The business outlook is unexciting and demand has dropped for non-ferrous scrap. In terms of energy, ongoing load shedding over six hours a day in recent weeks has been hurting the economy. A strike at Eskom has been resolved but the electricity utility is still struggling with the backlog of maintenance and breakdowns at its power stations.
With oil at US$ 100 per barrel, prices of petrol and diesel have increased to over ZAR 26 per litre in July (the ZAR is trading weaker at 17.15 to the US dollar at the time of writing).
Inflation is at a 13-year high of 7.4% and the possibility exists that interest rates will increase by 50 to 75 basis points this month.
Following the introduction of an export tax on scrap metal (10% on both copper and brass and 15% on aluminium) by the Department of Trade & Industry (DTI), the Treasury and the International Trade Administration Commission, there is now talk from the DTI and Treasury of a ban on exports of scrap metal in the next few months. There have been fewer export applications over the last few weeks.
With the sharp fall in commodity prices, demand has dropped dramatically and many consumers have stopped purchasing for the balance of July and will buy reduced volumes during August.