South Africa

Business remains challenging given the continuing lack of infrastructure spend required at Eskom and Transnet to stimulate the economy, leading to tough trading conditions for manufacturers.

The May inflation increase to 4.5% was mainly attributable to higher fuel prices owing to the situation in the Middle East. At the end of the same month, the prime interest rate in South Africa increased by 25 basis points to 10.50%.

US tariffs on South Africa are still affecting exports. Extended until December 31 this year, the African Growth and Opportunity Act will be discussed thereafter by the USA and South Africa to identify a way forward.

According to Eskom, the National Energy Regulator of South Africa has approved an interim discounted ​power tariff of Rand 0.62 per kWh for Samancor ‌Chrome and for a Glencore/Merafe Resources joint venture in order to assist the struggling ferro-chrome producers; the agreements are for five years and three years, respectively.

While South Africa’s ban on exports of copper scrap is continuing, dealers are still shipping out ingots, anodes, blocks and billets. Aluminium scrap can still be exported through the International Trade Administration Commission but most dealers are selling locally, except in the case of those few grades which are not consumed domestically.

The ABSA purchasing managers’ index dropped from 50.8% in May to 47.3% in June, thus indicating a contraction in manufacturing. As for currency exchange, the rand is trading at 16.40 to the US dollar at the time of writing.