Steel consumption on a decline in SA

STEEL demand in SA dipped almost 10,7% in the third quarter, with 1,3-million tons of carbon steel sold domestically, showed data published by the South African Iron and Steel Institute (Saisi) yesterday.

However, demand remains strong with the 4,1-million tons of steel sold in the first nine months, 1,6% ahead of sales in the nine-month period last year.

And while real consumption showed a decline, the trend line is continuing its upward curve.

Saisi secretary-general Peter Dieterich said the growth trend was expected to continue, with demand for long steel, used in construction, in particular expected to grow incrementally as more large-scale construction projects came on stream.

The increase in demand had been anticipated by SA’s largest steel producer, ArcelorMittal , which has tweaked its R9bn expansion programme to include an increase in the production capacity of long steel. This was in response to the perceived shift in demand patterns.

Mittal Steel SA CEO Rick Reato yesterday said a shift in trend was evident and augured well for the company’s decision.

While growth in the long steel side of the market is not yet clearly evident in the Saisi figures, Dieterich pointed out that there were several producers of long steel in the South African market and that there might have been a marginal shift in market share in favour of Mittal.

Reato was upbeat about prospects. “Steel volumes are reflecting our decision to expand long steel production capacity,” he said.

Asked if added capacity would come on stream to optimally catch the new wave of demand driven by construction projects, Reato pointed out that the group was gradually bringing added capacity on stream, while the growth trend should extend well beyond 2010.

“The demand will undoubtedly increase when the construction of Eskom’s power stations starts. We are certainly looking beyond 2010,” he said.

Imports of finished carbon and alloy steel products totalled 131819 tons during the second quarter and accounted for 8,8% of the total domestic consumption. This was a marginal increase from the 8,4% in the first quarter.

Dieterich said the modest growth in imports indicated that local producers were able to meet demand needs in the domestic markets, but was also an indication that South African steel prices were comparable with imported product.

The EU remained the largest market from which SA imported steel, with 167105 tons of steel making its way to South African shores in the first eight months of this year.

Brazil is now SA’s second- biggest provider of steel — pipping Indian and Chinese imports to these shores.