Demand Drivers

Sassda is cooperating with a variety of industry partners within the framework of the Steel Master Plan to increase local production capacity to capture more of the local market through localisation.

The association believes that building a strong local production capacity based on local demand, can be the catalyst for increasing the export market with a special focus on Africa.

In pursuit of this, Sassda has identified a number of key local industry sectors that it considers demand drivers for local industry...

1. Demand Sector: Hollowware

Sassda has monitored the local hollowware and kitchenware sectors since 1999. As a labour-intensive area of manufacturing, jobs per ton, it is estimated that each ton of hollowware produced represents about five jobs. Current statistics indicate an average annual import tonnage of around 10 000 tons since 2010 which would equate to approximately 50 000 jobs in the South African market. The good news is that the capacity for local manufacturers to supply the market exists and although it is currently underutilised, it would be easy to re-activate.

Sassda’s Proposed actions:

• Revision and enforcement of SANS 998 - Sassda plans to revise relevant parts of the SANS standard in collaboration with SABS. This might entail a product differentiation model for consumers as tabled in 2013. It would also be a critical component for success if these National Standards are enforced strictly at the points of entry and sale.
• Consumer awareness campaign and retailer training - It is important to create public awareness around buying locally manufactured hollowware, and the technical issues relating to quality and durability. It would also be important to arrange training sessions with procurement departments of retailers and users.
• Audit of current capacity, tooling, and skills - The South African hollowware industry has various world-class players. Some of these manufacturing entities are mature with a well-developed local market presence. There are also a number of local companies that have mothballed their local manufacturing facilities and now act as agents for imported brands, but their manufacturing capacity exists and can be re-activated. There is also capacity locked up in other industry sectors. For instance, a company currently undertaking metal pressings for the auto industry has huge capacity for pressings into other industries and is willing to invest in research and development in this regard.
  Sassda is therefore advocating for a complete audit of the sector focusing on capacity, tooling, and skills. At the same time, there is also a need for market research into the local product requirement to differentiate the market potential for different products. This will allow the industry to focus on the manufacture of popular and lucrative items. Similar product-based market research should be carried out for SADEC countries.
• Optimising supply chain upstream from fabricators - It would be appropriate to use locally made material for this purpose. However, the competitive arena this industry finds itself in means the producer needs to be extremely competitive in international pricing, availability, and quality. The correct mix of these factors is not always stable from the local producer according to fabricators in this sub-sector. The upstream supply to the fabricator must be redesigned and negotiated to the maximum advantage of the value chain to product, and not individual interest.
• Demand development downstream from fabricators
  Demand can be created by:
  • Curbing imports on grounds of quality and competitiveness by strongly enforcing the SANS codes and standards.
  • Government procurement of only local products.
  • Consumer awareness and buy-in to ‘Buy South African’ concept.
  • Introducing a threshold for local procurement by major retailers.
• Development of export market - The export market for this product would logically be Africa with a focus on the SADEC region to take advantage of the trade agreements in this community. African countries also import most of their hollowware and therefore offer vast markets for South African manufactured hollowware. This might even lead to the expansion of manufacturing capacity into the rest of Africa.
  Overall import and trade balance figures indicate the potential for viable development of local manufacturing of hollowware and related products. There is also good export potential. Fortunately, there is no critical need for large investments in capacity, equipment, and technology in this sector, as it mainly exists. In addition, exchange rates give the local industry an advantage when using older technology against the backdrop of the increased requirement for semi-and low-skilled labour. Sassda therefore firmly believes that a national project can revive the sector, make it globally competitive, and create jobs locally.

2. Demand Sector: Mining

Mining (including mineral beneficiation) has a vast demand for steel and, in many cases, speciality steel. The mining environment is very corrosive and maintenance specifications for many carbon steels in critical applications make certain stainless steel grades viable replacement materials, due to their low levels of maintenance, strength, and durability.

Historic arguments based on the high initial acquisition and fabrication costs of stainless steel are now negated when proper Life Cycling Costing analysis is applied. 3CR12 remains an underestimated yet incredibly cost-effective material, especially for structural applications in the mining industry.

3. Demand Sector: Renewables

The demand for stainless steel in solar energy plants has thus far been limited, however. 3CR12 is used in solar installations in geographical areas with a higher corrosion risk.

The use of stainless steel in wind farm applications is extremely limited. The use of biomass in energy generation does offer extensive use of stainless steel but at this stage no viable option for South Africa.

However, with more and more renewable energy being generated, the real scope for stainless steel would be 3CR12 as an alternative to coated mild steel. Once again, this locally developed stainless steel outperforms other steels in terms of Life Cycle Costing in this application. There is an ongoing debate as to whether nuclear energy can be regarded as renewable energy.

As reported in previous issues, the re-activation of the local nuclear built program can be a huge boost for the local stainless steel and general steel industry.

4. Demand Sector: Automotive

The automotive industry consumes a large quantity of locally produced ferritic stainless steel. This is mainly used for locally fabricated exhaust systems and catalytic converters in the form of components, blanks, and tubes.

Localisation in the South African automotive industry is at high levels and industries supplying components and other value added products into the automotive industry are well developed. The good news is that there is significant potential to increase the value of local stainless steel content.

However, the automotive sector is a technical, specialised, and competitive industry with high quality standards. It, therefore, remains important for Sassda to continue to assist its members to become compliant with, for example, ISO standards and other quality requirements.

5. Demand Sector: Agri-processing, food, and beverage

Stainless steel remains critical for applications such as food and beverage from the farms, processing plants, storage, transport, and retail. Demand for these products remained strong even during the pandemic.

With an array of highly competitive and competent fabricating companies, Sassda regards Africa, with a focus on SADEC countries, as an existing market that is now opening in terms of access, transport infrastructure, and favourable trade agreements. Increased government procurement from local suppliers will create the critical mass required to become truly competitive in trading with our neighbours.

Agri-processing design and innovation in South Africa ranks amongst the world’s best. The proximity of African markets when negotiating contracts and for technical backup, makes many South African companies preferred suppliers north of our borders. It is possible and Sassda aims to bring Africa closer to our members during 2023.