http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.75Change: 0.08
R/$ = 10.99Change: -0.04
Au 1167.05 $/ozChange: -33.17
Pt 1227.50 $/ozChange: -18.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Feb 10, 2010

Restocking to drive steel demand recovery in Q1

Back
ArcelorMittal South Africa CEO Nonkululeko Nyembezi-Heita in conversation with Terence Creamer about the outlook for the steel market in South Africa. Camera Work and Editing: Darlene Creamer.
Construction|Africa|Packaging|Africa|Brazil|China|Germany|South Africa|United States|Automotive|Building|Gross Domestic Product|Manufacturing|Packaging|Steel|Steel Demand|Transport|Nonkululeko Nyembezi-Heita
Construction|Africa|Packaging|Africa||Automotive|Building|Manufacturing|Packaging|Steel|Transport|
construction|africa-company|packaging-company|africa|brazil|china|germany|south-africa|united-states|automotive|building|gross-domestic-product|manufacturing|packaging|steel|steel-demand|transport-industry-term|nonkululeko-nyembeziheita
© Reuse this



The medium-term outlook for South African steel demand remained uncertain, but ArcelorMittal South Africa expected first quarter sales to rise by between 15% and 20% relative to the fourth quarter of 2009, on the back of anticipated restocking, as well as some fundamental demand growth.

However, prices would probably remain flat for the remainder of the quarter, with the JSE-listed group having kept its prices stable for the past three months.

Any recovery would also be off a low base, with total dispatches having fallen 12% to 4,5-million tons in 2009, and with high-margin domestic consumption having fallen to 69%, or 3,1-million tons from 4,4-million tons in 2008.

The decline in sales volumes and prices (some of which declined by over 60% from the records achieved in the first half of 2008) resulted in a dramatic change of fortunes for the company in 2009.

Its year-on-year headline earnings descended in to loss of R440-million for the year ended December 31, 2009, compared with a record profit of R9,5-billion in the previous financial year.

Merchant inventory levels were currently estimated at about eight weeks, as compared with a historical average of ten weeks, while end-user stocks were closer to the four-week level.

Therefore, CEO Nonkululeko Nyembezi-Heita said that there was definitely room for replenishment, but warned that consumers remained cautious, following the ructions of 2009, and that this restocking would probably be "slow".

She said it was also difficult to be definitive about underlying demand, indicating that visibility would probably only begin to emerge from the second quarter.

"Steel use will be a leading indicator . . . so we could see the underlying demand coming through even before it hit the gross domestic product (GDP) numbers," she added.

The company was forecasting a 2,5% rise in South Africa's GDP for 2010, following the country's first recession in 17 years, and was particularly bullish about packaging and construction sector growth.

In fact, it expected the packaging sector to expand by 13,6% during the year and that the building and construction market would grow by 11,7%.

Manufacturing growth had been pegged at 4,8% for 2010, but the group was less bullish about transport- and automotive-sector growth rates, estimating these at 3,3% and 1,3% respectively.

The pricing outlook, meanwhile, would depend materially on the direction of the South African rand, which had emerged as one of the top-three performing currencies in 2009, after the Brazilian real and the Australian dollar.

Indeed, its decision to hold prices into February was based on the fact that the stronger rand was balancing out the effect of rising international steel prices.

The company sets its prices after analysing domestic selling prices in four markets (the US, Germany, Brazil and China) and then adjusting these to its expectations for the South African currency for the forthcoming month.

 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
Updated 19 minutes ago The German government has committed a further R70-million towards the second phase of the Non-Motorised Transport (NMT) programme. The NMT programme forms part of the Department of Environmental Affairs’ 2010 FIFA World Cup National Greening Legacy Programme.
City of Johannesburg executive mayor Parks Tau
Updated 22 minutes ago The strategic area frameworks for the City of Johannesburg’s three identified Corridors of Freedom had been approved by council, on Thursday, executive mayor Parks Tau has revealed. The proposed Corridors of Freedom were the Empire/Perth corridor, that would stretch...
Updated 32 minutes ago Affordability was the key issue facing South Africa in terms of human settlements and housing development, South African Affordable Residential Developers Association committee member and Basil Read Developments MD Yusuf Patel said on Friday. Speaking at the Banking...
More
 
 
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
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.
 
 
 
 
 
This Week's Magazine
In the next 20 years, it was expected that, in Africa, more people would live in cities and towns than in rural areas, United Nations Habitat executive director Dr Aisa Kirabo Kacyira said at the Human Settlements Indaba that took place earlier this month in...
Tough-talking Human Settlements Minister Lindiwe Sisulu has committed government to building 1.5-million low-cost houses over the next five years, telling the Human Settlements Indaba in Johannesburg on Wednesday that the State would achieve this target through the...
Over the past 20 years there has been persistent concern about deindustrialisation in South Africa, as well as the fact that locally produced manufactured products have been increasingly displaced by imports.
Financial agreement for Ghanian independent power producer (IPP) Cenpower Generation Company’s $900-million, 350 MW combined-cycle gas-turbine power plant was finalised earlier this month, paving the way for the project’s construction to begin before 2015 in Tema,...
The revenue implications for South Africa of ‘base erosion and profit shifting’ by corporate taxpayers are firmly in the crosshairs of the Davis Tax Committee (DTC) and Judge Dennis Davis hinted last week that recommendations were being considered to “detect and...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks