Cape Town - ArcelorMittal South Africa (AMSA) [JSE:ACL] is the biggest stumbling block to a competitive steel price industry in South Africa, said DA MP Dean McPherson.
“They’re a major threat to South Africa’s ability to manufacture steel competitively and their pricing model remains a mystery,” he added.
His comments came after trade and industry minister Rob Davies briefed parliament on the steel price situation in South Africa on Tuesday.
AMSA was fined a record R1.5bn on Monday for setting prices at the level consumers would have to pay for imported steel, but Trade and Industry Minister Rob Davies told parliament on Tuesday that it had agreed on a mechanism that would provide transparent pricing based on domestic prices in a number of other countries.
The local price for flat steel products will henceforth be calculated through a formula using the weighted average of domestic prices in countries such as Germany, the US and Japan, but excluding China and Russia.AMSA also agreed to cap their profits at 10% on certain products - that is profits before interest and tax, subject to certain conditions.
In the event that AMSA changes its flat steel prices in future, it will have to use a transparent pricing mechanism.
McPherson said although this should be welcomed, it may be “too little, too late”.
“While we were delaying the setup of a steel pricing committee, ArcelorMittal has continued to push up their prices to the detriment of the downstream manufacturers. Still ArcelorMittal seems to be handled with kid gloves,” McPerson said.
He also questioned why ArcelorMittal was not required to be present in Tuesday’s committee meeting where steel prices were discussed.
“You can’t discuss the problems and not have the chief protagonist in the meeting. They must come and disclose their pricing models and how they run their business. I think they still have a lot to answer for,” McPherson said.
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