http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.34Change: -0.01
R/$ = 10.68Change: 0.03
Au 1294.21 $/ozChange: -0.38
Pt 1463.50 $/ozChange: 3.00
 
 
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  
 
 
Jul 11, 2008

Steel industry performance to sustain and grow steel price

Back
 
Commonwealth Of Independent States|Natal|Newcastle|Sal-danha|Vanderbijlpark|Vereeniging|Africa|ArcelorMittal South Africa|Eskom|Industrial|Petrochemicals|Africa|China|Germany|Kenya|Mozambique|Nigeria|South Africa|Tanzania|United States|Newcastle Plant|Newcastle Production Facility|Commonwealth Day|Automotive|Crude Steel Production|Energy|Local Steel Industry|Petrochemicals|Products|Steel|Steel Consumption|Steel Industry|Steel Price|Steel Prices|Steel Producer|Steel Users|Steel-using|Saldanha Bay|Western Cape|African Iron And Steel Institute|Commonwealth Of Independent States|International Iron And Steel Institute|Gavin Maile|Infrastructure|Nonkululeko Nyembezi-Heita|Pieter Dieterich|Power
|Africa|Eskom|Industrial|Petrochemicals|Africa||||Automotive|Energy|Petrochemicals|Products|Steel||||Infrastructure|Power
commonwealth-of-independent-states-city|natal|newcastle|sal-danha|vanderbijlpark|vereeniging|africa-company|arcelormittal-south-africa|eskom|industrial|petrochemicals-company|africa|china|germany|kenya|mozambique|nigeria|south-africa|tanzania|united-states|newcastle-plant|newcastle-production-facility|commonwealth-day|automotive|crude-steel-production|energy|local-steel-industry|petrochemicals|products|steel|steel-consumption|steel-industry|steel-price|steel-prices|steel-producer|steel-users|steelusing|saldanha-bay-natural-feature|western-cape|african-iron-and-steel-institute|commonwealth-of-independent-states|international-iron-and-steel-institute|gavin-maile|infrastructure|nonkululeko-nyembeziheita|pieter-dieterich|power
© Reuse this



The current performance of the steel industry, locally and internationally, is expected to sustain the price of steel and may even grow steel prices should steel demand increase, reports the continent’s biggest steel producer, ArcelorMittal South Africa.

ArcelorMittal South Africa CEO Nonkululeko Nyembezi-Heita says that the price of steel has been a contentious issue since the begining of 2008. “The pricing structure that Arcelor-Mittal South Africa uses is dependent on two main factors, the first of which is the price of steel in the international markets that ArcelorMittal monitors, these being the Commonwealth of Independent States, China, Germany, and the US. Depending on the performance of the price of steel in these countries, ArcelorMittal’s steel prices will either increase or decrease. Obviously, the demand from these international markets will determine the price of steel in those markets and increased demand will push up prices,” says Nyembezi-Heita.

Meanwhile, research conducted by the International Iron and Steel Institute estimates that, Chinese steel consumption will grow by 11,5% in 2008 and a further 10% in 2009, accounting for 35% of the world total in 2008. Chinese steel consumption is expected to reach 36,7% of the world total by 2009.

In the local steel industry, KPMG industrial, automotive and petrochemicals, and industrial markets partner Gavin Maile says that South Africa’s infrastructure roll-out programme is the main driver of the steel industry, and expects 2008 to be another good year for the steel industry.

ommenting on the possible future of the programme, Maile says that South Africa has a significant backlog of infrastructural reinvestment that needs to be looked at. Because of this, sustainability of the Infrastructure Roll-Out Programme should last beyond 2010. Because of this, Nyembezi-Heita says that ArcelorMittal South Africa is not looking at 2010 as a point in the industry where the future of the infrastructure roll-out programme will be in doubt.

Meanwhile, Nyembezi-Heita comments that there is a measure of confusion surrounding the international basket pricing structure. “What steel-using companies in South Africa need to realise is that ArcelorMittal South Africa bases its prices in the domestic market on the international markets ArcelorMittal South Africa follows, not on the export price. If the steel users want to actively pursue importing steel from any of the markets ArcelorMittal South Africa follows, the company will have to pay the export price for the steel plus the ancillary costs of transporting the steel to South Africa.”

The second significant factor that ArcelorMittal South Africa uses to determine its steel price is the performance of the rand against US dollar. “ArcelorMittal South Africa has just announced that on July 1, 2008, the price of flat and long products is to increase by R450/t. And this was calculated at an exchange rate of R7,60 to the US dollar. This exchange rate has changed significantly since then, so, once again, ArcelorMittal South Africa’s prices are significantly cheaper than the price of steel in the international markers that the company follows,” she says.

Furnace Reline Programme

Reports carried out by the South- ern African Iron and Steel Institute (Saisi) indicate that crude steel production during the first quarter of 2008 has dropped by 50 156 t, compared to crude steel production during the first quarter of 2007. Saisi secretary-general Pieter Dieterich says that this is attributable to lost production during ArcelorMittal South Africa’s furnace relining programme across all its production facilities.

At the beginning of 2008, ArcelorMittal South Africa went though an extensive relining programme of its furnaces at the companies main production facilities in Vanderbijlpark and Vereeniging, in Gauteng, Saldanha Bay, in the Western Cape, and Newcastle, in KwaZulu-Natal.

Nyembezi-Heita reports that three out of the four production facilities are on line and are operating at full production following the reline programme.

ArcelorMittal South Africa’s flagship production facility in Vanderbijlpark came back online towards the end of last year following two months of relining. After the reline production, problems were experienced which were only resolved during the first quarter of 2008. Nyembezi-Heita says that the company is happy with the fact that the production, problems have been resolved and that blast furnace D achieved record production in April.

“The Midrex and Corex plants, at Saldanha Bay, went off-line in February and were back on-line by April 22. The company is happy with the fact that the reline was completed without any time lost due to injuries,” says Nyembezi-Heita.

The only facility that is not yet operating at full capacity is the Newcastle production facility. The Newcastle production facility went off-line for a mini reline on May 12, and is on track, with the completion date set for the beginning of July.

Nyembezi-Heita adds that the estimated cost of the reline programme to ArcelorMittal South Africa is R1,2-billion. The cost is an estimation owing to the fact that the mini reline of the furnace at the Newcastle plant is yet to be completed. However, Nyembezi-Heita is confident that the mini reline at Newcastle will come in within budget.

Energy Crisis Concerns

Although the reline programme came at a time when South Africa was feeling the worst effects of the current energy crisis, Nyembezi-Heita says that the company would have gone ahead with the programme regardless of the fact that the programme coincided with power utility Eskom’s load-shedding programme was coincidental.

“The company needed to carry out the programme regardless of Eskom’s capacity as furnaces have only got a ten-year lifespan. Some of the company’s furnaces have been operating long after that with no reline work being done. When Eskom instructed industry to reduce its electricity consumption by 10%, the reline work at Vanderbijlpark took the required strain off Sal-danha, and Vereeniging,” says Nyembezi-Heita.

She adds that the effect of the energy crisis on the company has been significant. Initial estimations indicate that the company could lose 300 000 t by the end of 2008 provided that Eskom does not reinitiate its load-shedding programme during the winter months. Should this be the case, Nyembezi-Heita says that the company will loose more than 300 000 t.

African Footprint

In June this year, ArcelorMittal South Africa opened its Maputo production plant in neighboring Mozambique. This is a significant step for the company as it is the company’s first expansion into Africa. “ArcelorMittal South Africa has, in the past, sold steel into East African countries such as Kenya and Tanzania. Because of the knowledge that the company has of those markets, and Mozambique’s strategic position on the East African seaboard, it made sense to open up operations in that country.

Looking at further expansion possibilities, ArcelorMittal South Africa will initially probably limit it to Southern Africa for the time being. West Africa would have been an interesting prospect, but the ArcelorMittal group has identified a potential growth market in Nigeria, so there will be a group presence in West Africa,” concludes Nyembezi-Heita.

Edited by: Laura Tyrer
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Carbon Steel News
ArcelorMittal South Africa said on Friday its first-half loss narrowed compared to last year but earnings are expected to remain under strain because of weak domestic economic growth and labour disputes. Africa's biggest producer of steel reported a headline loss of...
Economic Development Minister Ebrahim Patel
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...
More
 
 
Latest News
While the global economy continues to battle growth headwinds as it slowly emerges from a lingering post-recessionary phase, the greatest inhibitors to South African economic development are largely domestic and within government’s control, Finance Minister...
Building materials firm Infrasors said on Friday that FD Marius Potgieter, who had occupied the position since July 1, 2009, had tendered his resignation and would leave the company with immediate effect.  Construction supplies manufacturer Afrimat FD and Infrasors...
Telecommunications group Telkom on Friday announced that, following extensive facilitated consultations and deliberations, management and organised labour had reached consensus that the company’s current restructuring process would proceed.  “The parties have...
More
 
 
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
South African construction company Group Five says work on the rehabilitation of the 800 km stretch of the Plumtree–Mutare highway, in Zimbabwe, should be completed by the end of this year. Giving evidence before the Parliamentary Porfolio Committee on Transport...
SINGLE EXPERIMENT An artist’s impression of OCO-2 in orbit
The Space Operations division of the South African National Space Agency (Sansa) revealed on July 17 that it had supported the successful launch of the US National Aeronautics and Space Administration’s Orbiting Carbon Observatory-2 (OCO-2) satellite on July 2. The...
RICE TAG The real costs of operating Rea Vaya have become clear
Phase 1A of Johannesburg’s Rea Vaya bus rapid transit (BRT) system should carry around 42 000 people a day, while it was been expected that Phase 1B, rolled out last year, would add another 60 000 daily passengers. However, the entire system is currently carrying...
A stormwater project in Bedforview, east of Johannesburg, has stalled for eight months after project managers in the Ekurhuleni municipality resigned and municipal managers were placed on special leave without designating replacements. Construction to reinforce the...
The design of the Beit Bridge border post is the biggest impediment to efficient freight movement between Zimbabwe and South Africa, says Cross-border Road Transport Agency CEO Sipho Khumalo. Beit Bridge is the busiest border post in Africa. A research study on the...
 
 
 
 
 
 
 
 
 
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