Oct. 31 (Bloomberg) -- ArcelorMittal South Africa Ltd., the continent’s largest steelmaker, declined to the lowest in more than eight years in Johannesburg after reporting a third-quarter loss that it expects to widen in the following three months.
The Vanderbijlpark-based company fell 3.5 percent to close at 33.40 rand, the lowest level since February 2004. The South African unit of the world’s biggest steel producer said its quarterly loss, narrowing to 148 million rand ($17 million) from 462 million rand a year earlier, is poised to expand again.
“The earnings loss for the fourth quarter is expected to be substantially more than quarter three due to the seasonal slowdown in domestic demand during December,” it said in a statement. “A steady deterioration in global economic growth led to weak steel demand across all regions. Domestic trading conditions have been very challenging for steel producers.”
Benchmark prices for hot-rolled coil have fallen 14 percent in the last year, according to a price tracker compiled by London-based market researcher Steel Business Briefing. Africa’s largest economy, which exports cars and machinery using steel, will grow by 2.5 percent this year, Lungisa Fuzile, director-general of South Africa’s National Treasury, said on Oct. 25.
ArcelorMittal reduced output at the Saldanha steel works as Kumba Iron Ore Ltd. declared force majeure, though the supplier did ship ore from stockpiles, Chief Executive Officer Nonkululeko Nyembezi-Heita told investors on a call.
The company closed some electric furnaces and plans to complete further shutdowns in the current quarter, she said.
ArcelorMittal South Africa expects to spend 380 million to 400 million rand on capital expenditure during the quarter, Chief Financial Officer Rudolph Torlage said on the call.
The steelmaker said the average prices it received climbed 1 percent while long-steel prices dropped 3 percent. Cash costs of hot-rolled coil per unit decreased by 6 percent.
ArcelorMittal South Africa on Aug. 23 said Kumba, majority-owned by Anglo American Plc, will keep supplying 1.5 million metric tons of iron ore at below-market prices until Dec. 31. Kumba in March 2010 canceled a 2001 deal to supply 6.25 million tons of ore a year from its Sishen mine in the Northern Cape.
South African Trade and Industry Minister Rob Davies has appointed a mediator to try to resolve the dispute, Kumba and ArcelorMittal said on Oct. 16.
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