| Mon 24 Jan 2005, 10:45 | | Iscor to cut domestic steel prices by up to 8% |
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Iscor to cut domestic steel prices by up to 8%
January 24, 2005
By James Macharia
Johannesburg - Ispat Iscor would cut domestic steel prices by between 4 percent and 8 percent effective in February, Africa`s biggest steel maker said on Friday.
Davinder Chugh, Iscor`s chief executive, said that while international steel prices had remained stable over recent months, the strong rand had made it possible for the company to adjust domestic prices downwards.
The rand touched a six-year peak against the dollar late last month.
Iscor is majority-owned by Mittal Steel, a Rotterdam-based company set to become the world`s biggest steel producer on completing a merger with International Steel Group of the US.
Chugh said the domestic price reductions, following other price cuts effective in January, would be on both its flat and long steel products.
`Domestic consumers of colour-coated steel are enjoying a second consecutive month of price reductions, which amounts to 13 percent for the first two months of the year,` Chugh said.
The company said the February price reductions for its flat product range comprised an 8 percent decrease on plate and a 4 percent decrease on colour-coated steel.
A general 5 percent price reduction would be applicable on most of the company`s long steel products.
On the global market, Chugh said the international steel environment was still maintaining its strong growth from 2004.
He said that in the US prices increased to an all-time high in September 2004 and had recently shown signs of stability.
The near-term outlook in that market was fairly positive, while in Asia steel demand remained strong, which would maintain current steel prices in the near term.
`Notwithstanding policies implemented by the Chinese government to bring supply and demand into equilibrium, global steel demand and supply remains adequately consistent to support current steel prices,` he said.
Iscor also said it had received government approval to launch a project to more than double coke production to 850 000 tons a year.
The new project, adding 450 000 tons of output annually, would contribute `significantly to the company`s bottom line earnings`, said Andries Joubert, the head of the firm`s coke and chemicals unit.
A new coke oven battery costing R450 million got approval from environmental authorities and is due to be completed in mid-2006 at the company`s Newcastle steel plant in KwaZulu-Natal.
A company spokesperson said coke prices had jumped to $230 a ton in 2004 from $140 a ton from 2003 but declined to give a forecast for prices in 2005.
Iscor sources most of its coking coal, the raw material for coke, from Kumba Resources, which was spun off from formerly state-owned Iscor.
Kumba has launched a R320 million project to expand its Grootegeluk coal mine to supply the additional requirements.
Iscor`s shares fell 2.68 percent to R56.35 on Friday, while the benchmark Top40 index rose 0.06 percent.
One trader attributed the fall to profit taking in the stock, saying he would buy the stock again at R53.
