ArcelorMittal (ACL) is South Africa's largest steel-producing company. It has survived while other companies, like Highveld Steel, have disappeared. Arguably, ArcelorMittal felt the impact of the sub-prime crisis more than any other South African company, with its share price falling from a high of R260 in June 2008 to as low as 25c in August 2020. Since then, the share price has rallied strongly and now trades at 1052c. The company has had to contend with the collapse of the local construction industry, which was a major consumer of steel, as well as massive imports of cheap Chinese steel that were dumped onto the South African market. Those imports have slowed down somewhat, and ArcelorMittal was successful in securing certain tariffs to discourage imports.
We believe that this company came close to closure in July 2020 when the share price reached 25c. However, it has been rescued by the rising steel price combined with severe cost-cutting measures. In its results for the six months to 30th June 2024, the company reported revenue down 3% and a headline loss of 100c per share compared with a loss of 40c in the previous period. The company stated, "The financial results were negatively impacted by the difficult local and regional trading conditions, and by the negative volume and direct cost impact of operational interruptions of the two blast furnaces at Vanderbijlpark."
In an update on 3rd July 2024, the company mentioned, "The Longs steel product operations ("Longs Business") have been operationally stable for H1 2024. The Flats steel product operations ("Flats Business") in Vanderbijlpark experienced notable levels of instability at its blast furnaces in April and May 2024. Due to the intensive cash management actions, the net borrowings position is anticipated to remain within tolerable levels."
We recommended waiting for the share to break above its 200-day moving average before investigating further. That happened on 10th July 2024 at 129c per share. Since then, the share has moved up to 136c and looks like it may be entering a new upward trend.
We believe that this company came close to closure in July 2020 when the share price reached 25c. However, it has been rescued by the rising steel price combined with severe cost-cutting measures. In its results for the six months to 30th June 2024, the company reported revenue down 3% and a headline loss of 100c per share compared with a loss of 40c in the previous period. The company stated, "The financial results were negatively impacted by the difficult local and regional trading conditions, and by the negative volume and direct cost impact of operational interruptions of the two blast furnaces at Vanderbijlpark."
In an update on 3rd July 2024, the company mentioned, "The Longs steel product operations ("Longs Business") have been operationally stable for H1 2024. The Flats steel product operations ("Flats Business") in Vanderbijlpark experienced notable levels of instability at its blast furnaces in April and May 2024. Due to the intensive cash management actions, the net borrowings position is anticipated to remain within tolerable levels."
We recommended waiting for the share to break above its 200-day moving average before investigating further. That happened on 10th July 2024 at 129c per share. Since then, the share has moved up to 136c and looks like it may be entering a new upward trend.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.