Global overcapacity and price concerns are rattling South Africa’s steel sector, as flat domestic demand and a structural surge in cheap steel imports erode local mills, to the extent that South Africa’s crude steel output slumped to 4.5-million tonnes in 2025, says private steel company Elco Steel director Franco D’Arrigo.

He says Elco Steel has been countering the squeeze through projections, mill investment and a hard push for tariffs to force local sourcing.

“We navigate the steel market by making six-month projections. We have been somewhat accurate within reason for the past 40 years,” D’Arrigo says.

That discipline is now critical. Pro- competition representative organisation the South African Iron and Steel Institute (SAISI) warns that import challenges are no longer cyclical but structural, with rising volumes and suppressed prices threatening local producers.

According to scrap metal, demolition and waste management consulting company D7 Capital Partners, South African structural steel pricing ranges from R2 500/m2 to over R5 500/m2, with fabricated steel at R25/kg to R45/kg, based on complexity, grade, transport and erection.

Elco Steel uses this type of industry information and tracks the steel markets to create short- and medium-term outlooks and through these projections, implements measures to meet local demand.

“We have successfully projected and sustained growth for Elco Steel even when the industry fares poorly.”

In terms of the effects of the global market, steel imports rose 11.8% in January 2026, with long product imports up by 151%. D’Arrigo describes the market as “very volatile at the moment”, commenting that manufacturers within the industry are experiencing a “price war”. He adds that while local manufacturers cannot currently compete with producers from the East, they are holding their own with Western producers.

Globally, the split is widening. The World Steel Association forecast flat global demand in 2025 at 1.74-billion tonnes and only a 1.3% rebound to 1.77-billion tonnes in 2026.

For D’Arrigo, tariffs are the lever that could allow local mills to fully compete on the global market, commenting that, “if there is an increase in tariffs, it will force the steel industry to source its steel locally”.

He argues that tariffs would help to keep local players competitive and curb cheap imports that “don’t contribute to job creation in South Africa”.

SAISI agrees that policy will decide South Africa’s future, pointing out that the structural decline will continue without coordinated intervention.

Construction, Manufacturing, Energy and Automotive Sectors

D’Arrigo believes that the manufacturing and construction sectors are experiencing flat demand because many investors do not have confidence in South Africa’s immediate future and hopes the state of those sectors will change following the local elections in November.

“Construction and manufacturing drive demand for the steel industry, so when there’s no demand or investment in those sectors, we all suffer. There also aren’t enough public-private collaborations to bolster activity in those sectors.”

SAISI’s Steel Matters January 2026 edition mirrors D’Arrigo’s sentiment noting persistent headwinds against infrastructure demand.

The automotive and energy sectors, meanwhile, are exceptions to the dearth of investment, primarily owing to renewable energy opportunities in light of fossil fuel- related concerns.

“In terms of the automotive and energy sectors, the demand for steel has been picking up, with more international investment flowing into these sectors.”

Green steel opportunities are also emerging, with the steel industry looking towards “implementing alternative, sustainable and consistent energy practices, since State-owned power utility Eskom is an inconsistent energy producer”.

Enterprise Development and Skills Gaps

D’Arrigo believes that the government is not providing enough support to the steel industry, particularly regarding the development of small, medium-sized and microenterprises (SMMEs), nor to facilitating black empowerment in rural areas, all of which contribute to the persistently high unemployment rate.

He advocates for direct intervention, saying that much more can be done to improve the steel industry, especially for SMMEs, suggesting that government should facilitate better opportunities for manufacturers and help them to modernise their production technologies.

Elco Steel has invested in its mill so that it can actively lower the costs of production, ultimately keeping its prices competitive.

“We also focus on skills development in which we are firm believers.”

D’Arrigo strongly emphasises that more work must be done to remedy existing challenges within the industry.

“For South Africa to survive the import wave, there needs to be more local projects and stronger protection for production mills. Demand for steel must be created and steel production enhanced to help manufacturers stay in business,” concludes D’Arrigo.