Steel producer ArcelorMittal South Africa has cut some of its prices for November, in line with “international price trends and the rand:dollar exchange rate” – the cuts are the first to be instituted since the group’s prices started recovering again in July, following a protracted period of cutbacks.

The group slashed some of its prices by nearly 60% between August 2008 and June 2009 as demand fell and customers destocked across the world. But since July 1, prices on a range of its products have been increasing steadily.

However, as from November 1, ArceloMittal’s rebar and wire rod prices will fall by around 3,5%, while the balance of its long-steel prices will remain unchanged.

In the flat-steel environment, plate prices will fall by around 5%, with other product prices to be rolled over from their October levels.

“The price adjustments are the result of our monthly benchmarking exercise based on inter- national price trends and the rand: dollar exchange rate,” spokesperson Sven Lunsche says.

The group sets its prices after analysing domestic selling prices in four markets – the US, Germany, Brazil and China – and then adjusts these to a view on the currency for the forthcoming month.

As with many South African enterprises, the group was taken by surprise by the recent strength of the rand, which has been one of the best-performing in the world this year.

Notwithstanding the most recent weakness in the rand and signs of recovery in the domestic and international steel markets, the group, whose prices have been the subject of much scrutiny over the past few years, decided to make the downward revision.

It appears that the rand was the key factor influencing the decision, with one recent analyst questioning whether the group felt under pressure to reduce prices in November and December, given that the exchange rate that it had used for previous months was significantly weaker than the prevailing rate.

Speaking on the outlook for the fourth quarter, CEO Nku Nyembezi-Heita said that, while results were expected to strengthen further as improved domestic demand drove higher sales, “the rand’s performance remains a critical variable in our outlook for the quarter”.

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