Structural engineering company B&T Steel warns that recent increases in steel prices, as a result of the flooding in Queensland, Australia, are having a devastating impact on the profit margins of projects for which prices were quoted in 2010.
The company, which designs and manufactures steel structures, says that the floods that devastated Queensland, which is a major exporter of coking coal, an essential steelmaking ingredient, resulted in increases in the steel price in January and February.
Further, it notes that the weather-related events in Australia have also led to shortages of certain steel products. “We find that merchants are on allocations and are only allowed to keep a certain amount of stock or purchase a certain amount of stock. Regular price increases from the mills also make pricing on jobs difficult,” says B&T Steel sales and marketing director Ben Dicks.
The company reports that one way to combat these issues is to carry stock, but it adds that not all companies are able to do so. Companies then also risk the possibility of projects being cancelled or delayed, which could further impact on the com- pany’s bottom line.
Meanwhile, the company reports that, over the past few years, the steel industry has dealt with, and overcome, many challenges.
It states that the steel industry showed a steady growth pattern in 2010, despite the fact that the market has become competitive.
“Last year also showed that the profit margins on projects are being minimised, which means that everyone needs to work smarter – a trend that is sure to resonate throughout 2011,” says Dicks.
“With the local market being so competitive and price sensitive, companies are beginning to look across borders for contracts. For some reason, South Africa seems to be excluded from the rest of Africa, as opposed to being part of Africa,” he adds.
Trading in Africa
Nevertheless, B&T Steel has a strong presence in Africa and, through good marketing, hopes to maintain and increase its presence. For this reason, the company also has a strategic marketing campaign in place that serves to create awareness among key stakeholders.
“We are currently involved in three projects in Angola, which includes a go-kart facility in Luanda, a warehouse and a workshop in Soyo and other mini warehouses.”
B&T Steel reports that it is also busy building a feed mill, in Mozambique, a manufacturing factory, in New Guinea, and a storage facility for explosives on a mine, in Sierra Leone. Two large projects that the company recently completed, include an automotive assembly plant, in Rosslyn, Pretoria, and a warehouse for agricultural biotechnology corporation Monsanto, in Lichtenburg.
“At B&T Steel, we are continually upgrading and improving our occupational health and safety management and, during 2011, we will be concentrating on obtaining our Occupation Health and Safety Advisory Services 18001 accreditation, which has great credibility in our industry,” comments Dicks.
“Currently, we find ourselves moving into a market that is competitive. We are tendering on some of the larger projects and we have invested in employing new staff and machinery to meet the demands of this market,” he says .