Bloomberg News

ArcelorMittal S.Africa Sees Third-Quarter Loss on Price Drop

July 25, 2012

ArcelorMittal South Africa Ltd. (ACL), the continent’s largest steelmaker, expects a third-quarter loss on lower prices and a decline in domestic demand.

That may be partly offset by improved sales of commercial coke, used in steelmaking, and a potential insurance payout, the Vanderbijlpark-based company said in a statement today.

Concerns that Europe’s debt crisis will curb demand for goods including cars and household appliances made from steel have weighed on prices. Global benchmark prices for hot-rolled coil fell 19 percent in the last 12 months, according to a price tracker compiled by London-based market researcher Steel Business Business Briefing.

The company, controlled by ArcelorMittal, had a loss excluding one-time items of 177 million rand ($21 million), or 44 cents a share, in the second quarter, compared with profit of 473 million rand, or 1.18 rand a share, a year earlier as costs rose. ArcelorMittal (MT) South Africa didn’t declare a dividend for the first half.

Its shares dropped 2.6 percent to 45.60 rand by the close in Johannesburg, the weakest level since Aug. 11, 2004.

The South African steelmaker raised prices of its products an average 13 percent in the first half of the year. Its cost to produce hot-rolled coil rose 11 percent as the price it pays for iron ore, a steelmaking ingredient, climbed 20 percent.

ArcelorMittal South Africa has received 734 million rand in insurance payouts to date following the failure of a dust- catcher at its Newcastle plant.

The company is in a dispute with Anglo American Plc (AAL)’s Kumba Iron Ore Ltd. over the price of supplies. Talks to extend or review an interim agreement expiring July 31 are under way, the steelmaker said.

To contact the reporter on this story: Carli Cooke (nee Lourens) in Johannesburg at clourens@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net


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