Reuters reported that ArcelorMittal South Africa slid into a full year loss on the back of higher raw material costs, lower output and weaker sales and warned that a pick up in demand from key construction industry customers has yet to materialize.

Ms Nonkululeko Nyembezi Heita CEO of ArcelorMittal SA said that restocking and lower input prices would bring a significant turnaround in earnings for the first three months of 2012 compared with the previous quarter but the outlook was challenging.

She added that "The primary consumer of steel products in South Africa is the construction industry and the outlook from this particular sector continues to be bleak. Therefore it is difficult for us to gauge when underlying demand for steel will really start kicking in."

The South African unit of ArcelorMittal is betting on planned projects to build renewable power plants, transport infrastructure and water systems in the country to boost but it is unclear how quickly these projects will come on stream.

Production in 2011 was hit by structural problems, including a furnace failure at its Newcastle plant, a strike in the steel sector and a shutdown at its Saldanha Works operation. The Newcastle plant has since resumed full output.

Mr Paul Theron, an analyst at Vestact, said that "We are fairly positive about the steel industry globally and steel demand in this country, but there are many challenges to ArcelorMittal, particularly its iron ore supply and operational difficulties."

Globally, steel makers are expected to report a weak fourth quarter on destocking and squeezed margins, but parent ArcelorMittal forecast an improvement in the first half of 2012 from a weak end to last year.

(Sourced from www.reuters.com)