Citing falling global demand and lower prices and pointing specifically to the deceleration of the economy in China, the world’s largest consumer of steel, the company said the headline loss per share was up to 27 cents, from 2 cents in the corresponding period last time.
A statement from Africa’s largest steel producer said that although the markets in the rest of the continent remained positive due to the drive towards infrastructure investments in specific regions, such as the west and east sub-Saharan regions, the impact on the global market was minimal.
It said the South African economy, in particular the manufacturing sector, had “been hit from all sides due to the rising cheap imports and high operational costs”. The statement added: “Locally, the economy is nearly at a standstill due to electricity supply constraints, infrastructure development delays and the low spending in the mining sector.”
The statement noted that South Africa’s second largest steelmaker, Evraz Highveld, had applied for business rescue, reflecting how bad things were in the industry, as did the increase in its own net borrowing position to R2.5 billion during the period under review.
The company said it had continued to make headway on increasing efficiencies, but said government action was needed. “Import tariffs and designation of primary steel for localisation are key elements that need to be addressed by government in the short term to ensure the sustainability of the domestic steel industry”.