Steel producer ArcelorMittal South Africa [JSE:ACL] on Friday said domestic sales in the first quarter were 2% lower at 17 000 tonnes due to a dip in local demand, forecasting tough conditions to continue into the next segment.
The operational figures for the first quarter that ended 31 March also showed total imports of primary steel products decreased by 20% compared to the same period last year.
The giant steel producer attributed the dip in local sales to lower economic activity in the country.
“Local sales will continue to be under pressure due to tough trading conditions, but we expect that flat product volumes will increase following the potential upside from renewable energy and other projects,” the company said in a statement.
Export sales increased by 33.2%, but the company stated that the strong international demand was muted by the strengthening of the rand-dollar exchange rate for most of the quarter.
The firm said its exports into the US were minimal, following the recent introduction of tariffs on imports of steel products imposed by President Donald Trump.
The US government recently excluded South Africa from its application of steel and aluminium duties which came into effect in March. The tariffs include a 10% duty on the imports of aluminium, and a 25% tariff on imports of steel into the US.
ArcelorMittal South Africa said its US exports accounted for less than 2% in 2017.
“ArcelorMittal South Africa only dispatched around 70kt to the USA in 2017, which amounts to less than 2% of the company’s total sales of over 4 million tonnes in 2017,” the company said in a statement.
It said its primary markets were South Africa and Africa overland.
ArcelorMittal South Africa is the largest steel producer on the African continent, with a production capacity of approximately 7 million tonnes of liquid steel per annum.
Its liquid steel production was 5.9% higher at 71 000 tonnes, due to higher production at its Vanderbijlpark and Saldanha operations.
ArcelorMittal shares were up 1.82% at R280 per share in midday trade on the JSE.* SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.