ArcelorMittal exports up 33%

• Cheap Chinese imports, SA’s lacklustre economy and the continued exodus of top executives affect the company’s local growth

ArcelorMittal SA says domestic demand for primary steel is still weak in a lacklustre South African economy. While the group’s liquid steel production is up 6% in the first quarter ended March 2018, domestic sales fell 2%, even as export sales shot up 33%.

ArcelorMittal SA says domestic demand for primary steel is still weak in a lacklustre South African economy.

While the group’s liquid steel production is up 6% in the first quarter ended March 2018, domestic sales fell 2%, even as export sales shot up 33%.

The largest steel maker in SA says there is continuous pressure from cheaper imports on downstream products, at the same time rand volatility is “impacting the business significantly”. The strong international demand was however muted by the strengthening of the randdollar exchange rate for most of the quarter,” the group said.

Meanwhile, 25% tariffs imposed on steel imports into the US by the Trump administration earlier in 2018 could mean that export growth might falter in future.

ArcelorMittal SA’s shares had plunged more than 17% to new lows of about R2.31 last week, giving the company a market valuation of R2.6bn. This came after the company announced that chief financial officer Dean Subramanian had resigned after nearly three years in the role.

Several executives have left the company in quick succession, raising questions about its stability. This has come amid billions of rand in losses in recent years. The search is on to replace Subramanian, who leaves at the end of July 2018.

Kobus Verster, ArcelorMittal SA CEO, had earlier said that the top five steel-consuming industries in SA together contributed R600bn to GDP, or 15% of the total. These industries directly and indirectly employed more than 8-million people, he said.

Recent ArcelorMittal SA data shows steel used in construction now makes up just over 30% of group sales, well below the 50% of local steel output the sector usually takes up. This deficit took it to a R5.1bn loss for the year to December 2017.

The slump in domestic demand came as imports of primary steel products slumped 20% in the first quarter compared to the same period in 2017.

ArcelorMittal SA said the drop in such imports was a result of the government imposing safeguards on steel products amid a flood of cheaper mainly Chinese imports, high stock levels and increased production.

But imports of galvanised products had shot up 14%, while total imports of products containing steel rose 8% compared to the same period in 2017. This was mainly driven by imports of low standard thingauge products.

Meanwhile, imports of tube and pipe leapt 34%, highlighting the need for trade protection for the downstream industry, ArcelorMittal SA said.

Meanwhile, German familyowned investment group Aton said that it was committed to buying a majority stake in JSElisted construction group Murray & Roberts and was on track to file merger notification to the Competition Commission by May 24 2018.

The group had recently sold its steel operations to empowerment entities amid dismal business conditions.