Steel supplier and processing company Allied Steelrode will use its new membership of the Southern African Institute of Steel Construction (Saisc) to play a positive role in the development and regeneration of the downstream steel industry, Allied Steelrode executive director Warne Rippon tells Engineering News.
The company pursued this membership, from March, to take a “fresh approach”, owing to the economic constraints the downstream steel sector has to deal with, he adds.
Rippon posits that Allied Steelrode can leverage its many years of experience and expertise in the downstream industry, as well as its position as one of the country’s senior steel majors, to ensure that it and its fellow Saisc members and industry partners succeed in the downstream industry.
“We are keen to play a role in making our entire sector more competitive globally, an initiative which will generate far greater levels of business and benefit everyone involved in the long term.”
Rippon indicates that Allied Steelrode is playing an “increasingly important” role in the country’s steel construction industry. Firstly, through flat sheet materials, by investing in dedicated stretcher levellers at the company’s facility in Midvaal, in Gauteng, and, secondly, through an increasing focus on tubular steel, owing to the inherent mechanical advantages it contains.
“This material is attractive because there is less surface area, and the lack of edges leads to cleaner design and more aesthetically pleasing structures. It is also lighter and more cost effective than conventional ‘I’ beams and, when welded together, offers far greater strength.”
The company is capitalising on these opportunities by supplying an increasing number of projects that require tubular steel componentry. Examples are a sports stadium, currently under construction in Parys, in the Free State, and supplying processed tubular steel for the construction of game lodges in Africa.
“Because of our growing role in the structural steel sector, we have a great responsibility within the Saisc to achieve greater collaboration with all other members of the downstream steel sector.”
Despite only becoming a member in March, the company has assisted in the formation of the CEO Steel taskforce in May. This taskforce lobbies for industry and policy changes.
Rippon informs that Allied Steelrode’s intention and willingness to join the Saisc board is indicative of the company’s continuous contribution to the organisation and the industry. “We have indicated our willingness to join and share our expertise and experience with our colleagues.”
Moreover, he emphasises that the company is keen to be involved in future trade missions which might be run under the auspices of the Saisc. “Owing to a lack of major South African infrastructure projects, our steel sector needs to look to sub-Saharan Africa project work for further sustainable revenues. Trade missions are vital and pivotal in this process.”
Rippon highlights that a lack of investment in major infrastructure – in terms of capital expenditure projects by government and the primary producer – has resulted in a “severe” decline in the local steel sector. Subsequently, the local steel sector is facing a threefold challenge.
Firstly, a low growth economy, which means fewer projects, jobs and steel use. Secondly, the political, legal and policy environment of the country, which impacts on the economy and the steel industry. Thirdly, the steel industry ‘ecosystem’ and its competitiveness locally and abroad. At present, companies in the local steel industry are finding the market very challenging. Much of this can be attributed to the extreme volatility of the primary pricing which poses an enormous and very urgent challenge to the entire sector.
These price fluctuations result in a knock-on effect which is very hard to contend with. If the downstream steel sector is experiencing this, then the downstream customers must be even more adversely affected, posits Rippon. “Quoting customers accurately – even three months ahead – is extremely difficult when you have this level of pricing volatility to contend with.”
He indicates that the downstream steel sector is being forced to consider increasing imports instead of buying steel locally, “if these fluctuations reflect in our pricing in turn – then why should customers buy locally?”
Moreover, the situation is further exacerbated by the “imposition” of protective tariffs and safeguarding. Rippon says that these appear to have been put into place to protect South Africa’s primary steel producer to the detriment of the downstream steel sector who are the primary steel producer’s customers. Also, there is very little in the way of downstream price protection and volume metrics in the current steel pricing equation, he notes.
With no discounts or customer loyalty programme in place, the industry is effectively being de-incentivised, professes Rippon.
“Owing to the prevailing challenges, there seems to be a low point in the morale of the downstream steel sector. This has resulted in a metaphorical ‘logjam’, which needs to get moving again. In collaboration with other Saisc members, we are keen to look for creative and positive ways of achieving this and stimulate the future of our steel industry.”
To counteract this current state, Rippon believes that there needs to be greater transparency among participants in the industry, with the key stakeholders being government, the primary steel producer, and steel suppliers and manufacturers.
The Saisc CEO Taskforce has been addressing this cooperation impasse by gathering pertinent information and resources, and actively lobbying the key stakeholders on behalf of the downstream sector, highlights Rippon.
Allied Steelrode will also benefit from being a Saisc member, as it can capitalise on the networking and education/training opportunities provided by the Saisc.
“It is important that Allied Steelrode remains up to date and ahead of the curve to take advantage of development in the sector in a positive and proactive manner,” concludes Rippon.