Steel production is an important indicator of a country’s economic health, so the fact that steel production fell only 0.8 percent year-on-year in the first four months of this year after a 4.2 percent drop last year is good news, because it means that economic growth should be higher than 0.3 percent last year.
The recovery in steel production is not confined to South Africa. Global steel production increased 5.2 percent in the first four months of the year, which indicates that the increase in global economic growth forecast by multi-lateral agencies such as the World Bank has substance.
Demand for steel in emerging and developing economies, excluding China, which accounts for 30 percent of the world total, is expected to grow 4percent this year, according to World Steel Association forecasts, and increase further by 4.9 percent next year.
Bulk exports from Saldanha, which are mostly iron ore, fell 5.6 percent to 59.8 million tons last year, but surged 24.2 percent year-on-year in the first quarter of this year to 17.4 million tons as Chinese steel production recovered.
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In April, Chinese steel production grew 4.9 percent year-on-year to a record 72.8 million tons, which largely explains the 5 percent year-on-year rise in global steel production to 142.8 million tons.
The poor local demand for steel in 2015 and 2016 was in part because the government’s multi-billion-rand infrastructure investment plans failed to get off the drawing board.