With financial losses lower than expected for the first half of 2024, ArcelorMittal SA is cautiously looking forward to better performance, especially if the country’s new National Unity Government kick-starts infrastructure spending and lowers interest rates.
But a surge in cheap steel imports especially from China remain a threat, causing CEO Kobus Verster to later call for tariffs more in line with international norms.
Production interruptions also took place at two blast furnaces at the Company’s largest plant in Vanderbijlpark, Gauteng.
Actual production of crude steel lessened by 10% to 1,2 million metric tons even as sales dropped by 2% to 1.2 million tons.
Mitigating factors cited by Verster included the hope that steel-friendly industrialisation and construction projects by the GNU kick-start dormant local demand, along with ongoing improvements to Transnet port and rail logistics.
“Domestically, the potential for interest rate cuts as well as a focus on infrastructure-build by the Government of National Unity may bring much-needed support to the demand dynamics in the local market,” said ArcelorMittal South Africa.
China at present has a record-high trade surplus and that is expected to fuel a surge in steel exports from the country and Asia which will result in cheap Chinse steel being dumped in South Africa and elsewhere.
“China’s excess production relative to demand is resulting in very low domestic steel spreads and aggressive exports and steel prices in both Europe and US are below the marginal cost,” said the company.
Earlier this year, ArcelorMittal South Africa announced it was not closing its Long Steel Division in Vereeniging and Newcastle, saving thousands of full-time and contractor jobs.
