Our opinion on the current state of ARCMITTAL(ACL)ArcelorMittal (ACL) is South Africa's largest steel-producing company. It has survived where companies like Highveld Steel have disappeared.
Arguably, ArcelorMittal felt the impact of the sub-prime crisis more than any other South African company and has fallen from its high of R260 in June 2008 to as low as 25c in August 2020. Since then, it has rallied strongly and now trades at 1052c.
It has had to deal with the collapse of the construction industry locally, which was a major consumer of steel, and the massive imports of cheap Chinese steel which were dumped onto our market. Those imports have slowed down somewhat, and ArcelorMittal was successful in getting certain tariffs in place to discourage imports.
We believe that this company came close to closure in July 2020 when the share price reached 25c. It has been rescued by the rising steel price combined with severe cost-cutting.
In its results for the year to 31st December 2024, the company reported revenue down 7% and a headline loss of R5,1bn compared with a loss of R1,89bn in the previous period. The company recorded an "Operational EBITDA loss - before the Longs Business wind-down charge, severance packages charge and the write-down of inventory – of R1 816 million (2023: R56 million profit), includes R670 million of losses relating to the Q2 2024 Blast Furnace instability and R1 514 million of inventory disposal losses in support of improved liquidity."
These results brought the new upward trend to an abrupt halt, taking the shares back down to and through support at around 100c.
On 6th January 2025, the company announced that it had taken the decision to wind down and close its Longs steel division, leading to a sharp drop in the share price.
