AMSA CEO Paul O’Flaherty
Photo by: Duane Daws
JSE-listed steel producer ArcelorMittal South Africa (AMSA) reported a loss of R158-million during the year to December 31, 2014, a material improvement on the R2.1-billion loss of 2013 and indicated that it expected a recovery in volumes in 2015, which should support an improvement in results during the current six months, despite low international steel prices and weak domestic market conditions.
CEO Paul O’Flaherty, who is overseeing the strategy to recover output to closer to full capacity and reduce costs, said volumes would be bolstered in the current six months as a result of the completion of the reline of the blast furnace at Newcastle – a project that had experienced cost and schedule overruns.
Liquid steel production of 4.518-million tons in 2014 was 578 000 t lower than 2013, with the planned Newcastle blast furnace reline a major contributor to the fall. Capacity utilisation averaged 70% for the year, compared to 76% in the previous year.
The fourth quarter performance was affected by the seasonal slowdown, but the loss for the second half of the year fell to R143-million from over R2-billion in 2013.
AMSA stressed that market conditions remained weak, with prolonged strikes in the mining and manufacturing sectors and ongoing load shedding by Eskom having placed the industry under “severe pressure”.
Domestic steel consumption fell from about 5.4-million tons in 2013 to around 4.9-million tons last year, but AMSA indicated that it had managed to increase its share of the domestic market in 2014 to about 62%, despite the fact that there had been no production from Newcastle for six months.
The group’s volumes were flat at 4.24-million tons, but domestic sales fell by 4%, owing to the subdued local market, the Newcastle reline and competition from imports – exports rose 12%.
“Cheaper imports into local markets, most notably from China, continue to impact our sales, regardless of a depreciated exchange rate position,” O’Flaherty said.