Moody's ratings agency on Thursday downgraded global steel giant ArcelorMittal (Other OTC: AMSYF - news) a notch to Ba2 as the group struggles in the face of slumping prices.
The group had already been on negative watch, an outlook which Moody's retained suggesting a further downgrade could be in the offing.
"Our downgrade of ArcelorMittal's rating to Ba2 from Ba1 primarily reflects its weaker operating performance since the beginning of 2015 as a result of falling steel prices," said Hubert Allemani, Moody's vice president and lead analyst for ArcelorMittal.
Allemani added that "a material decrease in EBITDA (earnings before interest, tax, depreciation and amortisation) from its mining operations" also contributed to the downgrading.
He said he saw "little prospect of recovery in the short term to the levels required for a Ba1 rating" given the difficult price environment, particularly in the United States.
Moody's expects there will be limited opportunity for ArcelorMittal to bolster profitability over the next 12 months.
The ratings firm identified several risks to profitability, including the European pricing environment for steel products, competition from floods of cheaper imports from Asia and Russia and also weak GDP growth prospects in Brazil.
Estimating that iron ore prices will not increase in the next 12 months, Moody's saw ArcelorMittal's profitability staying low, while adding that the company overall "is well-positioned with a global business with diversified revenue."
Friday saw the firm issue its fourth profit warning in three years while it also suspended dividend payments.
Chief executive Lakshmi Mittal noted then that "already challenging operating conditions have further deteriorated during recent months, largely due to additional declines in steel prices caused by exceptionally low Chinese export prices