Arcelormittal SA (JSE: ACL)

ACL down to R1.21 again. Eish.

1.21 now, that's rough for steel hey.

1.21, good day to top up.

Worth a deeper dig on the balance sheet here.

ACL's got that wounded animal vibe, Springboks down at halftime energy, could come back hard.

@firsttime_Frans cheap on what though, if the construction work isn't happening because of load-shedding?

Stage 6 tonight, gonna lose the plot if this keeps up.

@mumu_data Ja, construction's completely dead when the power's off half the day.

ACL at 1.25, is that cheap or expensive?

Good morning everyone. Steel demand is still weak locally with load-shedding hitting construction and manufacturing, so ACL's volumes have been under pressure. At 1.25 it's cheap on paper but the earnings aren't there yet to justify holding much.

Good Morning Everyone. ACL closed at 1.25 yesterday, down about 3% on the week. Steel prices have been soft because there's just not much building happening locally with the load-shedding mess.

@newbie_naledi ja, higher steel price means more cash per ton they sell, so margins improve. That's the whole game.

ACL makes the steel that goes into cars, buildings, and pipes, so when construction and manufacturing slow down here at home, they feel it pretty quick. Load-shedding isn't helping either, eats into margins.

sorry if this is obvious, but does steel price going up actually help acl make more money?

good question. when steel prices go up, acl's customers pay more for the stuff they buy, so yes, acl gets more money per tonne they sell. but here's the thing, the company's costs go up too, so it's not a straight line. what really matters is the gap between what they sell for and what it costs them to dig it up and make it, that gap is their profit.

ACL's holding the line like the Boks in the 79th.

Steel price goes up, ACL gets a bit more per ton they sell, but the real test is whether local construction and car makers are actually buying. Load-shedding is killing them on the cost side, so unless we get demand back or power sorted, the margin gets squeezed either way. Simple as that.

ACL's holding 1.25 like the Boks holding the line.

Steel prices swing around a lot depending on what's happening in the world, and ACL makes money by selling steel to car factories and builders, so when those industries slow down the share price often falls with it. It's not that the company suddenly became bad, just that people expect it to earn less in the next year or two. What helped me was remembering that a share price isn't magic, it's just what people think the business is worth right now.

Steel demand's been pretty flat with load-shedding killing construction, so ACL's volumes aren't moving much even when prices tick up. Hard to get excited about it when half the country's not building anything.