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AMSA’s Q1 sales fall despite strong operational recovery

7th May 2015

Creamer Media Editor

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South Africa’s leading steel producer ArcelorMittal South Africa (AMSA) reported a 4.9% fall in sales for the quarter ended March 31, 2015, when compared with the same period in 2014.

The decrease was attributed to lower exports, which declined by 156 000 t period on period, or 43.1%, amid weakening international markets. Local sales increased by 13.1% to 101 000 t, with the sale of flat products rising by 96 000 t and long products by 5 000 t.

But CEO Paul O’Flaherty warned ahead of the operational report that the domestic market had also come under “severe pressure”, including from cheap imports arising primarily from China.

The group had, therefore, decided to hold production rates below capacity at its Newcastle and Saldanha mills until market conditions improved.

AMSA’s “fill the mills” strategy remained intact at the Vanderbijlpark operation, however, where capacity utilisation rates had increased in an effort to improve the plant’s cost competitiveness.

The JSE-listed group announced a strong recovery in capacity utilisation rates for the first quarter, increasing from 77% to 84%.

Liquid steel production increased by 108 000 t period on period, or 8.7%, and by 21.4% when compared with the prior quarter.

But the group expected trading conditions to remain difficult, which could result in modestly lower capacity utilisation rates in the second quarter.

O’Flaherty said the long-term strategy was to “utilise the assets to the full”, but that, in the short-term, it would balance that aspiration with the need to preserve cash.

Edited by Creamer Media Reporter

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