CAPE TOWN – South African steel production fell by 17.8% year-on-year (y/y) in August to an estimated 434,000 tonnes according to the World Steel Association (worldsteel). Global steel production on the other hand grew by 3.4% y/y.
In the first five months, South African steel production had still grown by 1.1% y/y, but from May onwards there have been a series of double-digit y/y declines. In May the drop was 10.3%, followed by 17.0% in June and then 13.2% in July.
The plunge in steel production and its impact on industrial production may be a delayed reaction to the imposition of a 25% tariff by the US on steel imports. Last year ArcelorMittal South Africa (AMSA) offset weak domestic demand by increasing its exports by 21%.
The department of trade and industry had made representations to the US to be exempted from the imposition of US tariffs, but these fell on deaf ears.
The 330,000 tons exported in 2017 from South Africa represented less than 1% of US steel imports, but 5% of South African production equivalent to roughly 7,500 jobs in the steel supply chain.