South Africa

Over the past two months, South Africa’s recycled steel and steel market has faced significant challenges, reflecting both global trends and domestic issues.

As of November 2024, South Africa’s year-to-date crude steel production stood at 4.42 million tonnes, marking a 2.3% decrease compared to the same period in 2023. This decline placed South Africa behind Egypt and Algeria in terms of production on the African continent. Since 2018, the country’s crude steel production has decreased by approximately 30%.

The nation has experienced a substantial shift in its trade dynamics: imports have surged by nearly 50% since 2018 while exports have diminished by 40%. This trend underscores the increasing reliance on foreign steel and a weakening position in international markets.

The global steel market has been under pressure owing to economic challenges in China, leading to a surge in Chinese steel exports. From January to September 2024, China exported 81 million tonnes of steel for a 21% increase over the previous year. This outflow has driven international steel prices to multi-year lows not seen since the peak of the COVID pandemic in 2020 and, prior to that, in 2015/16.

The South African steel industry is confronting its most prolonged challenge since the 2008/09 financial crisis, with issues such as unsustainable margin pressures, production halts, capacity reductions, plant closures and job losses all being prevalent. There is a growing concern about de-industrialisation and the need to reassess decarbonisation goals owing to financial constraints. In response, stakeholders - including the Department of Trade, Industry and Competition and the Steel and Engineering Industries Federation of South Africa - convened on November 20 last year to discuss urgent and ambitious interventions to address the sector’s decline.

A significant development in the past two months has been the debate over the recycled steel export tax. Electric steel producers in South Africa are advocating for the retention of this tax, emphasising its role in ensuring the availability of recycled steel for local, greener steel production. They argue that removing the tax would jeopardise smaller, environmentally friendly steel manufacturers, potentially leading to job losses and undermining the country’s industrial sustainability. Conversely, ArcelorMittal South Africa is pushing for the removal of the tax, suggesting that it would benefit its operations. The government faces a critical decision on this matter, balancing the interests of various stakeholders within the industry.

In summary, the past two months have been challenging for South Africa’s recycled steel and steel market, characterised by declining production, shifting trade balances, global market pressures, internal industry challenges and pivotal policy debates. The industry remains under pressure, with policy decisions on recycled steel exports and economic interventions critical to its future.