ArcelorMittal addressing steel shortage

JSE-listed steel producer ArcelorMittal South Africa is implementing a number of measures to address the critical shortage of steel products, which has severely impacted the building and construction and manufacturing sectors.

ArcelorMittal SA group manager stakeholder engagement and communications Thami Didiza said the company aims to
significantly reduce the temporary supply backlogs during December, which is traditionally a quieter period for the industry.

He added that the company’s second blast furnace in Vanderbijlpark will be restarted next month and, with all three of its furnaces fully operational from January 2021, ArcelorMittal SA “will be able to meet more than the steel requirements in South Africa and neighbouring countries”.

He confirmed that ArcelorMittal SA is experiencing temporary backlogs in supply, adding that a range of flat and long products are in short supply locally and globally from most steel mills.

These shortages are attributed to almost three months of lockdown-related disrupted production and “other temporary production delays caused by external factors”.

“There are increased lead times for the supply from steel mills around the world, with most mills now quoting delivery in Q1 of 2021 or for some specific products even into Q2 of 2021,” he said.

“Similar shortages are [being] experienced in many other industries and ArcelorMittal South Africa is also battling to receive certain input material.”

Didiza added that the company ceased operations at all its blast furnaces as required by the Covid-19 lockdown regulations and completely stopped production “for the first time in the history of the integrated steel industry in the country”.

This resulted in an abrupt disruption in the entire steel supply chain, the effects of which the company is progressively addressing, he said.

Didiza said the lockdown also resulted in depleted inventories at every stage of the supply chain and ArcelorMittal SA experienced a breakdown in August of the blast furnace at its Newcastle Works, which produces long products and was shut down for about four weeks for repairs.

But he added that ArcelorMittal SA has been alleviating the supply impact of this breakdown to its customers by supplying steel from its Vereeniging plant and expects to return to full operations at its Newcastle plant this month.

Didiza said ArcelorMittal SA initially decided to temporarily idle its second blast furnace at Vanderbijlpark because of anticipated lower demand, which was based on customer input.

“However, certain short-term factors, such as lockdown-affected construction projects which are now being completed, increased sales at retail outlets and destocking [running at lower stock levels] in the steel value chain prior to the lockdown, have resulted in an increase in steel demand at a rate quicker than originally anticipated,” said Didiza.

This article first appeared on Moneyweb and was republished with permission.

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