[miningmx.com] — ARCELORMITTAL will drop steel prices after amending the surcharge system imposed on domestic consumers following the interim pricing agreement reached with Kumba Iron Ore (Kumba).
The announcement is contained in the group’s interim results for the six months to end-June but CEO Nonkululeko Nyembezi-Heita did not specify the new rates in that statement.
ArcelorMittal hiked steel prices by R600/t in March by slapping on a surcharge when the dispute with Kumba erupted.
A spokesman for ArcelorMittal confirmed to Miningmx that steel prices would be on average $25/t lower and those rates were fixed for the next two months.
Nyembezi-Heita commented in the interim results statement that, “ArcelorMittal South Africa will, with effect from August 1,2010 charge a single, all-in price reflecting the higher cost of iron ore rather than a separate surcharge as had been charged previously.’
Nyembezi-Heita added that, “the extra amount that is now due and payable to SIOC (Sishen Iron Ore Company) exceeds the funds that were raised as the surcharge over the last few months and, therefore, these accumulated surcharge funds and the shortfall will be paid over to SIOC.’
She stressed that, “this interim agreement has no bearing on the arbitration process currently underway or ArcelorMittal South Africa’s conviction that the supply agreement remains legally valid and binding on the parties.’
The interim statement reveals that the Competition Commission is formally investigating four cases against ArcelorMittal.
The cases involve; alleged price fixing in the flat steel market; alleged prohibited pricing behaviour in the tinplate market; alleged prohibited vertical practices in respect of purchases of scrap steel and an extension of the Barnes Fencing Industries case.
The Barnes case concerns alleged price and exclusionary conduct on the sale of low-carbon, wire-rod products.
The statement added, “the Competition Commission has referred ArcelorMittal South Africa and three other primary steel producers in South Africa to the Tribunal for alleged price fixing and market division in respect of certain long steel products.
“The Commission has recommended the imposition of a financial penalty of 10% of the company’s 2008 annual turnover.
“The parties and the Commission are engaged in preliminary applications regarding access to documents. The matter continues.’
ArcelorMittal increased sales volumes 31% to 2.7 million tonnes (mt) in the six months to end-June and posted headline earnings of R1.8bn (previous comparable six months – R844m loss).
Nyembezi-Heita commented, “Demand in China remains strong on the back of an expected real GDP growth rate of 10% for 2010 up from an already impressive 9% in 2009.
“ArcelorMittal South Africa’s exports increased by 10% compared to the preceding six months and by 17% compared to a year ago. “
Turning to the South Africa domestic market she said, “sales to the domestic market during the first half of 2010 increased by 37% compared to a year ago and by 13% compared to the second half of 2009.
“The positive growth in sales was boosted by the 2010 FIFA World Cup with increased consumer spending and the infrastructural development initiatives that took effect.
“However, merchants are experiencing a slowdown in activities and do not expect any improvements during the second half of the year.’
