16 September, 2020

The Nuts and Bolts of Steel

The South African steel production and steel manufacturing industries have been facing a significant decline since the 2009 financial crisis. However, despite the current demand for steel being under severe pressure, the potential for growth once the local economy improves is strong. 

Granville Rolfe, Senior Regional Manager for Macsteel Trading says, “The Steel industry plays a critical role in a number of economic sectors from agriculture, mining and energy, to manufacturing and construction. We can see from numerous economic policy documents drafted by government and business alike, that the aim is to grow and improve these sectors, which should ultimately benefit steel.”

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“Other than Covid-19 which is truly significant, the reduced activity across all sectors in the economy affects the demand for steel products. Continuity of supply also remains a huge hurdle and the protection on imports doesn’t offer a sense of comfort either.  The South African policy environment requires change to stimulate growth and investment. That being said, one of the biggest challenges we face in our country is the lack of investment in all sectors and this has resulted in dire consequences”, says Rolfe.

Paolo Trinchero, CEO for Southern African Institute of Steel Construction (SAISC) agrees and says,” We need to be innovating more and creating opportunities where we can to compete with new products and new services, so if you want to compete with China for example,  you need a plan to find your niche. We’ve found that some SA factories are very competitive if their inputs for steel, electricity and transport are competitive. It’s important to note that the Chinese benefit from high volumes which bring down their overall costs per unit.

“Furthermore, there are other factors also changing the steel market such as the increased risk of cheaper imports and threat by the introduction of Non-financial tariff barriers such as the new European conformity (CE) mark for steel products exported to Europe.  In South Africa there was an attempt to follow a similar approach with the National Regulatory Codes for Compliance (NRCS) which is headed up by the Department of Trade and Industry (DTI). So, any steel reinforcing that doesn’t comply with a minimum standard can be stopped in a harbor and sent back. In many, cases it is not enough to have a standard, you need skilled staff and testing facilities to ensure that it works. In some cases, this is to prevent sub-standard imports and international companies with better equipment and staff who can easily overcome these challenges.  This requires calculated planning,” exclaims Trinchero.

“As a major player in the steel industry, Macsteel has risen to the challenges 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 the provision of our premium products,” concludes Rolfe.

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