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SA steel production falls by 4.3% to 6.141m tonnes

27 Jan 2017

South African steel production fell by 4.2% in 2016 to an estimated 6.141-million tonnes, according to the World Steel Association. This compared to an 0.8% rise in global steel production to 1.6285-billion tonnes.

SA steel production falls by 4.3% to 6.141m tonnes

Crude steel production decreased in Europe, the Americas and Africa, but increased in the Commonwealth of Independent States (CIS), the Middle East, Asia and Oceania. Africa's production fell by 4.7% in 2016 to 12.189-million tonnes, so SA's share of African steel production was just more than half.

The largest producer was China, which increased its production by 1.2% to 808.4-million tonnes. It raised its share of global production to 49.6% in 2016 from 49.4%; in some months of 2016 its share exceeded 50%.

In the first half of 2015, a time when load shedding was prevalent and domestic demand was poor, South African steel production fell by an annual 7.6%, but in the second half of 2016, when there was no load shedding and there was a rebound in construction demand, steel production grew by an annual 1.0%. In particular there was a 3.1% increase in November last year to an estimated 498,000 tonnes, after jumping by 13.8% in October to 534,000 tonnes, before a 2.4% drop in December to 416,000 tonnes.

The poor demand was due, in part, to the government's multi-billion rand infrastructure investment plans failing to gain traction, as investment in steel-intensive railway corridors, such as links to Swaziland and the Waterberg coalfields, remain plans rather than projects.

The government's economic cluster said in early September last year that steps have been taken to accelerate implementation of the Nine-Point Plan. The cluster was at an advanced stage in preparing for the implementation of 40 "high-impact investment projects".

In the 2016 budget, the Treasury outlined plans for R865.4bn in public sector infrastructure spending over the next three fiscal years. The largest portion of R291.6bn will be invested in the steel-intensive transport and logistics sector.

By contrast the private sector has invested heavily in the steel-intensive non-residential construction sector with reports of shortages of steel reinforcing bars. The real value of non-residential buildings completed soared by 21.6% year on year in the nine months of 2016 as there were large increases in completions of retail, office and banking space in KwaZulu-Natal, while Sandton currently has several large buildings being constructed.

Source: BDpro

Source: I-Net Bridge

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