The country’s second-largest steel producer Highveld Steel & Vanadium would join its larger rival, ArcelorMittal South Africa, in raising steel prices as from the start of August, having refrained from doing so in July.
Engineering News Online has learned that Highveld would increase prices on its plate products by between 6% and 9% as from August 1. But, the JSE-listed company, which is about 85% held by Evraz of Russia, would reportedly hold prices on the balance of its portfolio, including steel used by the rail industry and on some heavy structural steel grades.
Prior to the price increases of July 1, which had been pursued by just about all domestic primary producers bar Highveld, South African steel prices had fallen by as much as 60% from their peak of August last year.
Neither Highveld CEO Walter Ballandino, nor Evraz’s media relations office would confirm the increases, despite several requests for confirmation made by Engineering News Online.
All Ballandino would say in an emailed response, was that the pricing information was ‘sensitive’ and would only be made available after its half-year report, which is due for release in late August. Evraz’s Moscow office did not acknowledge receipt of this Engineering News request for clarity.
The price increase was not only sensitive for consumers, but also for labour, owing to the fact that Highveld had initiated a retrenchment programme as part of a larger programme to realign the business to the downturn in market and the poor outlook.
Already, South African trade union Solidarity has condemned the plan to cut nearly 300 of the Mpumalanga operation’s 2500 work force, particularly given recent signals that stability was returning to the market.
In its most recent communication to shareholders in June, Highveld reported that it initiated retrenchment negotiations with its unions and that it expected the process would be completed within three months.
It made the retrenchment announcement after reporting sharply lower earnings for the quarter ended March 31, ‘09, and in line with an outlook statement which asserted that the steel market remained uncertain and that there was ‘no indication as yet, as to whether demand will improve or whether prices will stabilise’.
At the time, Highveld’s assessment appeared to contrast with the one made by ArcelorMittal South Africa, which indicated that it planned to raise flat- and long-steel prices by between 4% and 6% as from July 1, and by between 3% and 4%, on both flat and long products, as from August 1. Creamer.