July 27 (Bloomberg) -- ArcelorMittal South Africa Ltd., the continent’s largest steelmaker, forecast “substantially lower” third-quarter earnings than the previous three months because of a drop in international steel prices and sales volumes.
The effect will be “exacerbated” by a planned shutdown at its Saldanha plant, an increase in coking coal costs and recent industrial action, the Vanderbijlpark, South Africa-based steelmaker said today in a statement.
Second-quarter net income fell 54 percent to 470 million rand ($70 million) from 1.032 billion rand in the year-earlier period, according to Bloomberg calculations based on half-year results published today. That followed a “sharp” increase in raw materials costs and a stronger rand.
Coking coal costs increased by 59 percent and iron ore by 23 percent in the first six months of the year.
“In general, steel demand was subdued in the past six months, with slow economic growth being a concern in most advanced economies,” the statement said.
The company determines its prices based on a basket of international steel prices from the U.S., Germany, Brazil and China. ArcelorMittal South Africa is controlled by the world’s biggest steelmaker.
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