Predicting anything positive for the stainless steel industry in terms of market growth in 2020 would be risky and remains in the ‘Daily Lotto’ realm when looking at current economic forecasts. Against this backdrop, Sassda Acting Executive Director Michel Basson takes a look at past and present performance and where there are slivers of potential for growth and development in the local stainless steel sector.
Q. Please comment on the current state of the stainless steel?
A : The stainless steel sector is heavily intertwined with the local economy as well as subject to international trade conditions. However, stainless steel is a key material in many industries and, even in a stagnant market, these industries such as food processing, hygienic and process-specific applications, continue to grow. Stainless steel is also extensively used in the auto industry and this remains a stable contributor in national stainless steel consumption. We do not expect significant growth in the local market but are rather working towards curbing any decline in specific sub-sectors in industry.
Q. What are the main challenges facing the sector and how can they be mitigated?
A : Like other industry sectors, the stainless steel industry will be hampered in terms of productivity, efficiency and project lead, should the electricity supply remain unstable and unpredictable. This will impact negatively across the stainless steel value chain from primary producer to fabrication and services. Political uncertainty and a lack of firm decision making will most likely continue to restrict investments and might have an influence on export markets. It can be argued that the lack of certainty in the respect to many issues remains a stumbling block for the industry.
Q. Based on the above, what is your outlook for the future of the stainless steel market?
A : As mentioned earlier, we do not expect 2020 to be a year of substantial growth in the market or industry. The Department of Trade, Industry and Competition has done a huge amount of work to develop a Steel Plan by the end of 2019 that is currently being studied by the minister for action in the new financial year. We believe that this renewed understanding of industry and the current co-operation between government and industry can have a positive effect in mitigating the stumbling blocks to sustainable growth in the stainless steel industry.
Q. What supply/demand dynamics do you predict for the steel sector in the short term?
A : The level of dynamic behaviour in our industry’s value chain has dwindled of the last decade, mainly due to international completion, steel prices as well as the slow growing national economy. We do not foresee great changes, but rather lateral movement. Cost of material, labour efficiency and innovative solutions in fabrication and new applications will be key in maintaining a dynamic scenario in the market.
Q. Comparatively speaking, how does stainless steel fair as compared with other metals?
A : Stainless steel is maintaining reasonable global growth. This is mainly due to the material’s excellent life cycle costing and corrosion resistance. Stainless steel is also popular because of its application-specific solutions and low maintenance requirements. It is also a required material in most food, beverage, medical and process related applications and cannot be easily replaced by less costly alternatives. That being said, we believe that stainless remains the most cost effective solution in many applications and will remain a growing and competitive material in various markets.
Q. In light of environmental standards getting even more stringent, how is SASSDA encouraging members to reduce carbon emissions in their production processes?
A : The South African stainless steel industry does not stand in isolation within the global market and most of our members are accredited to some or other international quality standard. Even though stainless steel has very similar energy requirements as carbon steel when primary product is made, this is being offset by stainless steel being a 100% recyclable material and the fact that even carbon steel scrap is used in the process.
Q. The national grid remains under pressure in South Africa prompting the need for energy efficient production lines. Are there any initiatives that the association has rolled out in this regard?
A : As mentioned earlier, the biggest issue is the uncertainty regarding energy supply. The industry is a major electricity user and not much can be changed about that. Many of our members have invested in renewable support to their energy requirements. It is our understanding that good communication between the electricity supplier, government and industry can mitigate the effects of interrupted powers supply somewhat through scheduling and planning.
Q. Please expand on the education and skills deficits that you have noticed in the industry and how the association, along with its members will work to curb this?
A : Like any other industry, our skills and training requirements are quickly changing to adjust to the demands of moving into a 4th industrial Revolution. There is an increasing demand for manual skills to be upgraded to skills more suitable for machine interfacing such as operators and programmers. Process based thinking and systems orientation is also becoming increasingly important. See Education & Training article LINK.
Q. What are some of the association’s aspirations for stainless steel based on the overall market?
A : Our aspirations and mandate remain the same as in the past. We want our industry to positively contribute to the national and regional economy. This will create opportunities for investment in the market and technology, job creation and poverty alleviation. This we can only do through assisting industry to locally convert more stainless steel tonnage. We assist by liaising with government, developing new markets, training and education as well as relevant technical assistance.
Q. Is there anything else that you would like to add?
A : Stainless steel is one of the youngest industrial materials in the world, but in its short existence has change the lives of all humans. Stainless steel is critical in human survival and will continue to be in the future. We ask South Africans to support the local industry by, when buying, make sure it is stainless and make sure it is South African.