Steel producer ArcelorMittal South Africa (AMSA) says it is operating in a challenging global steel market, which has been exacerbated by a subdued local market, with low sales volumes and competition from imports, particularly finished goods.

“Therefore, we have been on a drive to increase production efficiencies and output while containing costs,” AMSA corporate affairs GM Themba Nkosi tells Engineering News.

He highlights that the R1.6-billion reline of the blast furnace at AMSA’s Newcastle plant, in KwaZulu-Natal, is in line with the company’s improvement programme.

Nkosi adds that the reline will take 125 days and it is expected to have a positive impact on the local economy, with the plant expected to increase liquid steel production from 1.7-million tonnes a year to 1.9-million tonnes a year.

“Economic growth has been below expectations amid weak fixed investment expenditure and subdued global demand for locally produced goods. More pertinently for the steel industry, is that the slow implementation of infrastructure development projects and the low level of fixed investment in the mining sector, coupled with weak production activity in the manufacturing sector, continue to hamper steel demand.”

Further, he says that “higher-than-usual import levels added to increased stocks in the market, which gradually normalised towards the end of 2013”.

However, Nkosi points out that the depreciation of the rand exchange rate against other major currencies in 2013 improved AMSA’s competitive position, specifically with respect to export sales.

“Also, some construction companies’ order books are looking healthier and there are also other improvements on key monthly data, particularly building plans, but these remain relatively moderate.”

Nkosi explains that AMSA’s export and local supply percentages vary from plant to plant. “In 2013, 35% of the flat products produced at our Vanderbijlpark plant, in Gauteng, and the Saldanha plant, in the Western Cape, were exported, while 65% were sold to the local market.”

He adds that 76% of long steel products produced at the Newcastle plant, and at the Vereeniging and Pretoria plants, in Gauteng, were sold to the local market, and 24% were exported. The export figures include Africa overland and sea exports.

New Developments

Nkosi states that in the third quarter of this year, AMSA will introduce its environment-friendly chrome-free Chromaprep primer for colour-coated products.

He highlights AMSA’s introduction of several new flat products to the local market.

“In April, we introduced Chromadek Ultim, which was developed together with the research and development team of the AMSA Group in Europe. It is a colour-coated material for roofing and cladding, which is suitable for use in heavy industrial applications and at coastal regions that are up to 400 m away from the high-water mark.”

He says AMSA’s sales and marketing department held product launches for Chromadek Ultim in Durban, Cape Town and Port Elizabeth, in May and in Gauteng, last month.

“We have received small orders to date; however, we expect sales volumes to increase towards the end of this year,” Nkosi states.

He adds that various products are also being developed for the renewable-energy market.

These products include, but are not limited to, high-strength structural steel plates and long sections for tower structures, concrete-reinforcing bars for foundations and electrical steels for generators for wind turbines, as well as saw wires to cut silicon wafers that are used as building blocks for photovoltaic solar cells.

“This is a new market for us, which obviously brings new product requirements. Our Vanderbijlpark plate mill will be upgraded to increase its current production capacity of 7 t plates to 11 t plates later this year,” Nkosi says.

The heavier plates are expected to be supplied from January 2015 onwards. “The heavy plates will mainly be used for wind towers and other general applications. The production volumes will increase by about 27 000 t/y, owing to increased volume demands for wind tower projects,” he adds.

Moreover, he says the most notable automotive product developments this year were for use in chassis applications. “The material has already been approved by a vehicle manufacturer. The yet-to-be-named product will be introduced into the market in the second half of this year and we expect to see sales volumes increase from mid-2015.”

Nkosi states that AMSA is also developing a wide material for line pipe to increase the diameter of electron-resistance welded pipes to 610 mm. The project is expected to reach completion in the fourth quarter of this year.

Meanwhile, he points out that AMSA’s business improvement programme continues to deliver improved operational efficiencies and improved supplier efficiencies.

“A range of existing energy efficiency projects are starting to deliver savings and, over the past five years, we have invested more than R1-billion in environmental improvement projects, despite tough trading conditions. This will certainly contribute to our efforts of keeping up with changing legislation and licensing requirements,” Nkosi asserts.

African Horizons

Nkosi says there are various sales and promotional efforts under way in targeted areas in other African countries to assist AMSA in promoting greater sales volumes.

He adds that AMSA also focuses on the large infrastructural projects in certain African countries.

“The sub-Saharan African (SSA) economies are registering high economic growth rates, averaging about 5% in 2013. Steel demand, which grew by 5.5% [last year], in the SSA region, continues to be stimulated by the large infrastructure investments and improved activity in mining sector investments, specifically in countries such as Mozambique, Zambia, Kenya, Nigeria, Tanzania and Ghana,” he enthuses

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Nkosi adds that the outlook for the SSA region remains encouraging over the next three years, as most multinational companies look for further investment opportunities in the region.