Stainless steel sector 'took a knock'
June 5, 2009
Johannesburg - Last year proved to be a tough one for the stainless steel industry, the Southern Africa Stainless Steel Development Association (Sassda) said on Friday, after figures for 2008 were released.
The data showed that despite a good start to the year, the final few months proved difficult and the industry "took a knock", Sassda said.
"The South African stainless steel industry has experienced a volatile year, not unlike global steel markets," Sassda chairman Sampie van Rooyen said in a statement.
"We saw a very buoyant South African market for the first six months of the year.
"However, when global markets collapsed during August-September 2008, we experienced global as well as South African steel markets reversing from buoyancy to total collapse," Van Rooyen said.
Figures showed that apparent consumption was recorded at 185 647 tons, down 5.8 percent from the previous year.
This is on the back of reduced primary local supply, which was down 2.83 percent at 132 448 tons, and reduced finished product imports, which were down 45.42 percent at 10 846 tons.
However, primary imports bucked the negative sentiment to finish 3.55 percent higher at 42 353 tons.
"Apparent consumption takes into consideration all consumption, including stocking before the crisis.
"Demand for steel disappeared with stock levels being very high," Van Rooyen noted.
"The figures are therefore skewed by what the stockist had already bought and this will be reflected in 2009 figures," he said.
Finished product imports dropped the most significantly, falling 45.42 percent whereas consumption only slowed 5.8 percent, showing that consumers and end-users favoured local product first.
"The finished product imports figure is the most accurate reflection of the market we can go on," Sassda managing director Tim Raaff said.
Local market demand was up, most probably also due to forward stock buying, at 118 741 tons, despite exports slowing to 66 906 tons, the figures showed.
"Personally, I think we have seen the bottom of this slowdown," Van Rooyen said.
"We just have to bide our time now ... things changed so fast."
He added that everyone who had survived the past couple of months had probably gained more experience than they had in the past 20 years.
Despite the hit the industry had taken with the world-wide financial crisis, projected future global demand for stainless steel, according to the International Stainless Steel Forum, showed that total demand should grow steadily during 2008 and 2009, he said.
"However, this is mainly due to demand for hot rolled flat products.
"Cold rolled flat products and long products are expected to dip, recovering in 2010," he said.
Other good news for stainless steel was the current bottoming out of the nickel price, Sassda said.
Nickel rose to a high of $53 000 per ton in 2007 from about $17 000 in 2006, severely affecting the price of stainless steel.
It has subsequently turned full circle, falling below $9 000 and currently sitting at approximately $12 650 per ton.
Nickel accounted for about 60 percent of the cost of austenitic stainless steel.
According to Sassda, it was reported by research group Antaike that China's primary nickel output would grow by 11 percent in 2009 to 230 000 tons and that Chinese stainless steel output was forecast to fall by six percent for the country.
Sassda added that in Japan stainless steel prices were rebounding as demand returned to September 2008 levels before the financial crisis.
Steel manufacturing company Acerinox reported at the end of May that it too would be increasing its prices on better demand, Sassda noted. - Sapa
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