AMSA confirms another round of steel price increases from May 1

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AMSA confirms another round of steel price increases from May 1

Steel producer ArcelorMittal South Africa (AMSA) has confirmed yet another round of price increases on both flat- and long-steel products, announcing average increases of 10% from May 1 and reinforcing what has become an established pricing trend since the start of 2016. However, acting CEO Dean Subramanian has again insisted that the latest increases have nothing to do with recent moves to raise import barriers and are, instead, the result of a recovery in international prices from depressed 2015 levels.

2 0 Prices, AMSA notes, plunged by 38% between January and December 2015, as a consequence of falling demand and overcapacity, particularly in China. The resulting steel glut, made many steelmakers unprofitable and others unviable, with South Africa’s second-largest producer, Highveld Steel and Vanadium, entering business rescue in early 2015. The company has since ceased operations and retrenched workers after a bid to sell the operation as a going concern failed in January. AMSA has itself pursued a far-reaching cost-reduction and restructuring programme, with its Vereeniging Works having been curtailed. It has also warned that the sustainability of its Saldanha Works is at risk, owing to fast-rising electricity prices. Scaw Metals, meanwhile, has also downsized operations and cuts jobs. AMSA has also led the campaign to increase import protection, from 0% previously to the 10% bound rate allowed for under South Africa’s World Trade Organisation commitments. It has succeeded in securing such protection on a range of long- and flat-steel products and is awaiting a determination from the International Trade Administration Commission of South Africa (Itac) on the last few products, including hot-rolled coil (HRC) other bars and rods. The majority of the 103 000 t of foreign steel having landed in South Africa during February was in the form of HRC. In addition, the JSE-listed company has submitted five applications for safeguard duties, which, if successful, will impose far higher protection levels over and above the 10% duties already secured. Itac is expected to make a determination on the application in June. “We reiterate that these price increases are not related to the recently implemented import duties, but based purely on international steel and raw-material price movements,” Subramanian stresses. International steel prices, he adds, have increased by 20% over the past month and the May increase has sought to “moderate” the increase of domestic steel consumers. “Over the last month, the price of traded steel sourced from China has increased by more than 20% ($80/t) on HRC and 30% ($90/t) on reinforcing bar (rebar).” However, the increases in the long-steel sector have also come with an indication from AMSA that it has been forced to implement a strict allocation of rebar and wire-rod customers, owing to shortages of such products in the domestic market. The group expects the backlog to persist until June for rebar and until mid-July for wire rod. In a note to customers, AMSA says the base prices for flat- and long-steel products will rise as follows from May 1: HRC, cold-rolled and galvanised coil will increase by R750/t. Plate (including quench and tempered) will rise by R900/t. Flange and profile plate rises by R1 150/t. Colour coated coil increases R200/t. Rebar (including smooth and mining bar) rises R750/t. Wire rod, mesh bar, bolt and nut, grinding media, rounds, rails, medium and light sections (including windows and fencing) will increase by R600/t.   “We reiterate that these price increases are not related to the recently implemented import duties, but based purely on international steel and raw material price movements.  This is further highlighted, by the fact that although international steel prices increased by 20%, we have taken all stakeholders’ into consideration and opted for a more moderate 10% average increase,” Subramanian concludes.

 

BY: TERENCE CREAMER CREAMER MEDIA EDITOR

Edited by: Creamer Media Reporter