Brussels - South African steel production fell by 9.4% in the first quarter 2015 to 1.6 million tons according to data from the World Steel Association released on Tuesday.
The news comes as the industry battles with electricity supply disruptions and subdued domestic demand. This is in part due to the government’s multi-billion rand infrastructure investment plans failing to gain traction, as investment in steel-intensive railway corridors remain plans, not projects.
The poor domestic demand conditions meant that Russian-owned Evraz Highveld Steel and Vanadium placed itself in voluntary business rescue in April 2015 after it suffered mounting losses. Its recent annual steel production was about half a million tons.
Steel accounts for 4.7% of total South African manufacturing production and is an important indicator of the overall health of the sector, as it feeds into other manufacturing sectors such as cars, fridges and other steel-based products.
Demand in the rest of Africa is, however, on the rise as projects such as Mozambique’s railway line linking Tete and Nacala near completion. This and other rail and port expansions in the rest of the continent mean that the World Steel Association expects Africa to be the top performing region in the world terms of apparent steel usage with growth of 7.4% in 2015 to 40 million tons after an increase of 4.2% in 2014.
The strong growth in Africa compares with subdued growth in the rest of the world as global apparent steel use will increase by 0.5% to 1.544 billion tons in 2015, following growth of 0.6% in 2014. In 2016, it is forecast that world steel demand would grow by 1.4%.
The slow growth in the rest of the world was mainly due to the deceleration in fixed investment in China. The outlook also reflects the influence of major structural adjustments in most economies, particularly owing to limited investment growth after the Great Recession of 2008.
ANA