The local stainless steel industry remained stable during the first six months of the year, but Southern Africa Stainless Steel Development Association (Sassda) forecasts a 3% to 4% drop in apparent stainless steel consumption by the end of the year, newly appointed Sassda executive director John Tarboton tells Engineering News.

“Apparent consumption decreased from 110 640 t in the first half of 2013, to 108 566 t for the first half of 2014. Current predictions are for 202 550 t for the full year, compared with 209 372 t for 2013,” Tarboton says.

Despite the decline in the manufacturing industry from 22% to 12%, as a contribution to gross domestic product, between 1994 and 2013, apparent stainless steel consumption has increased by 214% in these 20 years.

Meanwhile, local primary supply of stainless steel in the industry increased from 68 262 t in the first half of 2013, to 73 913 t for the first half of this year.

Further, in the comparison of the first six months of 2014 and 2013, Sassda has registered an increase in the number of finished product exports, which can be attributed to South Africa’s rise in competitiveness in terms of pricing, says Sassda market intelligence specialist Lesley Squires.

This increase can also be attributed to the trend of industry exporting more products into Africa, particularly for the mining, hospitality, architectural, building and construction sectors, she says.

While South Africa often does not have the volume of demand that makes production of some stainless steel products cost effective, many industries are looking further afield to obtain the necessary economies of scale, Squires notes.

“The natural destination is Africa, and more specifically sub-Saharan Africa,” Tarboton points out, emphasising that Africa is “the next economic frontier and South Africa must capitalise on the opportunities this presents”.

However, Tarboton notes a continuous decrease in local demand in the past two years, from about 150 000 t in 2012 to 123 080 t this year – although 2012 was a record year. Moreover, Sassda local demand levels are similar to 2011 figures.

“This trend is a cause for concern, with uncertainty as to whether this is a long-term trend,” he says, noting that it may be attributed to the current lack of larger infrastructure projects.

Nevertheless, significant amounts of stainless steel would be required for the proposed development initiatives, such as the Presidential Infrastructure Coordinating Commission’s Strategic Integrated Projects (Sips), Tarboton asserts, noting that Sassda would expect local demand to increase and hopefully reverse the current trend observed in local demand.

The 18 Sips have been established to address a variety of infrastructure needs in the nine provinces.

Tarboton further notes that, while stainless steel was traditionally not significantly used in structural applications, an increasing global trend is that the architectural, building and construction sectors are becoming key growth areas for stainless steel supply.

In light of this, Sassda is creating a stainless steel structural design course with industry body the South African Institute of Steel Construction, for the promotion of the stainless steel construction industry, which is to be released next year.

Future of the Industry
“The short-term future remains uncertain as industry is in a sensitive state,” Tarboton says, noting that the strike by the National Union of Metalworkers of South Africa earlier this year has contributed to the challenges faced by industry.

Moreover, rising electricity costs remain a key challenge.

Cheap Asian finished product imports, a dearth of artisans, low labour productivity and the deceleration of the manufacturing industry in the past decade further exacerbate the industry’s state.

“Nevertheless, Sassda remains cautiously optimistic for the year,” Tarboton says.

He stresses that any deceleration needs to be countered through the moderation of wage increases, export diversification and focus on tailored taxation to increase investments in the local industry.

Further, as a result of a shortage of artisans for industry, such as welders, fitters and turners, and boilermakers, Tarboton notes that Sassda and other industry associations are participating in the National Manufacturing Initiative Programme, which was established from the Intsimbi National Tooling Initiative Programme (NTIP), with the Department of Trade and Industry’s (DTI’s) Skills for the Economy unit.

The NTIP, a partnership between industry and government, is a programme aimed at the rehabilitation and growth of the tool-, die- and mould-manufacturing sector. It has been identified by the DTI as “a key programme to support the development of South African manufacturing competitiveness as the stimulus for sustainable economic growth and job creation”, according to the NTIP website.

Further, Sassda will sit on the Intsimbi programme board, which will plan the curricula of the programme next year, while first-year student enrolments are expected in 2016.