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Print[Ferro-alloys.com]STEELMAKER ArcelorMittal SA expects to return to profit this quarter with its Vanderbijlpark plant back in operation after a devastating fire in February halted output for two months.
This should be welcome news for the company after its share price shed 52% of its value over the past year.
Compounding the problems, ArcelorMittal SA suffered a net loss of R275m in the quarter, compared with a profit of R279m in the corresponding period in 2011.
The fire led to the company losing an estimated 361000 tons of liquid steel production.
The external insurance will not cover the first $75m of damage, estimated at about $97m.
In 2011, the Newcastle plant, its second-biggest, was idle for four months after a dust-catcher collapsed, leading to an insurance claim of R1.1bn.
The steelmaker said there was “positive sentiment” in the South African nonresidential building and construction sector, though government’s planned large-scale infrastructure development projects were yet to translate into increased orders.
“The nonresidential sector is keeping things ticking over. If you look at their performance [excluding the impact of the fire], it is clear the market remains very tough out there.
“There is no momentum in the export market,” said Mohamed Kharva, analyst at Nedgroup Securities.
The company was also negatively affected by Eskom’s electricity buy-back programme, where several ferrochrome customers were forced to idle furnaces, cutting purchases of commercial coke from ArcelorMittal.
Commercial coke sales fell 41% compared with those of the corresponding quarter in 2011 with prices on average 15% lower. With the buyback programme ending this month and a need to replenish ferrochrome stocks, ArcelorMittal expects an improvement in the second quarter, said CEO Nonkululeko Nyembezi-Heita.
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