The Manufacture and Wholesale of Basic Iron and Steel Industry in South Africa 2022

Introduction

According to the World Steel Association, South Africa was the world’s 32nd-largest crude steel producer in 2021, with output of 5.

0 million tonnes (Mt), while the country exported basic iron and steel worth R22.5bn, according to statistics from the International Trade Centre’s Trade Map. Basic iron and steel products contributed R20.5bn or 0.4% to South Africa’s GDP in 2021, but factors such as poor economic growth, high input costs, inconsistent supply of electricity, and the poor performance and high costs of rail and port services are preventing the basic iron and steel manufacturing and wholesale industry from contributing more.

Opportunities

Increasing exports due to growth in African end user industries.

Local production of grades of flat steel currently imported by the automotive, mining and construction equipment and mining industries, but needed by these industries to achieve their local procurement commitments. Steel needed for the transition to renewable energy supply. Steel products with a minimum local content threshold of 100% designated for procurement by state entities. The African Continental Free Trade Area agreement.

Outlook

According to the Resources and Energy Quarterly report, global crude steel output is forecast to rise to 2,007Mt in 2022, and to 2,059Mt in 2023. Global crude steel consumption is expected to increase to 2,021Mt in 2022 and 2,072Mt in 2023 due to the recovery in the world economy. International steel prices are forecast to decline from an average of US$950/t in 2021 to an average of US$750/t in 2022 as demand normalises. The average price for the period 2023 to 2025 is expected to be US$535/t. ArcelorMittal South Africa expects demand in South Africa and its neighbours to grow in 2022, but at a lower rate than in 2021.

Lucio Trentini, CEO of the Steel and Engineering Industries Federation of Southern Africa, said in February 2022 that he expected 2022 to be marginally better than 2021. “However, a lot hinges on the government’s planned infrastructure rollout and the trajectory the COVID-19 pandemic takes in the country in the months to come. ”Report Coverage

This report focuses on the manufacture and wholesale of basic iron and steel in South Africa and includes information on the state and size of the industry and influencing factors such as input costs, infrastructure and transport challenges, major players, regulations and government support.

There are profiles of 41 companies including the major players such as ArcelorMittal South Africa, Columbus Stainless and BSi Steel, steel traders such as Macsteel Services Centres and suppliers such as Hudaco Trading.

Strengths

Government support.

Raw materials are mostly available in South Africa. The industry is well-established and produces most grades needed by local end users. Wide range of end users.

Threats

Inconsistent supply of electricity.

Increasing costs of electricity, water, raw materials and logistics in particular, pose a threat to the industry’s profitability and sustainability. Poor economic growth affects demand for steel. Poor performance and high costs of Transnet’s rail and port services. Slow rollout of public infrastructure projects.

Weaknesses

Coking coal has to be imported. Energy-intensive production processes make producers vulnerable to high electricity costs and load-shedding.