Photo by: Duane Daws
Steel producer ArcelorMittal South Africa (AMSA) warned on Friday that its loss for the six months to June 30 could be up to 64% higher than the loss of 28c a share reported for the same period in 2015.
However, the interim loss of between 42c and 46c a share represented a significant improvement on the second half of 2015, when AMSA reported a loss a share of 2 125c and a headline loss of 1 311c a share.
The improvement, it said, was primarily due to the increases in average net realised prices and decreases in costs.
AMSA has announced several prices increases during the first few months of 2016, but has insisted that these hikes are not the direct result of the introduction of 10% tariff protection across a range of steel categories.
AMSA has succeeded in securing protection on ten product categories, including import duties on hot rolled coil and other bars and rods, which were approved on June 10 and June 24 respectively. It has also submitted five safeguard duty applications to the International Trade Administration Commission of South Africa.
“The local steel industry continues to be threatened by imports entering the market, primarily from China, despite the positive progress made on duties to date,” AMSA said in a statement to shareholders.
It added that safeguard duties, together with a fair pricing mechanism and the designation of local steel for South Africa’s infrastructure programmes, remained necessary to ensure both AMSA’s viability, as well as the viability of the domestic industry.
“Based on the current initiatives, and with the expectation that the safeguard duties will be in place by the end of the third quarter in 2016 - or shortly thereafter - the board remains of the view that there is a reasonable prospect of the company returning to profitability in the medium term.”