation.

Other legal claimsMinority shareholder claims regarding the exchange ratio in the second-step merger of ArcelorMittal into Arcelor

ArcelorMittal is the company that results from the acquisition of Arcelor by Mittal Steel N.V. in 2006 and a subsequent two-step merger between Mittal Steel and ArcelorMittal and then ArcelorMittal and Arcelor. Following completion of this merger process, several former minority shareholders of Arcelor or their representatives brought legal proceedings regarding the exchange ratio applied in the second-step merger between ArcelorMittal and Arcelor and the merger process as a whole.

ArcelorMittal believes that the allegations made and claims brought by such minority shareholders are without merit and that the exchange ratio and merger process complied with the requirements of applicable

law, were consistent with previous guidance on the principles that would be used to determine the exchange ratio in the second-step merger and that the merger exchange ratio was relevant and reasonable to shareholders of both merged entities.

Set out below is a summary of ongoing matters in this regard. Several other claims brought before other courts and regulators were dismissed and are definitively closed.

On January 8, 2008, ArcelorMittal received a writ of summons on behalf of four hedge fund shareholders of Arcelor to appear before the civil court of Luxembourg. The summons was also served on all natural persons sitting on the Board of Directors of ArcelorMittal at the time of the merger and on the Significant Shareholder. The plaintiffs alleged in particular that, based on Mittal Steel’s and Arcelor’s disclosure and public statements, investors had a legitimate expectation that the exchange ratio in the second-step merger would be the same as that of the secondary exchange offer component of Mittal Steel’s June 2006 tender offer for Arcelor (i.e., 11 Mittal Steel shares for 7 Arcelor shares), and that the second-step merger did not comply with certain provisions of Luxembourg company law. They claimed, inter alia, the cancellation of certain resolutions (of the Board of Directors and of the Shareholders meeting) in connection with the merger, the grant of additional shares, or damages in an amount of approximately 192. By judgment dated November 30, 2011, the Luxembourg civil court declared all of the plaintiffs’ claims inadmissible and dismissed them. The judgment was appealed in May 2012. By judgment dated February 15, 2017, the Luxembourg Court of Appeal declared all but one of the plaintiffs’ claims inadmissible, remanded the proceedings on the merits to the lower court with respect to the admissible

claimant and dismissed all other claims. In June 2017, the plaintiffs filed an appeal of this decision to the Court of Cassation.

On May 15, 2012, ArcelorMittal received a writ of summons on behalf of Association des Actionnaires d’Arcelor (“AAA”), a French association of former minority shareholders of Arcelor, to appear before the civil court of Paris. In such writ of summons, AAA claimed (on grounds similar to those in the Luxembourg proceedings summarized above) inter alia damages in a nominal amount and reserved the right to seek additional remedies including the cancellation of the merger. The proceedings before the civil court of Paris have been stayed, pursuant to a ruling of such court on July 4, 2013, pending a preparatory investigation (instruction préparatoire) by a criminal judge magistrate (juge d’instruction) triggered by the complaints (plainte avec constitution de partie civile) of AAA and several hedge funds (who quantified their total alleged damages at approximately 262), including those who filed the claims before the Luxembourg courts described (and quantified) above.


To the shareholders of ArcelorMittal24-26, Boulevard D’AvranchesL-1160 LuxembourgGrand Duchy of Luxembourg

Report on review of interim financial statements

Introduction We have reviewed the accompanying condensed consolidated statement of financial position of ArcelorMittal and its subsidiaries as of June 30, 2017 and the related condensed consolidated statements of operations, other comprehensive income, changes in equity and cash flows for the six-month period then ended (collectively, the “interim financial statements”). The Board of Directors is responsible for the preparation and fair presentation of the interim financial statements in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union. Our responsibility is to express a conclusion on the interim financial statements based on our review.

Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity, as adopted by the Institut des Réviseurs d’Entreprises. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union.

For Deloitte Audit société à responsabilité limitée Cabinet de révision agréé

Jean-Pierre Agazzi, Réviseur d’entreprises agrééPartner

July 31, 2017 560, rue de Neudorf L-2220 LuxembourgGrand Duchy of Luxembourg

Report of the Réviseur d’entreprises agréé on review of interim financial information

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