Wim de Klerk. Picture: BUSINESS DAY
Wim de Klerk. Picture: BUSINESS DAY

ArcelorMittal SA says domestic steel demand remains subdued, despite the government’s implementation of import duties on certain steel products and the designation of local steel for use in state infrastructure projects.

The country’s largest steel producer said rand volatility continued to affect its business.

The group is seeking to exit losses in recent years amid a crisis in SA’s steel sector due to cheap Chinese steel imports. But exports sales were slightly up in the period, despite falls in liquid steel production and a drop in domestic sales volumes.

"Although having declined slightly from 2016 levels … imports are still high despite the 10% duties having been imposed," ArcelorMittal SA CEO Wim de Klerk said on Friday.

The group said trading conditions in the domestic market were difficult. Domestic sales were 30,000 tonnes, or 3.4% lower, mainly due to weaker demand for long products. This was due to high stock levels at steel merchants and strong competition. Long product sales plunged 27.7%, while flat product sales increased 10.7%.

Liquid steel production was 2.3% lower, mainly due to lower production at the group’s main Vanderbijlpark plant. This was due to poor raw-material quality and the rupture of a stove at a blast furnace in the fourth quarter of 2016. The drop had been partly offset by higher production at the export-oriented Saldanha plant near Cape Town.

But production at KwaZulu-Natal’s Newcastle works was also lower mainly due to the poorer quality of imported coke and iron ore. Capacity utilisation for the first quarter of 2017 was 80%, down from 81% in the same period in 2016. Export sales rose 8.8%. Flat products sales were slightly higher at 2,000 tonnes. But the "strong international demand" was negatively affected by the strengthening of the average rand-to-dollar exchange rate for most of the quarter.

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