Investors have pushed the stock up by about 50% since early September, bringing gains so far in 2016 to more than 150%, making it one of the best performers on the local share market.
Capicraft Investment Partners CEO Drikus Combrinck traced the marked improvement in the share price to coordinated measures by the government to protect the local steel industry that has buckled under the weight of cheap Chinese imports.
Evraz Highveld Steel and Vanadium was a classic case in point, where more than 2,000 employees lost their jobs as the second-largest steel maker closed shop after a few years of operational losses.
Announcing a R2.3bn black economic empowerment deal late in September, ArcelorMittal SA said the Treasury had issued instruction notes prescribing minimum local content thresholds on a number of products, including solar water heater components, rail rolling stock and electric cables.
"ArcelorMittal awaits the outcome of the further designation measures requested for construction, renewables, power generation and rail equipment," it said on September 29.
So far, the government has approved a 10% tariff on 10 imported steel product categories.
The small-cap stock was up 7% to R11.60 in mid-afternoon trade on Monday, giving it a market value of R13.2bn. At its peak in 2008, the company had a market capitalisation of more than R116bn.
Other supporting factors included the "better balance sheet, management's willingness to cut down costs and the demise of Evraz which gave ArcelorMittal SA a bigger market share", Combrinck said.
Source: BDpro
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