Stainless steel industry shows brighter future

28th May 2021

Stainless steel industry shows brighter future

LOOKING UP South Africa's economy is expected to rebound in 2021 and 2022 after the dire impact of Covid-19 last year

The stainless steel market is still under pressure following years of economic decline in South Africa’s economy. This was exacerbated by Covid-19 and the measures that government imposed to reduce infections, says Africa-based stainless steel mill Columbus Stainless. After the Level 4 lockdown restrictions, increased economic activity was evident and the stainless steel industry benefitted from this.

Apparent market consumption of stainless steel turned the corner at the end of 2020 and markets have seen an increase of close to 40% in the first two months of 2021. Apparent consumption is now close to 10 500 t each month following years where there was a double digit decline in apparent consumption. There was a 19% decline from 2019 to 2020 and the industry suffered the consequences.

International stainless steel consumption was reduced by 2.5% in 2020 and was well below the reduction experienced in the South African market, where one of the stainless steel merchants unfortunately closed down after completion of an unsuccessful business rescue process.

Imports have also increased on the back of improved demand as a result of better business condition in 2021 and the first three months saw 4 700 t of primary products imported into the country.

Locally produced material increased as well and the merchant sector experienced increased volumes with active restocking programmes from players in this sector. Unfortunately, not many new projects are being announced amid the uncertainties at play. These include economic growth prospects, political stability as well as possible reactions and policies related to Covid-19.

South Africa's economyis expected to rebound in 2021 and 2022 after the dire impact of Covid-19 last year. The sharp gross domestic product contraction in 2020, owing to enforced shutdowns and the resulting absence ofeconomicactivity, resulted in a high expected growth rate of 3.3% in 2021. Real growth may be as low as 1.5% as a pessimistic view and both these are well below the predicted growth rates for other developing economies. Stainless steel activity is expected to follow these rates and there are hopes for the more optimistic rate of above 3%.

There are concrete plans to make this possible and the establishment of the Steel Master Plan could be the tool and vehicle to create real growth through the complete value chain. Industry has seen some real developments such as the resumption of Passenger Rail Agency of South Africa passenger rail cars being built from stainless steel.

Localisation and product designation efforts from the government should also find more traction this year and increased locally produced material demand is expected. It is also expected that the very active automotive sector in South Africa will rebound on the back of international demand the logistical problems between Asia and the West.