ArcelorMittal South Africa today announced price increases of its steel products with effect from 1 December 2016 in line with international market movements.
The continued downturn in the global economy and the sustainability of the steel industry are among the factors which led the company to increase prices following its monthly price review. Last year was challenging for steelmakers worldwide, with companies registering record losses.
Significant increases have been experienced since June 2016 in the international prices of raw materials. The prices of iron ore and coking coal have increased by 54% and 243% respectively, which has led to an international raw material basket increase of 98%, exerting upward pressure on international steel prices. Chinese Hot Rolled Coil (HRC) has increased by 38% over the same period and Rebar by 35%. The spread between the raw material basket and that of the steel price (the gap available for conversion costs and margin), has come down to unsustainable levels from $158/t to $102/t internationally in the case of HRC. This reflects a continuation of dumping of steel by China as these are below EBITDA costs and therefore the need for safeguards.
Alph Ngapo, Chief Marketing Officer at ArcelorMittal South Africa, said the monthly price reviews and increases are in line with normal market practice and are aligned with the fair pricing principles applicable to flat products and which are being finalised with the South Africa government.
ArcelorMittal South Africa appreciates progress made with government on a number of key initiatives which are intended to protect the local steel sector. However, the company’s Vanderbijlpark Works continues to face sustainability pressure despite a turnaround strategy which is being implemented at the operations.
“The price increases are essential to address the current losses at the Vanderbijlpark Works, while considering the fair pricing principles and progress on the application for safeguard duties and designation of steel for the building and construction industry,” said Ngapo.
Source: Mineweb