ARCELORMITTAL SOUTH AFRICA updates on progress of Longs Business
Global steel demand expected to contract in 2024 by 0.9% driven by declining household purchasing power, aggressive monetary tightening, and escalating geopolitical uncertainties.
• Significant impact from China’s overcapacity and low international and export prices resulted in lower earnings across the global steel sector.
• Countries urgently implementing trade measures and localisation of manufacturing to protect local industries from the Asian steel export surge.
• Global crude steel production decreased by 4.7% in July and 6.5% in August 2024 compared to the same months in 2023. China’s production fell by 9% in July and 10% in August.
Business Update (quarter three (Q3) 2024):
• Deterioration in global and local steel markets, with South African demand weaker and high energy/logistics costs impacting on the Company’s financial results.
• Imports continue to threaten the local market.
• Deep cost-cutting interventions have been implemented by the Company, but national and market constraints remain.
• Long steel products business (“Longs Business”) continues to operate at a loss despite business improvement initiatives implemented by the Company.
• Support from government and stakeholders, but urgent action needed on issues such as scrap export tax reduction and Preferential Price System reset.
• Company posted an EBITDA loss of R466 million for Q3, compared to a profit of R52 million in Q3 2023.
• EBITDA loss primarily driven by the Longs Business, which posted a R512 million loss.
• Due to intensive cash management actions, the net borrowing position remained stable compared to June 2024
