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

SA expects domestic steel sales to remain under pressure due to tough trading conditions in a generally poor South African economy.

However, sales could be slightly higher in the fourth quarter of 2017 due to lower imports. Export sales would also be higher due to better international prices, SA’s largest steel group said on Friday, when it released its three months to September sales update.

ArcelorMittal reported a 6% increase in sales for the three months to September, despite difficult trading conditions and rand volatility having "significantly affected the business".

The steel group said liquid steel production rose 11% in the period. Export sales were up 49%. It also completed the refurbishment of the coke batteries at its Newcastle Works in KwaZulu-Natal in the quarter. Capacity utilisation increased from 73% to 81% in the period.

"This improvement was mainly due to higher production at Saldanha as a result of the [furnace] mini-reline in the [third quarter] of 2016," CEO Wim de Klerk said.

"However, this has been partly offset by lower production at Newcastle following a cutback as a result of high input costs and poor market conditions," De Klerk said.

Meanwhile, the government had implemented import safeguards on hot rolled coil and plate since early August 2017, along with imposing 10% import duties on heavy steel sections. Imports had fallen by 142,000 tonnes as a result of this, amid weaker domestic steel markets and higher stock levels.

"We are starting to see a positive impact on local demand since the safeguards on hot rolled coil came into effect in August this year," the CEO said.

De Klerk is retiring at the end of January 2018. He joined the group in September 2016.

allixm@bdfm.co.za

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