South Africa

The domestic recycled steel market has remained constrained by policy uncertainty, unresolved industry restructuring and regulatory price controls. While some Price Preference System (PPS) amendments have been introduced, the absence of a final framework is continuing to limit investment confidence and distort domestic pricing relative to global markets.

The government has yet to finalise the long-term structure of the PPS or export tax regime. October 2025 amendments reduced the recycled steel discount from 30% to 25% and established a technical working group. However, the ongoing uncertainty is suppressing trading activity and weakening confidence across the steel value chain.

At the time of writing, no deal has been confirmed amid ongoing buyout talks between ArcelorMittal South Africa and the state-owned Industrial Development Corporation, with a prior valuation of around Rand 8.5 billion failing to close the gap. The ownership outcome could materially reshape recycled steel consumption. For the moment, the continued uncertainty around primary steel capacity creates risk for future recycled steel demand as well as for pricing stability.

PPS and export restrictions are continuing to anchor South African recycled steel below global parity. Market participants argue the framework favours mini-mills while constraining recyclers and broader manufacturing, with the formal recycling sector experiencing margin compression and weaker incentives for investment.

The recent period has seen a broad 8-10% appreciation of the rand to a level of multi-year strength in January when it averaged 16.3 to the US dollar as compared to 17.3 when the firming trend began in October last year. A stronger rand reduces export revenues and, when combined with PPS discounts, creates a dual pricing constraint on local HMS values. However, evidence suggests policy rather than exchange rates remains the dominant price suppressor, with pricing visibility set to remain limited until PPS is finalised.

South Africa remains a structurally discounted recycled steel market, with regulation continuing to outweigh global fundamentals. The government bias is favouring domestic processing, and continued intervention can be expected with the aim of keeping recycled steel inside the country.