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Real Economy News in Real Time
R/€ = 15.65 Change: -0.04
R/$ = 13.92 Change: -0.08
Au 1439.80 $/oz Change: 19.85
Pt 856.72 $/oz Change: 7.80
 
 
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Company drives new stainless steel applications

31st May 2019 BY: Cameron Mackay
Journalist

Owing to stainless steel being 100% reusable, local stainless steel distributor Stalcor is engaged in a drive to find new applications for stainless steel in which the metal can be used as an alternative to materials such as plastic, thereby providing a green solution, says Stalcor projects manager James Barnard.

“Two successful examples are the use of reusable stainless steel straws instead of disposable plastic ones, and replacing historical carbon steel, copper or polyvinyl chloride water pipes with corrugated stainless steel pipes. This kind of forward thinking is what we need in our local industry, as it will enable Stalcor and the industry to grow into new markets, which are under pressure,” he states.

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Barnard also references figures in a report published in April 2019 by stainless steel producers association the Southern Africa Stainless Steel Development Association. The report compares local stainless steel production in the period January 2017 to December 2017 with that of January 2018 to December 2018.

The report showed that local stainless steel production decreased by 9%, exports decreased by 13%, while imports increased by 16.3%. This indicates the pressure the local industry is under, as other global markets are using the opportunity to export materials into the South African market.

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“As part of the Southern African Development Community (SADC), we should ensure that investors look at locally produced goods first, before allowing imports to flow in. Our local manufacturers need all the support they can get to remain competitive against imported finished goods. This will make South African manufacturers and fabricators a viable option for exports into Africa and, ultimately, globally,” he states.

Moreover, the uncertainty of the global market is creating challenges in terms of using more locally produced stainless steel and related products.

“The world’s economy is waiting to see the outcome of the negative trade sentiments as a result of tensions between the US and China, and the anticipated outcome of Brexit. This slowdown and negative trade have led to a lack of use of production capacity across various countries, which now require new offset points,” states Barnard.

He highlights how Africa has become a “target offset point” with material imported into the continent at lower manufactured costs, with export incentives attached. This drives the price of stainless steel down, and commoditises the product, creating difficult local trading conditions.

Downstream development of stainless steel products has been affected by the influx of cheaper fabricated finished goods, adds Barnard.

The lack of local infrastructure development, a low gross domestic product, and inconsistent electricity supply from State-owned power utility Eskom, are putting pressure on the local stainless steel industry.

Subsequently, this has created a negative perception of stainless steel supply, which, together with final product supply, is time sensitive. This creates doubt in investor sentiment.

Meanwhile, Barnard mentions that a positive aspect about the downturn in the local stainless steel industry and economy is that customers and investors have become more aware and open to change regarding historical material specifications.

This presents an opportunity to supply more locally manufactured and cost-effective solutions, he states.

“Being proactive to this will enable us to assist end-users in making more informed decisions. We have reached the end of selling stainless steel, and should be selling cost savings, based on life-cycle opportunities.”

A local manufacturer to the mining sector was advised to use a lean duplex material to replace the current carbon steel unit. This was due to the carbon steel failing in this very aggressive environment and was leading to downtime and replacement costs. The increased exponential cost was a stumbling block.

After consultation with the local mill, the manufacturer, Stalcor and the end-user, a more cost-effective 3CR12 solution was suggested.

“Locally produced 3CR12 steel, through long-term testing, has proven its reliability in this highly combined abrasive and acidic environment. The result was an increased life span, saving on downtime and increased production, which warranted the marginally higher cost,” states Barnard.

Cost-effective solutions and savings, such as this one, have become crucial as local and global markets contract, profitability in the sales cycle becomes more difficult, he says.

“Being able to manage risks between a competitive and viable stockholding, and debtors and creditors, is a real challenge. Our clients are exposing themselves to high risks as they are supplying unstable markets,” he states.

Barnard highlights that forming part of industrial conglomerate the Consolidated Steel Industries group enables Stalcor to have a significant footprint locally and in the SADC region.

“In current market conditions, the biggest investment would be in people, their skills and ability to see new opportunities for growth. This will enable us to grow the locally produced alloys and related products, which, in turn, can make Stalcor a stronger competitor in every way,” he concludes. 

EDITED BY: Zandile Mavuso Creamer Media Senior Deputy Editor: Features
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