Results of the October 2017 Short Track Survey

The Sassda Short Track survey had 77 respondents in October.

For Sassda respondents, the results of the first question were:

48% of sassda respondents had a positive response to the current order situation which continues the improvement seen since the lows in July and is also higher than the same month last year (38%). The weighted average is up on last month as well as October, 2016. These are the best figures seen since this survey began.

For sassda respondents, the results of the second question were:

35% of Sassda respondents thought the current business situation was positive, which is slightly up on last month (32%) and up on a year ago (33%). The weighted average has improved slightly to 2.29 this month compared to 2.25 last month but it is still lower than last year October (2.34).

For Sassda respondents, the results of the third question were:

The outlook was slightly worse than last month with 18% thinking that things would get better (21% last month) and 10% expecting things to get worse (13% last month). Expectations are slightly better than the same month last year with a weighted average of 2.62 compared to 2.59.

The above data can be converted to the Sassda Expectations Index, where the index is calculated as 0.5 x % unchanged + % better. Above 50 would predict expansion in the next three months.

For the last four months, the index has been above 50 indicating a consistent expectations of expansion.

The comments received from Sassda members were:

  • [The] Chinese will be and are bringing duplex in through Walvis Bay. I believe more profiles/grades will follow.
  • December and January are tough months!
  • Finance Minister Gibaba’s Mini Budget doesn’t convey any good news when covering the economic prospects for the next four years. Increasing the debt only worsens an already poor economy and international credit ratings, with further expected downgrades later this year and expensive borrowings going forward. The ever increasing budget tax collection shortfalls [resulting from] lower economic growth. Loss making SOCs like SAA and many others, which are continuously poorly managed and running at exorbitant losses, should be sold off. Worse still is going ahead with the new nuclear power stations with Russia, when this cost should be better spent on education, new schools, hospitals, houses for the poor, additional new roads countrywide and the maintenance thereof, and many other far more important matters. Wholesale corruption must be brought to an immediate end with heavy punishing judgements, etc., better sooner than later.
  • Good pickup in stainless steel demand.
  • Government has no understanding of the manufacturing sector. The programmes that are available are so high level and the criteria so limiting that very few companies can participate.
  • How much longer can we continue to promote and continue to be recognised in South Africa as a world-class supplier of innovative products, with all of this noise going on in our country? This current environment is not conducive to doing global business.
  • It is important to diversify and expand international exposure.
  • October, as has been common over the last few years, has proved to be a decent month from a volume perspective. This is expected to continue through November until the mid-December industry shutdown.
  • … is working on a multi-million rand project to install a new conveyor system. A new project department has been established to process this project. Huntsman Tioxide in Umbogintwini has closed down. They were the largest manufacturer of pigments etc. for the South African paint manufacturing industry. The sugar industry is looking good. Annual maintenance shutdown starts towards the end of December, 2017. … Sugar Refinery has a major maintenance project starting soon.
  • Survival is our priority. The market Grapevine is cautiously optimistic and concerned about the outcome of the political situation.
  • Thankful to be blessed with enough orders.
  • Things normally ramp up this time of year and while sales were better in October, I don’t think we should get ahead of ourselves in thinking things are on the up.
  • We have taken some reasonable orders recently and have more potential, but with other companies scrambling for business, margins are very low.
  • With R.O.E. our import prices are not competitive.

Overall sentiment continues the upward trend first seen in August. To put this in perspective, the latest  seasonally adjusted ABSA Purchasing Managers’ Index (PMI) continued its recent upward trend and rose by 2.9 points to reach 47.8 in October 2017. This was the third consecutive increase and brought the index to the best level since May 2017. Nonetheless, the PMI remained stuck below the neutral 50-point mark.

The Bureau for Economic Research’s Economic Prospects report, published on the 10th of November, reported that, despite a better-than-expected Q2 growth figure, economic activity continues to be undermined by political and policy uncertainty. Business confidence remains weak. Low business confidence and policy uncertainty should keep a lid on private sector fixed investment. Worsening domestic constraints continue to prevent the South African economy from benefitting from the improved global conditions. As a result, GDP growth is projected to remain well below 2% over the forecast horizon.

Thanks and Kind Regards

Angie Baker
KwaZulu-Natal Regional Manager
Southern Africa Stainless Steel Development Association
Tel: +27 11 883 0119 | Cell: +27 82 604 0040