Steel prices: govt steps in

Johannesburg - Government said on Monday it will look at ways to lower steel prices partly blamed on the price dispute between Kumba Iron Ore [JSE:KIO] and ArcelorMittal SA [JSE:ACL].

ArcelorMittal South Africa reached a stop-gap agreement to buy ore from Kumba, an arm of global miner Anglo American [JSE:AGL], at about half of recent market prices, following a price disagreement that began in February.

Department of trade and industry (DTI) spokesperson Sidwell Medupe said a team comprising officials from the departments of Economic Development, Mineral Resources and the DTI will recommend measures to ensure a viable and competitive steel pricing system.

Medupe said the interim agreement between Kumba and ArcelorMittal South Africa would only remove the iron ore surcharge ArcelorMittal had introduced following the dispute, but result in a rise in the base steel price.

"This increase in the base price will effectively pass through the cost of iron ore established in the interim agreement to steel purchasers," Medupe said in a statement.

Medupe said a competitive steel industry was necessary for the development and deepening of manufactured steel products that would benefit downstream industry.

- Reuters