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ArcelorMittal South Africa has announced far-reaching changes
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Longs Supply in South Africa threatened

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Autor: Birgit Schmunk

Datum: 09. Jan. 2024

January 9, 2024 | The intended shutdown of ArcelorMittal’s iron ore-based long products mill in South Africa is anticipated to lead to an upswing in import prices, according to steel buyers in the region.

ArcelorMittal South Africa unveiled its decision to cease steelmaking operations in Newcastle and Vereeniging in late November, attributing the move to structural challenges beyond its control. The company cited a 20% demand decrease over seven years, totaling four million tonnes, along with increased energy costs, supply disruptions, and a scrap advantage over iron ore-based production due to government policies.

Government actions, including a 20% export duty and a recent ban on scrap exports, have lowered domestic scrap prices to ZAR4780 per tonne (USD260 per tonne), well below the global scrap price of USD430 per tonne. This policy has benefited South Africa’s EAF-based minimills. Nevertheless, challenges such as high transport costs and electricity load curtailment, leading to regular power outages, continue to undermine domestic steel production, as noted by ArcelorMittal South Africa.

Specific bottlenecks

ArcelorMittal, responsible for half of the country’s crude steel production, produces flat products in Vanderbijlpark and Saldanha, and long products in Newcastle and Vereeniging. The closure of the long products operations is expected to impact approximately 3,500 employees. The shutdown of ArcelorMittal’s Newcastle facility will result in the discontinuation of specialized grades and specific dimensions of long products in the country, leading to an increased reliance on imports. Despite a decline in steel demand to four million tonnes per year, imports grew by almost 55% to 1.43 million tonnes in the four years leading up to 2022. By October 2023, 1.25 million tonnes of steel had already been imported.

Respondents to MEPS International’s December research revealed that ArcelorMittal South Africa is finalizing its last long product orders, with plans to wind down the Newcastle operation by the end of the first quarter. Some customers express hope that the closure may be a strategy to garner support from the South African government.

Economic concerns

While concerns loom over domestic steel production, South Africa’s Department of Trade, Industry, and Competition questioned the European Commission’s CBAM regulations earlier this year, suggesting conflicts with the Paris Agreement and WTO rules. Economic circumstances closer to home may now exert a more significant influence on South Africa’s steel industry, potentially leading to constrained supply and rising prices for certain products.

 

(Source: MEPS/2024)

 

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prozesswaerme.net, Inhaber: Vulkan-Verlag GmbH (Firmensitz: Deutschland), würde gerne mit externen Diensten personenbezogene Daten verarbeiten. Dies ist für die Nutzung der Website nicht notwendig, ermöglicht aber eine noch engere Interaktion mit Ihnen. Falls gewünscht, treffen Sie bitte eine Auswahl: