ArcelorMittal South Africa (AMSA) expects the economy in its home country to improve in the first half of 2015 to at least the levels seen in 2013, while Sub-Saharan Africa will drive export demand. The firm anticipates higher production and sales, as all its operations are now in full production.

The producer plans capital expenditure of ZAR 1.6 billion ($137.4 million) in 2015 with a continued focus on renewable energy. After its plate mill was upgraded in the fourth quarter of 2014, the firm aims to supply heavy plate for wind towers and to regain market share against local competitors and imports. It expects wind tower orders of about 15,000 tonnes in H2 2015. Its continuous annealing line will be converted to a galvanizing line to serve the automotive and construction sectors.

AMSA’s shipments in 2014 remained flat at 4.24mt. Flat product sales to the domestic market were down 3% year-on-year to 1.95mt, but exports surged 34% to 1.03mt. Domestic longs sales declined 6% to 1.05mt, while exports plunged 38% to 208,000t due to the reline at the Newcastle works blast furnace. Stepped-up billet imports mitigated the impact for local longs customers, the group says.

Real steel demand in South Africa is seen 8% stronger in 2015 versus 2014 assuming no strike actions. The construction industry should benefit from lower inflation and stable interest rates, while recoveries in mining and manufacturing, coupled with strong performances in the chemicals, water and pipemaking sectors, will boost steel demand. The weaker rand and import substitution will reduce the share of imports in apparent consumption from 18% to 15%. Demand from the Southern African Development Community (SADC), meanwhile, is forecast to rise to 850,000t.

AMSA’s revenue in 2014 was up 8% to ZAR 34.85bn, but headline loss deepened 1.3% to ZAR 227m.

Locally, the ongoing load-shedding by local electricity provider Eskom - a last-resort policy to balance power supply, coupled with "slow implementation of the large infrastructure development projects, [as well as] the protracted mining and metals and engineering strikes put severe pressure on the steel industry,” says AMSA ceo Paul O’Flaherty in a report seen by Kallanish. “Due to the worldwide excess capacity of steel, cheaper imports from China continued to enter the local market despite the devaluation of the rand."