ArcelorMittal SA faces steel supply problems COMMENTPRINT
EMAIL | By: Olivia Soraya Spadavecchia
29th January 2008
TEXT SIZE The South African arm of the world’s largest steel producer, ArcelorMittal, said on Tuesday that it would not be able to meet all of its customers needs, because of continued power supply problems.
“We are advising our customers that we are experiencing a force majeure event. We are continuing to assess the full impact of the power shortages but steel processing and steel despatches will be delayed,” Arcelor Mittal South Africa CEO Rick Reato said in a statement.
The company noted that if the electricity supply problems continued for the next two weeks the impact on steel supply would be a loss of about 300 000 t.
Reato added that ArcelorMittal South Africa was currently engaging with Eskom "at the highest levels" to rectify the situation.
A steel industry analyst said that with current demand at such high levels the producer could not afford a slowdown and would potentially have to turn to imports to fulfil customers’ requirements.

Aside from the impact of the power outages, ArcelorMittal South Africa’s production had also been affected by the reline of the blast furnace at its Vanderbijlpark operation which took longer than expected.
'The firm will potentially have to turn to imports'
The analyst said that it was “disappointing” that the electricity supply crisis was having such a negative impact and that the company might have to reconsider its expansion plans and factor in the power disruptions.

When asked about the potential for a steel shortage, the analyst agreed that fears of a shortage in the short term were warranted.

He noted that the first products in danger of running out would be long products used in the construction sector and commented that this would be the “pinch area”.

Globally, inventories were also falling and orders for steel generally took about two months. However, penalties for