ArcelorMittal South Africa (AMSA) increased its liquid steel production by 11.2%, or 125 000 t, in the third quarter ended September 30, despite tough trading conditions, owing to higher production at Saldanha Works as a result of the mini reline in the third quarter of last year.
However, this was partly offset by lower production at Newcastle Works following a cutback in production as a result of high input costs and poor market conditions. The capacity use for the third quarter increased to 81% compared with 73% in the comparable period.
Local sales stood at 49 000 t, or 6% higher year-on-year, owing to higher local demand for flat products as a result of the implementation of safeguards on hot rolled coil since the beginning of August, while long product sales decreased by 15.5% following strong competition from scrap users in relation to manufacturers that use raw materials in their production process.
Imports declined by 142 000 t as a result of safeguards, a weaker local market and high stock levels.
Export sales increased by 66 000 t, or 48.5%, with flat product sales up by 22 000 t and long steel products by 44 000 t. The strong international demand was, however, muted by the strengthening of the average rand/dollar exchange rate for most of the quarter.
Meanwhile, in its commercial coke section, the company recorded a 3 000 t increase in sales. The refurbishment of its coke batteries at Newcastle Works was completed in the third quarter, which had the effect of limiting the amount of coke available for blast furnace production and for sale to the commercial coke industry.
During the repair of the coke batteries, the company imported metallurgical coke in order to supplement shortfalls.
Looking ahead, the company expects domestic sales to remain under pressure owing to tough trading conditions, mainly as a result of lower steel demand, but it does expect sales to be slightly higher in the fourth quarter owing to lower imports.
Export sales will also be higher as international prices improve.
“We remain firmly of the opinion that a solution is required to protect the downstream industry from cheap finished and semi-finished products that continue to be imported into the country.
“We continue to engage government and the downstream industry on the implementation of safeguards and initiatives to stimulate local demand,” the steel manufacturer said in a statement.
AMSA added that a sustainable solution was needed for the high increases anticipated in electricity and rail costs in South Africa, which would significantly impact the viability of some of its plants going forward.
“The general impact of these increases on the national economy is also a concern.
“The volatility in the rand/dollar exchange rate will continue to have an impact on our financial results,” it stated.