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Cape Town - It’s not true that there’s a glut in all steel prices globally, said Garth Strachan, deputy director general of the industrial development division at the department of trade and industry (dti). Over the past four months some prices actually increased.
Responding to questions from the DA about the fact that South African steel producer ArcelorMittal South Africa (Amsa) has pushed up its prices, despite the global steel glut, Strachan said it is incorrect to argue that all steel prices globally have “steadily dropped”.
READ: ArcelorMittal sees boost from higher steel prices
“It’s not the case at all. There are a number of other cost drivers of steel production in South Africa. One of them is coking coal, which we import. When the rand devalues it’s an added cost to the primary steel producer,” Strachan said.
The price of coking coal (a crucial product in steel-making) has recently gone up significantly, which had an influence on local steel prices.
The Australian news website ABC reported that coking coal prices are currently more than double what they were at the start of the 2016 with an increase in demand coupled with supply constraints.
Strachan said the dti was confident that the range of policy measures it introduced went a long way to help save the primary steel production capabilities in South Africa.
“We have agreed with ArcelorMittal on a set of pricing and investment and maintenance commitments. There are definite measures in place to support not only primary steel products, but also sharing some of the pain to ensure downstream steel intensive manufacturers are also given protection.”
READ: ArcelorMittal in new steel pricing deal after R1.5bn fine
At a previous parliamentary briefing, Trade and Industry Minister Rob Davies told MPs that Amsa had agreed to cap their profits on certain products at 10%, and should it decide to change its flat steel prices, it would have to use a transparent pricing mechanism.
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