19 November 2020
The South African steel production and steel manufacturing industries have experienced a significant decline since the 2009 financial crisis.
The reduced activity across all sectors of the economy has affected the demand for steel products and Covid-19 has further exacerbated the situation.
The current difficulties in continuity of supply from Arcelor Mittal South Africa (AMSA) is placing an already fragile economy in greater jeopardy. Coupled with this, is the extension of the import safeguard duties which has certainly contributed to the cost pressure on the downstream industry, which is already on its knees.
Marcus Nel, Sales Executive for Macsteel Trading says, “The Steel industry plays a critical role in all sectors of the economy and Macsteel is a major supplier to sectors such as agriculture, mining, automotive, energy, manufacturing and construction.
However, despite the current demand for steel being under severe pressure, the opportunities for growth, once the local economy improves, are real.
What the steel sector requires now is urgent intervention by government to implement an effective policy that will generate confidence and sustainability in the country and by extension the Steel Sector through an effective blend of demand side interventions that spur on Private sector investment and job creation.
We find ourselves between a rock and a hard place with steel supply allocations that AMSA have introduced into the market, given their production challenges, and the safe guard duties that the International Trade and Industry Commission (ITAC) have in place, which prevent competitively priced steel to be imported. As a reputable steel merchant, we need to ensure that the downstream customer base is protected from supply side disruptions and imports are necessary to mitigate this risk but the current price dynamic, given the duty framework make it very difficult.
It has always been Macsteel’s intention to support the local producer mills but not at the expense of disrupting the supply of steel. Importing is not without risks, our harbours are not equipped to handle large volumes and the rail infrastructure is non-existent or ineffective, making moving these types of volumes very difficult. It remains Macsteel’s view that the steel sector requires an effective and competitive primary steel producer. We need to beneficiate our raw materials in the country, creating jobs in the process, but more importantly, reducing the costs of an extended supply chain.
Nel says we are a resource rich country and if all role players caucus to find a solution to beneficiation of the abundance of these resources, it will stimulate manufacturing and construction which in turn will drive much needed employment and effectively boosts demand for steel.
We are encouraged by governments intention to create economic stimulus through infrastructural spend, but we need this implemented as soon as possible, there is no time to waste!
As a major player in the steel industry, Macsteel has risen to the challenge of the current circumstances by working efficiently to adapt to the ever-changing business environment to ensure we remain a household name. With so many variables constantly being reviewed, we are continuously adjusting to ensure that the needs and requirements of customers to service all sectors of the market are identified and serviced consistently through our extensive network and range of products, concludes Nel.
Macsteel Pursuing Reinvention