Arcelormittal SA says the global steel industry continues to struggle‚ and that South Africa is feeling the pain.
The country’s largest steel producer said in a quarterly update to March that Chinese producers continued to flood the world with cheap steel exports.
“For the first quarter of 2016‚ South Africa continued without duties on hot-rolled coil‚” the South African unit of the Indian-backed global ArcelorMittal group said at the weekend.
This had resulted in large amounts of this product being imported into South Africa between January and February.
Last month‚ the International Trade Administration Commission (Itac) had recommended the imposition of 10% tariffs on hot-rolled coil and various bars and rods‚ but this was still being implemented.
“Safeguard duties still remain critical in the short-term to ensure the future sustainability of primary steel production ‚” ArcelorMittal SA said.
During the quarter‚ the firm’s capacity utilisation fell from 84% in the period last year to 81%‚ with overall steel production falling 9%. Steel sales‚ though‚ were 3% higher‚ mainly due to improved exports.
Acting chief executive Dean Subramanian said that while it acknowledged progress had been made against Chinese imports‚ without safeguards and use of domestic steel for state infrastructure projects‚ the company and domestic steel industry were vulnerable to volatile international prices.
A recent slowdown in China’s economy has led to considerable overcapacity among Chinese steel producers. The country makes and uses half of the total global production of steel.
In SA‚ after a protracted decline‚ Tata Steel’s KwaZulu-Natal ferrochrome plant in Richards Bay has gone into liquidation.
Meanwhile‚ SA’s second-largest steel producer‚ Evraz Highveld Steel and Vanadium‚ is being sold off in pieces after a sale to Chinese interests failed.
ArcelorMittal SA has also placed its Saldanha Works under review‚ after the steel manufacturer recorded a loss of R8.63-billion for the year ended-December.
On Friday‚ it said that while the base international price of hot-rolled coil had increased by $86 a ton‚ main steel-making inputs of coal‚ iron ore and scrap had also risen significantly.
“Perhaps the key comment from management on the positive side is that‚ following the increase in international steel prices‚ overall liquidity will normalise at acceptable levels‚” Stephen Meintjes‚ an analyst at Momentum SP Reid Securities‚ said.
Cheap steel exports cripple SA
The country’s largest steel producer said in a quarterly update to March that Chinese producers continued to flood the world with cheap steel exports.
“For the first quarter of 2016‚ South Africa continued without duties on hot-rolled coil‚” the South African unit of the Indian-backed global ArcelorMittal group said at the weekend.
This had resulted in large amounts of this product being imported into South Africa between January and February.
Last month‚ the International Trade Administration Commission (Itac) had recommended the imposition of 10% tariffs on hot-rolled coil and various bars and rods‚ but this was still being implemented.
“Safeguard duties still remain critical in the short-term to ensure the future sustainability of primary steel production ‚” ArcelorMittal SA said.
During the quarter‚ the firm’s capacity utilisation fell from 84% in the period last year to 81%‚ with overall steel production falling 9%. Steel sales‚ though‚ were 3% higher‚ mainly due to improved exports.
Acting chief executive Dean Subramanian said that while it acknowledged progress had been made against Chinese imports‚ without safeguards and use of domestic steel for state infrastructure projects‚ the company and domestic steel industry were vulnerable to volatile international prices.
A recent slowdown in China’s economy has led to considerable overcapacity among Chinese steel producers. The country makes and uses half of the total global production of steel.
In SA‚ after a protracted decline‚ Tata Steel’s KwaZulu-Natal ferrochrome plant in Richards Bay has gone into liquidation.
Meanwhile‚ SA’s second-largest steel producer‚ Evraz Highveld Steel and Vanadium‚ is being sold off in pieces after a sale to Chinese interests failed.
ArcelorMittal SA has also placed its Saldanha Works under review‚ after the steel manufacturer recorded a loss of R8.63-billion for the year ended-December.
On Friday‚ it said that while the base international price of hot-rolled coil had increased by $86 a ton‚ main steel-making inputs of coal‚ iron ore and scrap had also risen significantly.
“Perhaps the key comment from management on the positive side is that‚ following the increase in international steel prices‚ overall liquidity will normalise at acceptable levels‚” Stephen Meintjes‚ an analyst at Momentum SP Reid Securities‚ said.
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