Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

ArcelorMittal SA anticipates H2 sales volumes to improve relative to H1, which was severely impacted by the pandemic, barring the probability of stringent lockdowns in South Africa. H2 sales volume are expected to be lower than historic levels.


For the foreseeable future, ArcelorMittal SA expects steel demand to remain at 70-75pc of pre-pandemic levels. The company expects receipt and payment cycles to normalise in H2. 


The company is aligning its sales and production to meet real and sustainable demand levels and avoiding the risk of COVID-19 infection among its employees. On the cost reduction front, ArcelorMittal SA is finalising a large-scale labour reorganisaton to face economic headwinds under its OneOrganisation and Business Transformation Programme.


The company has temporarily idled Vanderbijlpark Blast Furnace C from Q2 and Vereeniging EAF from Q3 2020.



ArcelorMittal SA’s capacity utilisation rates dropped to 35pc from 76pc in 2019. The company’s liquid steel production declined by 54pc or 1.4mn mt to 1.1mn mt in H1 2020. Flat steel production lowered by 849,000mt on lower plant utilisation at 37pc from 78pc in H1 2019 and was impacted by maintenance at Saldanha works. Long steel production dropped by 488,000 mt with utilisation rate at 31pc.


The company’s liquid steel production in Q2 was just 153,000mt with the idling of blast furnaces in April and May. This led to and additional purchased energy costs of ZAR328mn due to the idling of blast furnaces and coke-making batteries.

ArcelorMittal SA steel production and sales
 H1 2020H1 2019H1 Change YoY
Liquid steel production11,23,00024,60,000-54%
— Flat steel7,64,00016,13,000-53%
— Long steel3,59,0008,47,000-58%
Total steel sales11,47,00021,62,000-47%
Local steel sales9,46,00015,86,000-40%
Export steel sales2,01,0005,76,000-65%


In the first half of 2020, ArcelorMittal SA’s sales volumes dropped by 47pc or 1mn mt to 1.1mn mt from H1 2019 as domestic sales declined by 40pc or 640,000mt. Flat steel sales fell by 38pc or 426,000mt and long steel sales dipped by 45pc or 214,000mt. Export sales fell by 65pc or 375,000 mt. In Q2, steel sales volumes declined by 54pc or 425,000mt to 361,000mt from Q1 2020 impacted by the lockdown in South Africa.


SA steel market

South Africa’s apparent steel consumption H1 fell by 26pc to 1.8mn mt amid the pandemic as key steel-consuming sectors. The government-imposed national lockdown led to a complete production halt in steel making activities at ArcelorMittal South Africa. The Company’s customer survey results suggest a domestic market size reduction of about 27% in 2020 compared to 2019’s full- year levels. Agriculture, packaging, DIY and infrastructure are foreseen to be less impacted, while the construction, automotive and machinery and equipment sectors expect to be more severely affected. Total steel imports for the six months to 30 June 2020 amounted to 340 000 tonnes[3] , which constituted some 19% of South Africa’s apparent steel consumption (2019: 20%)



In H1, ArcelorMittal SA’s revenues fell by 45pc to ZAR12,014mn ($715.17mn) leading to a headline loss of ZAR2,613mn compared to a loss of ZAR638mn in the prior year period. 


The company raw material basket (43pc of production cost) decreased by 6pc, while net realised steel prices remained flat against the prior year period, in ZAR terms. Average international steel prices (HRC) declined by 13pc and the company’s realised steel price in dollars terms fell by 11pc.


ArcelorMittal SA’s cash cost per tonne of liquid steel rose by 21pc due to a 54pc decrease in production volume and logistic issues.


In H1, the company has sought import safeguards for hot-rolled products through the extension application, as the existing safeguard expire in August 2020 and has applied for safeguards on heavy beams produced at Highveld Structural Mill (HSM). 



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