Africa’s largest steel producer ArcelorMittal South Africa, would roll-over its January prices into February, having reduced prices consistently between October and January in line with movements in international steel prices and the South African currency.
Corporate communications manager Sven Lunsche said that prices had dropped by between 35% and 40% on average over the last four months.
The company, which last year also announced that it would curtail production by 30%, in light of slowing global and domestic demand, sent notices to customers this week informing them of the decision.
The letter confirmed that flat and long prices for orders confirmed for delivery from February 1 would remain unchanged from January 2009, with the exception of two flat-steel items, the price of which would fall by R500 a ton.
The two items in question were PL140 galvanised 762 mm by 0,3 mm and PL140 galvanised 914 mm by 0,3 mm ISQ550 Z100 R500.
In December, the company cut a further R1 000/t on average off its long- and flat-steel base prices, which resulted in average declines of between 12% and 16% over the various grades that it produces.
The reduction was based on the decline in international prices and amplified domestically by the rally in the value of the rand against the US dollar in the latter months of 2008.
The decision to hold prices into February was probably attributed mostly to the weakening of the rand against the greenback since late December. The rand has lost nearly 5% of its value against the dollar since January 1.
The December cut was the third successive monthly price reduction since October, when the company made its first cut for the year and reduced its prices by an average of 5%. It also followed on from the 10% cut announced as from November 1.
Prior to that, there had been a series of successive price increases up until August, which had led to something of an outcry from steel consumers and placed the spotlight back on to the company’s controversial pricing policies.
In fact, between January and August there had been seven upward revisions to the price of hot-rolled coil, which surged by over 100%. Similarly, there had been six increases in the price of wire rod.