According to an exhaustive report by RBC Capital Markets, at the end of the first quarter 2011, when ArcelorMittal reports mining assets separately, AM Mining could rank as the fifth largest iron ore producer globally, through forecasts to 2015. This year, RBCCM reckons AM Mining could have the second-largest EBITDA contribution to the group (22%), and account for more than 50% of AM group growth capex (capital expenditure).

Eoin Treacy's view An expected side effect of high commodity prices is that end users tend to adopt a more serious attitude to inventory and supply chain management. ArcelorMittal is a one of a very small number of steel producers with access to resources in the ground; allowing it to hedge exposure to commodity prices.

It is reasonable to expect ArcelorMittal to increase its efforts to become self-sufficient in iron-ore against a background where prices remain close to historic highs. These efforts run in tandem with plans by Rio Tinto and CVRD to significantly increase supply over medium term in an effort to cash in on such high prices. Additional new supply is now also coming online. Fortescue Metals has perhaps been the most high profile entrant to the market over the last few years.

The steel industry was hit harder than most by the slowdown following the credit crisis. Chinese overcapacity continues to put downward pressure on steel prices. ArcelorMittal is performing more or less in line with other major steel producers and has been ranging for much of the last two years. It is currently mid range and found at least short-term support near €24 two weeks ago. A sustained move below that level would be required to question scope for some additional higher to lateral trading.

Specialist steel makers, such as Allegheny Technologies, have fared better. The share remains in a relatively consistent medium-term uptrend. It broke upwards to new recovery highs in January, found support near $60 two weeks ago and would need to sustain a move below that level to question medium-term scope for continued upside.

Over the last decade, iron-ore miners have been disciplined. They have withheld significant new supply from the market and fostered an upward trajectory for prices. Over the last few months, a number of companies have announced major new supply projects. While these will not begin production for at least a few years, these announcements are a departure from the more disciplined approach followed previously. Major bull markets tend to climax when the market becomes flooded with new supply. Iron-ore is unlikely to be any different, but the denouement is likely to still be at least a few years away