Stainless steel industry body Southern Africa Stainless Steel Development Association (Sassda) executive director John Tarboton says some imported stainless steel products do not have the correct alloy composition to adequately fulfil their functions.
He explains that this conclusion is partially based on a recent study that was commissioned to prove that locally made pots and pans are superior in terms of corrosion.
The study, sponsored by Sassda and undertaken by metal research organisation Mintek and fourth-year students from the University of Pretoria’s Department of Materials Science and Metallurgical Engineering, demonstrated that some of the imported stainless steel cookware had a lower nickel composition, substituted by an increase in manganese content, which, in turn, reduced corrosion resistance.
He comments that there are about 200 types of stainless steel, many of which are used interchangeably, “but it is important that the pro- duct’s alloy composition matches the application it is intended for”.
Moreover, cookware is not the only imported product manufactured using lower grades of stainless steel – “there have been complaints regarding roof fixtures and window hinges, as well as stainless steel plates and sheets, which are meant to be used as raw material by local producers,” says Tarboton.
He states that, over the past decade, there has been a dramatic increase in imports of all finished stainless steel products, despite their often being of a lower quality than their South African counterparts.
Since these products are made using lower grades of stainless steel only to lower costs, South African producers cannot compete, as they will always have higher production costs, he explains.
Tarboton adds that, despite the lack of compliance to some South African national standards, specifically those stipulating the alloy content of stainless steel products, autonomous regulatory body the National Regulator of Compulsory Specifications (NRCS) cannot prevent these imports from reaching the South African market.
He explains that the NRCS need only ensure that imported goods comply with compulsory specifications. Compulsory specifications are technical regulations that require imports to conform to national standards that pertain to consumer health, and the safety and/or environ- mental protection of the country. “While using lower-grade stainless steels ensures that the imported goods corrode faster, and might be disingenuous in terms of pricing – since foreign producers sell products as one type of stainless steel, when they are actually another type – it has not been proven to be a health hazard.”
This is another disadvantage for local manu- facturers as they are obliged to comply with South African standards, while their foreign counterparts are not.
Tarboton notes that the Chinese government currently offers significant subsidies to its stainless steel industry. These include export incentives, up to 80% electricity subsidies and, in some cases, free land and exemption from rates and taxes.
He says considering that “the deck is stacked in its favour”, it is no surprise that China’s share of stainless steel production has grown from 13% in 2005 to 52% by 2014, according to figures released by the International Stainless Steel Forum.
Further, the current oversupply in the market, which has dramatically decreased demand for South African produced stainless steel products, is as a result of China’s unmatched rate of production, which Tarboton points out, is the result of unfair practices. “Aside from using cheaper raw materials, and the massive subsidies, there have been reports that some Chinese factories violate labour regulations, such as mandatory overtime without overtime pay.”
On the other hand, he notes that there have been indications that China will reduce its stainless steel production, which will help alleviate the oversupply in the market and allow other producers to recover. This will be most beneficial in the current economic conditions, as it is unlikely that the South African government could introduce similar subsidies to increase the competitiveness of its stainless steel industry.
Tarboton notes that Sassda has taken to surveying its members on a monthly basis to accurately asses the business environment, asking them to comment on the current number of orders, the current business conditions and the expected outlook for the next three months.
“Last month, 33% of our members said the number of orders were sufficient or good, about 30% believe that stainless steel business conditions are positive and 80% believe that the outlook for the next three months will remain unchanged.
“Overall, this indicates that the market is depressed and is unlikely to improve in the short-term,” he says.
Tarboton commends the Department of Trade and Industry’s commitment to include stainless steel manufacturers in its trade missions and expos, such as the recent South African National Pavilion at Expomin in Chile, where Sassda helped market exports of South African-manufactured stainless steel products.
In terms of imports, he believes that introducing broad trade duties that affect finished stainless steel products would be the most viable option for the local industry, adding that “increasing tariffs on flat and long products could adversely impact on the local manufacturers who use them to create finished products”.
He also comments that Sassda is looking to partner with energy, water and materials efficiency specialist the National Cleaner Production Centre (NCPC). He says that, aside from the lack of demand, many of Sassda’s members include the cost of water and electricity as challenges that hinder their businesses. “So we’ve set up a meeting with the NCPC, and it will be presenting at our annual general meeting, outlining the benefits of optimisation, as well as its business symbioses platform.”