Grim outlook for steel factories

BACKLOGS: LOCKDOWN BLAMED FOR METAL SHORTAGE Knock-on effect makes it difficult to stock up as product is 30% more expensive.

Small factory owners have to hunt for steel to complete projects and some had to close down or retrench workers due to the steel shortage, with some begging online for a few lengths of steel to stay in operation.

The steel shortage in South Africa ascribed to the lockdown is affecting many small businesses that will have to close down if nothing is done about the shortage.

When factory owners manage to find some stock, it is low-quality steel imported from China. The shortage has also seen prices rising by about 30%.

The reason for the shortage is that ArcelorMittal South Africa (Amsa) ceased operations at all its blast furnaces as required by the Covid-19-related lockdown regulations. It completely stopped production for the first time in the history of the integrated steel industry in the country, according to Tami Didiza, group manager: stakeholder engagement and communications at Amsa.

This resulted in a disruption of the entire steel supply chain, but Didiza said the company is “progressively addressing” the problem of temporary backlogs.

Dirk Coetser, owner of Architects 4 A Change, works in the construction industry where he uses lightweight and other steel.

“I cannot find any steel. If you do find some, it is as much as 30% more expensive,” he said.

The problem is that he loses clients if he is unable to source steel and, so far, he had to pay back one client because he could not complete the work without steel.

He provides jobs for 10 people and had to cut their hours because they cannot work without steel.

Sherwyn Palani, owner of Sher Steel and Indent Manufacturers, does metal work fabrication and said there was definitely a steel shortage.

“I have orders to the value of R500 000 but I had to put them on hold because I cannot find steel,” said Palani.

Jannie Moolman, owner of MAG Machining and Engineering, does general machining and manufacturing. He is also suffering because of the shortage of steel.

Chifipa Mhango, chief economist at the Metals and Engineering Employers’ Association, said it was too early to put an exact figure to the number of people who work in the sector affected by the shortage of steel.

“The steel shortage has been triggered by capacity issues from the main supplier due to lockdown measures. We believe that this will be resolved.”