The significant decline in the nickel price, which occurred in May 2007, has slowed 2007 Southern African total stainless steel consumption to 197 070 t, a meagre 1,1% increase over 2006 Southern African total stainless steel consumption.
Southern Africa Stainless Steel Develop-ment Association (Sassda) outgoing MD Michael Campbell reports that up to May 2007, the nickel price climbed to $53 395/t, dropping rapidly to about $27 000/t. “This left customers who had bought large volumes of stainless steel in a situation with high-price tonnage.
Being unsure of an increase or the stabilisation of the nickel price, these customers were selling volumes into the market in an attempt to rapidly destock. This resulted in fewer imports and domestic purchasing from large stainless steel producers,” he explains.
Campbell adds that the most significant effect of this scenario was felt towards the end of the last calendar year. Campbell reports that when Sassda carried out a statistical survey in June 2007, results indicated that consumption was up by some 18% over the figure achieved towards the end of 2006. This dropped to the 1,1% figure reflected at the end of the year.
Although the nickel price fluctuation slowed total annual consumption of stainless steel, there was an increase in primary local supply.
The primary local supply figure of stainless steel for 2007, increased by 4,4% over the 2006 figure to end on 136 300 t. The imports of primary stainless steel and finished stainless steel products felt the biggest impact of the nickel price fluctuation. Primary imports were 7,4% down on 2006 figures to end on 40 900 t, while product imports were down by 1,8% to end on 19 870 t.
Campbell says that certain infrastructure projects in South Africa should be able to drive a small, but steady, growth for the next few years. “The whole country is working towards 2010; we can see a lot of the stadiums coming up and these are steel and stainless steel intensive.
Beyond 2010, a lot of the power generation projects will be coming on line, such as Medupi power station, Project Bravo, and possibly the pebble-bed modular reactor; these projects will be the main driver for the growth of the stainless steel industry,” says Campbell. There-after, Sasol’s expansion plans complement the pipeline to about 2020.
In February 2008, Engineering News reported on the negative effects that the energy crisis was having on the South African steel industry.
South African Iron and Steel Institute secretary-general Peter Dieterich reports that the steel industry does not have any indication of the real extent of the problem, and will not have any indication until the situation normalises. In February, the organisation already had word from its member companies which have indicated to clients that delivery delays would occur and that production was being lost that could not be recovered.
Campbell reports that although the energy crisis has had a significant effect on the stainless steel industry, there has been some measure of recovery. “The biggest frustration for the industry was the suddenness of the crisis and the poor communication and poor adherence to planned load-shedding schedules from Eskom at the beginning of the crisis.
It seems as if Eskom is communicating the situation to the public better and is adhering to load-shedding schedules. The energy crisis has presented the stainless steel industry with an opportunity to look at how companies within the industry do business. As a result, companies have begun to work smarter and iron out any inefficiencies that might occur in the business process,” says Campbell.
He adds that the energy crisis should not be seen as a limitation, but rather a fact of life that is going to be around for the next ten years. Campbell reports that this situation is not unique to South Africa, and that many emerging markets are experiencing the same situation.
A crisis that has a seemingly more profound impact on the stainless steel industry, however, is the current skills crisis.
Like the energy crisis, the skills crisis is not unique to South Africa, and is being driven by the rapid growth of emerging markets and their need for resources.
“One of Sassda’s primary functions is to support the marketing activities of the stainless steel industry in South Africa. This is done through a focus on skills development and a focus on technical advisory services,” says Campbell.
Sassda recognises the need for skilled artisans in the industry. As a result, Sassda has established in-house and external training initiatives.
Campbell says that Sassda offers three courses as part of the association’s in-house training courses. These consist of an orienta- tion course, a basic stainless steel course and an advanced stainless steel course. These courses last for two days each and are continuous professional development accredited.
The external initiatives are typified by two alliances that the association has within the industry.
The first alliance is with the oil and gas and chemical manufacturing artisan skills training project. “One of the significant supporters of this training initiative is petrochemicals giant Sasol. After completion of initial training in terms of this project, learner artisans can join Sassda member companies for further on-the-job training for aspects relating directly to stainless steel, specifically in boiler making, pipe fitting and welding,” says Campbell.
The second alliance that the association has is with companies within the Food and Beverages Manufacturing Industry Sector Education and Training Authority (FoodBev Seta). Learners in this sector go through initial training with their companies and then, for further on-the-job training, move to Sassda members who receive a cash incentive of R60 000 for every student taken on. These learners then go through a two-year training programme.
Sassda has a strong communicative relationship with tertiary education institutions. “Sassda has been trying for a number of years to make the basic stainless steel course a part of certain engineering degrees. The association has had some success in this regard. The Cape Peninsula University of Technology has just introduced the basic stainless steel and advanced stainless steel courses as part of the university’s mechatronics course,” concludes Campbell.