ArcelorMittal SA has reported a loss at the halfway stage as sales declined and international and domestic steel markets remained under pressure.
The group reported a headline loss of R1.014bn for the six months ended June, a slight narrowing from the loss of R1.11bn a year ago.
Its headline loss per share narrowed to 91c from 100c a year ago.
Revenue was 17% lower at R17.12bn due to lower sales volumes and softer average prices.
Crude steel production increased by 5% to 1.3-million tonnes, reflecting improved asset utilisation in the flats business, while sales volumes declined 11% to 1.05-million tonnes.
Realised steel prices were down 7% (5% in dollar terms), it said on Thursday.
Its earnings before interest tax depreciation and amortisation (ebitda) loss before exceptional items widened to R394m from R221m a year ago, after R1.075bn of funding support from the Industrial Development Corporation to neutralise the longs business’s operational losses.
The group said it continued to face significant challenges in the first half, with no improvement in market conditions.
The prolonged negative international steel cycle continued, ensuring that global and domestic steel markets remained under pressure in spite of some price improvement, notably in China during July.
International spreads averaged $130 per tonne, well below the sustainable $200-$220 per tonne range, it said.
Chinese steel exports hit a nine-year high of 111-million tonnes in 2024, up 23% from 2023. High levels of Chinese steel exports of 58-million tonnes in the current period, representing an increase of 9.2%, continue to pressure international markets.
Amsa said work continued with the SA government and other stakeholders in the steel and engineering value chain to support structural reform to reach an agreement on collaborative interventions needed to address the decline in the strategic steel sector.
Various duties have been implemented and a general review of steel tariffs is under way. The export tax on scrap and the preferential price system (PPS) are being reviewed.
“Unfortunately, despite this support and these initiatives, there has been limited progress with implementing interventions that adequately address the constraints identified,” it said.
The group noted that domestic infrastructure activity remained subdued and implementation delays continued to dampen industrial confidence and constrain volumes across the market.
Weak economic growth has led to an 18% decline in demand for steel over the past seven years.
“This emphasises the need to further act decisively to address key priorities, including stimulating demand through infrastructure rollout and localisation of steel; the reduction of and protection from the high level of imports at dumped prices; the implementation of forceful action against illicit trade where tariffs have been implemented; and the correction of the export tax on scrap/PPS which has created market distortion,” it said.
Amsa added that SA could maintain and grow a thriving steel industry; however, commitments needed to translate into real and immediate supportive action.
It said the top two priorities were to ensure that there was a vibrant level of steel demand accessible to SA steel producers and that the high levels of imports were dramatically reduced.
It added that about 68% or 518,000 tonnes of those steel imports could be manufactured locally.
“Once these priorities are addressed, the industry will be in a much stronger position to progress with investment to improve localisation levels with the aim of completely replacing imports while turning attention to the issue of decarbonisation,” it said.
In the absence of a sustainable solution, the final wind-down of the longs business remains scheduled for the end of September, it said.
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