The Manufacture and Wholesale of Basic Iron And Steel in South Africa 2025

This report on the manufacture and wholesale of basic iron and steel, including metal casting, includes information on production, manufacturing performance, capacity, demand and profitability. The report looks at plans by ArcelorMittal South Africa (AMSA) to shut down its long business and possible solutions, the status and performance of mini mills, and US steel tariffs. The report also includes information on notable players, corporate actions and new capex projects. There are profiles of 64 companies including steel companies such as AMSA, Scaw Metals, Columbus Stainless, Cape Gate, Macsteel and BSi Steel, and casting companies such as Autocast, Mitak, Wahl Industries, Weir Minerals and Atlantis Foundries.

Introduction

• South Africa’s crude steel production declined by 5% year on year in 2024.
• The local steel industry is at a crossroads, with speciality steel producer AMSA announcing in December 2024 that it would shut its long steel business.
• The company has blamed a lack of local demand, the government’s scrap metal policy which favours competing mini mills, and escalating logistics and electricity tariffs, which have made it unsustainable.
• Industry challenges include significant overcapacity, dumping and decarbonisation.
• Metal casting has faced similar challenges, and the number of companies involved in the sector has contracted significantly in recent years.

Trends

• A number of countries have added tariffs recently to protect their steel sectors.
• Decarbonisation of steel.
• Foundries are investing in technology solutions like 3D printing and robotics to become more competitive.
• Imports of steel flats are growing.
• Steel demand locally and globally remains low.
• The growth of local mini mills, with a number also expanding production recently.

Opportunities

• 3D printing and robotics in metal casting to improve productivity.
• Opening a mini mill, given the supportive policies for scrap metal and IDC funding available.
• Some steel products have a local content threshold of 100% (the product must be made entirely of local steel) designated for procurement by state entities.
• The African Continental Free Trade Area agreement.
• The introduction of export support and support for downstream producers to export to the rest of Africa.

Challenges

• AMSA’s imminent closure threatens to reduce the country’s steel competitiveness.
• Dumping of steel by other countries has created unfair competition with cheap imports.
• Environmental regulation affects steel producers and foundries.
• Imports are rising.
• Input costs have grown, particularly for logistics and electricity.
• Large producers like AMSA say the state’s scrap metal policies have created unfair benefits for mini mills.
• Low steel demand, in part due to delayed infrastructure projects, means that there is significant overcapacity.
• Poor logistics have created additional costs for producers.
• Shortage of skilled employees.
• Steel tariffs are lower than in other steel-producing countries.
• The EU’s Carbon Border Adjustment Mechanism may reduce exports to Europe.

Outlook

• Steel producers say the outlook for the basic iron and steel production industry is grim as local demand is expected to remain low as the economy barely grows.
• The industry is facing increased competition from cheap imports and challenges such as high electricity and logistics charges.
• Some experts have said that AMSA’s R1.7bn loan from the IDC will just delay the inevitable closure of the business.
• AMSA expects no real improvement in the steel market in 2025.
• With an increase in demand unlikely, the solution to the crisis facing long steel producers is to increase exports or reduce capacity.