SA steel consumption for 2022 decreased by 12% to 4 million tonnes

After increasing by 4% in 2021, global crude steel production decreased by 4% or 82 million tonnes in 2022 to 1,9 billion tonnes. This reflects the slower global economic conditions prevailing in 2022 emanating from monetary tightening in response to aggressive inflation, weak demand in China and Asia due to Covid-19 outbreaks/restrictions,low consumer confidence, and the spill-over effects of the Russian invasion of Ukraine.

Global crude steel production decreased by 8% in the second half of the year, compared to the immediately preceding six months. China’s crude steel production decreased by 2,0% to 1,0 billion tonnes, with its market share at 54% (2021: 53%).

Europe’s(2) crude steel output decreased by 9% to 217 million tonnes. North America was down by 6% to 112 million tonnes. Both Russia and Turkey continued the downward trend as production fell by 7% and 13% respectively while India succeeded in increasing production by 6% to 125 million tonnes.

Africa’s output decreased by 5% to 16 million tonnes due to lower production in South Africa and Egypt. South Africa’s crude steel production decreased by 12% to 4,4 million tonnes.

In November 2022 China’s hot rolled coil (HRC) prices reached the lowest level since June 2020. (Subsequently, prices have recovered by USD150 per tonne). International HRC prices decreased by 21% in dollar terms year-on-year, while rebar prices decreased by 3%.

These HRC prices decreased by 31% compared to the immediately preceding six months, with rebar prices decreasing by 20% for the same period. The international raw material basket (iron ore, coking coal, and scrap) was 3% higher in dollar terms. In absolute terms, coking coal increased by 62%, while iron ore and scrap decreased by 26% and 7% respectively.

Turning to South Africa and the regional economy, the GDP growth rate for South Africa fell from 4,9% (actual) to 2,5% (forecast) for 2022, and those for near and Sub-Saharan African markets are forecasted to be between 3,6% and 4,7%.

In South Africa, apparent steel consumption (ASC) for 2022 decreased by 12% to 4,0 million tonnes, reflecting low market activity in key steel-consuming sectors, high market inventory levels necessitating destocking, project delays due to rising interest rates, and overall weaker business confidence. ASC decreased by 2% compared to 2,0 million in the immediately preceding six months.

The Company’s overall realised steel price in dollar terms increased by 6%. In rand terms, this represented a 17% increase as the average dollar/rand exchange rate weakened by 11%. Realised dollar steel prices decreased by 15% compared to the immediately preceding six months, with rand prices down by 4% for the same period. This trend reflects the lag-effect of steel price movements which characterise the Company’s order intake.

The Company is the only primary producer in South Africa which supports the downstream industry through a formal export support programme. This industry support totaled R149 million (2021: R196 million) in value-added export and strategic rebate assistance during 2022.

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