The South African stainless steel industry has been negatively affected by the global financial crisis, says Southern Africa Stainless Steel Development Association (Sassda) chairperson Sampie van Rooyen.
Van Rooyen tells Engineering News that the consumption of steel has declined as a result of the significant number of pro- jects that have been delayed or postponed.
He points out that while the market is currently experiencing a quiet period, this could be exaggerated if compared with the corresponding period last year.
“The current economic slump has impacted heavily on the stainless steel industry. We still have a number of key infrastructural projects in the pipeline, but we need to work on stimulating further opportunity for the sector,” says Sassda MD Tim Raaff.
Before the financial crisis, companies increased stainless steel stocks to ensure they could meet demand, but as demand tapered off dramatically after the onset of the global financial crisis, stock levels increased. This, says Van Rooyen, placed pressure on manufacturers of stainless steel as a result of low prices and reduced demand.
He says that stock levels have now stabilised and demand for stainless steel is slowly improving.
“Sassda forecasts an improvement in the market. Industry is waiting for the increase in demand of stainless steel to pick up, but this will be driven by an increase in manufac- turing in all industries. Industry will see some upturn in demand from the third quarter of this year, but, in the worse case scenario, at the end of 2009,” says Van Rooyen.
If the anticipated growth takes place, the stainless steel industry should experience normal consumption by 2010. The consumption volume in the first quarter of 2009 has decreased to 15% compared with figures for the corresponding period in 2008. “This is to be expected in a depressed period. The short-term challenge is just how long the industry will take to recover,” says Van Rooyen.
“Over the past eight to ten years, the stainless steel industry has experienced a constant growth of between 5% and 7% in the consumption of stainless steel, and Sassda believes that the industry will achieve this growth rate shortly.”
Meanwhile, despite the current econo- mic environment, local and interna- tional mills continue to improve the grades of stainless steel. Mills started producing duplex-grade stainless steel, which can be used in more applications than conven- tional stainless steel.
Van Rooyen says that mills and downstream suppliers are developing new ways of improving technology and different methods of handling stainless steel, such as welding and cutting methods. He adds that local industry should be aware of international developments and trends to be able to compete globally.
“In spite of the short-term slowdown, research and development is ongoing, and Sassda is seeing positive results in this area. If South Africa can manufacture products on a cost-competitive basis, then there are opportunities for exports into Africa and internationally,” says Van Rooyen.
Meanwhile, Sassda also aims to conti- nually make the market aware of stainless steel. The association has sent its mobile exhibition unit, Stainless on Safari, to drive awareness.
The unit is a specially manufactured, air-conditioned and self-sufficient vehicle that showcases the uses of stainless steel. It is currently on show in all the large cities and universities around the country. The aim is to persuade all potential end- users to use stainless steel as a sustainable material in green building projects.
Van Rooyen says that there has always been a need from the users, fabricators and product converters to understand the uses of stainless steel. He adds that not many people are aware that stainless steel is a green product, as it is recyclable and environment friendly.
The interior of the mobile exhibition unit showcases a host of domestic and industrial stainless steel products that include flooring, balustrades and appliances.
The unit will also provide a platform for credible buyers and sellers to interact, as well as create awareness of the number of skills and development initiatives that Sassda has in place.
“It is Sassda’s intention for this unit to travel the country for the next five years. It will also serve as a mobile training centre. The association will also take this unit to rural areas and offer training and education courses on the benefits of stainless steel,” says Raaff.
He concludes that if the need arises, Sassda will ship the unit to global markets. The association aims to tour the Southern African Development Community countries in 2010, as well as expand its local footprint.