Currently South Africa’s steel industry – the key component of South Africa’s manufacturing sector – is facing serious challenges.
In order to coordinate decision-makers, South African Institute of Steel Construction (SAISC) members, and other associations to find actionable solutions to the current challenging industry environment – and to provide opportunities for steel industry leadership to raise key issues and propose potential solutions – on the May 4th, the SAISC held an industry mobilisation meeting.
Under the auspices of the SAISC, and with Allied Steelrode’s driving support, it was decided at the meeting to gather the leadership of both steel suppliers and manufacturers into a body which will be known as the CEO Task Force in order to lobby and mobilise key stakeholders to gain cooperation concerning protective tariffs.
Speaking at the meeting, Allied Steelrode’s Executive Director Warne Rippon asserted that his company would like to make a leading contribution to engendering a spirit of re-commitment to the steel industry.
He also raised certain issues regarding pricing, the volatility of which ‘poses a very urgent challenge to the entire sector’, as effective procurement – a key part of any business – is severely handicapped.
Price volatility from the primary supplier tends to have an adverse effect on the leading steel industry suppliers and even more so on their downstream customers.
“If there is not some rationalisation of pricing levels, many in the industry will be in forced to import more of their steel requirements,” cautioned Rippon. He emphasised the urgent need for viable solutions to ensure the long-term sustainability of the industry. Regarding key solutions, he proposed a more stable, reality-based pricing system which would include a review of the 10% import duty price protection and the scrapping of the added 12% safeguard duty.
Rippon also called for the primary steel producer to reintroduce volumetric tonnage discounts and to restore the advantage of bulk procurement. “In the steel industry, there are many long-established ‘first tier’ suppliers, whose loyalty could be recognised in the form of discounts,” he explained.
He added that primary steel quality furthermore requires improvement, which would reduce the downstream scrap factor.
“Shorter lead times between orders and deliveries would assist in reinvigorating the steel industry; while the responsibility for bulk warehousing should not lie with the major merchants.
There are major opportunities in our steel industry at present. However, foresight and courage are needed to make the substantial capital investments required for advancement,” emphasised Rippon.
At this breakfast, Rippon and several other steel industry leaders also signed a banner to symbolise their commitment to the regeneration and sustainability of the steel industry.
“Overall, what we would like to see is greater transparency in the relationship between the primary producer and the downstream market.
From an Allied Steelrode perspective, we trust that this meeting will prove to be an effective catalyst for members of South Africa’s steel industry to collaborate in order to mobilise for positive industry change; and for the growth and sustainability of the steel industry in the future, for the benefit of all concerned,” he concluded