High steel prices, according to South African construction companies, are hurting their bottom lines.
Companies claim that prices have risen dramatically in recent months, making it nearly hard for them to compete.
They say that the pricing have an impact on their final product and their ability to do business.
According to the steel industry, these prices are mostly influenced by Eskom’s unstable and high electricity expenses, as well as worldwide steel pricing.
Construction companies say these prices have increased significantly in the last few months making it almost impossible for them to compete in the market.
They say they run a loss because of the high prices and are worried that this will lead to an increase in the country’s devastating numbers that are unemployed.Serge Lumbala, founder of Mahlohonolo Trade and Projects says, “The South African steel industry has been in destruction for a number of years now but in recent times prices have started to rise quite strongly causing difficulties for downstream fabricators.”
The Department of Trade, Industry and Competition on Friday signed the steel metal master plan aimed at rejuvenating the sector.
The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) president Elias Monage said this plan is to ensure that local steel companies benefit and remain viable, sustainable and competitive.
“South Africa’s National Developmental Plan largely relies on steel and the country needs this industry thus the viability, sustainability and competitiveness of the sector is in all our interest.”
Engineering News editor Terence Creamer says that the COVID-19 pandemic is the main cause of high steel prices.
Although this sector has not been doing well even before the pandemic. This sector contributes 1.2% towards GDP and employs at least 200 000 workers.
“The South African steel industry has been in crises for a long time now and with COVID-19 it became worse pushing the steel prices quite high and affecting the demand in the industry,” says Creamer.
Steel industry and consumers supports the steel master plan by government.
They say this plan will elevate demand and high level import substitution for the of R200 billion over the next 5 years.