Jul 25, 2012
Mittal warns of more losses in Q3 on weak market conditionsBack
Africa|ArcelorMittal South Africa|CoAL|Africa|Newcastle Mill|Electricity Costs|Lower Steel Prices|Steel|Steel Demand|Steel Producer|Iron Ore|Nonkululeko Nyembezi-Heita
© Reuse this
The group, led by Nonkululeko Nyembezi-Heita, revealed that domestic steel demand had been weaker than anticipated during the second quarter, when the group slumped to a headline loss of R177-million, and warned that the outlook for the third quarter was equally bleak.
“Due to a further deterioration in market conditions, third-quarter financial results are expected to extend the headline loss incurred in the second quarter on the back of lower steel prices and a further decline in domestic demand, partly offset by improved commercial coke sales,” the company said in a statement to shareholders.
Mittal reported improved operational stability during the period and “no major incidents”. But sales were lower, and higher domestic prices were not sufficient to offset higher input costs.
Revenue climbed 7% to R17.8-billion, on the higher prices for the period. However, the cash cost of producing hot-rolled coil increased by 11%, while the costs associated with producing billets rose 13%.
Underlying the cost increases was a 20% rise in the price of iron-ore, a 19% increase in electricity costs, a rise of 12% in local coking coal prices and a 2% increase for imported hard coking coal. The result was a 72% year-on-year fall in operating profit to R260-million.
Liquid steel production was 11% lower, at 349 000 t, on the comparable period in 2011, but 15% better than the previous six months, which had been afflicted by significant production losses primarily as a result of the dust catcher failure at the Newcastle mill.
"Mitigating the expected loss is a potential insurance pay-out resulting from claims currently in the process of finalisation. Movements in the exchange rate will also have an important impact," the company said.
Edited by: Creamer Media Reporter© Reuse this Comment Guidelines (150 word limit)
Other Carbon Steel News
Economic Development Minister Ebrahim Patel says government will be prioritising six ‘I’s as part of its “radical economic transformation” agenda for the coming five years. Delivering his Budget Vote in Parliament on Tuesday, Patel said the six components...
Steel producer ArcelorMittal South Africa (AMSA) reports that it is planning an upgrade to its plate mill at Vanderbijlpark in quarter four 2014, which will enable it to produce heavy plates of up to 11 t for South Africa’s emerging wind-tower manufacturing...
The South African arm of Germany-based metallurgical plant and rolling mill technology provider SMS Siemag has registered significant growth in its technical services over the last two to three years. SMS Siemag South Africa MD Pieter Bezuidenhout notes that the...
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...