ArcelorMittal South Africa announces 2017 results
ArcelorMittal South Africa’s headline loss decreased slightly for the year, from ZAR 2 589 million to ZAR 2 518 million, while the operating loss increased by ZAR 128 million, primarily as a result of the strengthening of the rand and higher raw material prices. Revenue increased by 19% following a 15% increase in average net steel prices. Cash cost per tonne of liquid steel produced increased by 16% following higher input material prices. Positive EBITDA of ZAR 650 million achieved in Q4 2017 – first positive quarter EBITDA since Q3 2016
Wim de Klerk, ArcelorMittal South Africa’s Chief Executive Officer, said “The domestic and export markets in which we operate continued to be constrained, with minimal growth in demand resulting from negligible local investment and infrastructural spend.”
In 2018, domestic steel demand is likely to remain constrained due to low economic growth and a lack of infrastructural spend. However, the optimistic view of steel pricing globally, especially China, USA and Europe, will flow through to South African pricing as well. As such, export sales are also projected to increase marginally. The FSP division should see higher local sales due to both the volume effect of safeguards on hot rolled coil and plate and the strong global prices.
The performance of ArcelorMittal South Africa will continue to be affected by the volatility in the rand/US dollar exchange rate, having a material impact on our financial results.
However, on the plus side, steel prices in international markets are expected to stay strong in 2018, continuing the trend seen in the second half of 2017. This is largely because of Chinese production cuts to comply with environmental regulations and the Chinese government driving the sustainability of the domestic steel industry. The consequent reduction in Chinese export tonnages, down over 30% in 2017, is supportive of global steel prices in general.
Source : Strategic Research Institute, SteelGuru