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Stainless steel industry participants more optimistic about business conditions

17th November 2016

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

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Thirty-eight per cent of the 89 Sassda members who participated in the Southern African Stainless Steel Development Association’s (Sassda’s) Short Track survey for October indicated a positive response to the current order situation.

Although a slight deterioration on last month’s 40%, Sassda executive director John Tarboton noted that the improvement in sentiment of Sassda’s members was encouraging, with 33% of respondents considering their current business situation as positive, albeit slightly down from September’s 36%.

“So while the year started off pessimistically, we now have systematic survey data from our members, who deal with customers and orders on a daily basis, indicating that business has improved. Our worst months were April, May, June and July . . . but we are hoping that the industry has now bottomed out and we are seeing a gradual recovery,” he stated.

With this generally more optimistic outlook, Tarboton saw potential for growth stemming from the prospect of increasing per person consumption levels, as well as local supply and imports for stainless steel going into local fabrication markets.

He added, however, that this month’s survey did suffer from an anomaly of sorts since the first batch of responses received were before National Prosecuting Authority head Shaun Abrahams announced the withdrawal of fraud charges against Finance Minister Pravin Gordhan, while the second batch were gathered after this announcement.

The two batches of responses were also before and after the release of the ‘State of Capture’ report by former Public Protector Thuli Madonsela.

“Not surprisingly then, the first set of responses was considerably more negative than the second batch, which shows the significant influence of politics on business sentiment.

“That said, and considering the volatile nature of the South African situation and the resultant changeable psyche of its citizens, it will be interesting to see the next set of results which will probably show the effects of the shifting South African sentiment yet again,” Tarboton said.

He further highlighted that, overall, it was clear that the new normal in South Africa was that there “is no normal and we, therefore, must be mindful of the effects of this almost schizophrenic situation when looking at the results of this largely ‘sentiment’ based survey”.

Looking ahead, Tarboton noted that there was anecdotal evidence of some improvement for the South African stainless steel industry, but no-one was prepared to predict what would happen in 2017. “It is hoped that the stronger performance seen in the last few months will continue into next year and that 2017 will not see a drop in stainless steel consumption”.

Sassda members also reported that the agroprocessing, food and beverage, and pharmaceutical sectors were showing the most promise with regard to stainless steel consumption.

Unfortunately, challenges remained for the manufacturing industry, including the ongoing issues of high administered price increases, electricity tariffs and labour instability.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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