Global steel prices set to rise, says Mittal SA
James Macharia
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Reuters
GLOBAL steel prices were likely to rise in the third quarter, and stay up until the end of the year, Davinder Chugh, CE of AfricaÆs biggest steel producer, Mittal SA, said on Friday.
He forecast stronger local demand in the second half of the year compared with the first half, driven by SAÆs push for infrastructure projects worth billions of rand and by fresh construction in the run-up to hosting the Soccer World Cup in 2010.
He said steel prices would probably stay weak until then.
ôAlthough the underlying steel demand is still fairly strong, buyers of steel are holding off with their buying decisions in expectation of a drop in prices,ö Chugh said.
ôIt is our view steel prices will start to increase again in the third quarter of 2005, and will probably maintain the higher levels this year,ö he said.
ôHistoric levels of 2004 may, however, not be seen in the short term. Substantial price increases for raw materials such as coal and iron ore will provide a support to steel prices.ö
Asked about rumours of a possible delisting of the company, Chugh said that parent company Mittal Steel would buy out minority shareholders in its South African unit only if it increased its stake to more than 60% from just above 50% currently.
But he did not say whether the worldÆs leading steel producer had any plans to ramp up its stake to above 60%.
One analyst said the parent company had become increasingly frustrated by the opposition of minority shareholders at its South African unit to a renewed Business Assistance Agreement and wanted to delist to gain more control.
MittalÆs share price dropped more than 7% on Thursday as weaker steel prices, rumours of a plan to delist and a row with tax authorities fanned negative investor sentiment. On Friday MittalÆs share price was up 2,73% at R45,20 beating a weaker top-40 blue chip index.
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