Johannesburg - Steel producer ArcelorMittal South Africa (Amsa) needed to hike steel prices in order to curb losses at its Vanderbijlpark mill, the company said on Tuesday.
Amsa announced steel price increases with effect from December 1. The group attributed the move to the continued downturn in the global economy and the sustainability of the steel industry. The price increases ranged between 4.3 percent for colour-coated coil and 10.2 percent for hot-rolled coil.
Alph Ngapo, the chief marketing officer at Amsa, said the monthly price reviews and increases were in line with normal market practice and were aligned with the fair pricing principles applicable to flat products, which were being finalised with the South African government.
Turnaround
The company said that despite government initiatives to shield the local steel sector, Amsa's Vanderbijlpark works continued to face sustainability pressure despite an ongoing turnaround strategy.
“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,” Ngapo said.
He said the problems facing Amsa and the local steel industry persisted and placed the company and the steel sector in a tenuous position. “Creating a sustainable and profitable business is critical to ensuring that the steel industry can continue to play its part in the future growth and development of the country,” he said.
Amsa said that last year had been challenging for steel makers worldwide, with companies registering record losses. Significant increases had been experienced since June 2016 in the international prices of raw materials, it said. “The prices of iron ore and coking coal have increased by 54 percent and 243 percent, respectively, which has led to an international raw material basket increase of 98 percent, exerting upward pressure on international steel prices,” the company said.
But the National Employers’ Association of SA (Neasa) was critical of the price increases. “We are completely opposed to it. Amsa already has a 10 percent duty on imports. They want an additional 30 percent safeguard duty on imports. These import duties just open a door for (Amsa) to increase prices,” Neasa chief executive Gerhard Papenfus said yesterday.
Neasa has previously described the duties as protectionist.
Papenfus said Amsa's Vanderbijlpark plant was outdated “and it will close at some point. It is 80 years old”, he added.
Amsa's share price was down 0.42 percent yesterday to close at R11.74.
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