June Sees First Year On Year Increase In Local Steel Production For 2016

22 July 2016

South African steel production rose 6.9% year on year (y/y) in June to an estimated 545,000 tons, according to the World Steel Association (worldsteel).

This was the first y/y increase this year after a 16.3% rise in South African steel production to 7.6-million tons in 2015 compared with a 2.8% decline in global steel production to 1.6228-billion tons. In 2015 steel production decreased in all regions except Oceania, which registered a 4.6% gain.

South African steel production fell by 7.6% y/y in the first half 2015 to 3.2-million tons as the industry battled with electricity supply disruptions and subdued domestic demand. In the first six months of 2016 SA steel production was down 8.7% y/y compared with a 15.9% y/y decline for Africa and a 1.9% y/y reduction for global steel production.

The poor demand was in part due 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, not projects.

In the February 24 2016 budget speech, Treasury outlined plans for R865.4bn in public sector infrastructure spending over the next three fiscal years. The largest portion of R291.6bn would be invested in the steel-intensive transport and logistics sector.

By contrast the private sector has invested heavily in the steel-intensive nonresidential construction sector with reports of shortages of steel reinforcing bars. The real value of nonresidential buildings completed soared by 57% y/y in the first five months of 2016 as there were large increases in completions of retail, office and banking space in KwaZulu-Natal, while the centre of Sandton currently resembles one large construction site with several large buildings in the process of being erected.


Source : bdlive.co.za