Market Monitor Steel South Africa 2017

Market Monitor

  • Zuid-Afrika
  • Metaal,
  • Staal

14 nov 2017

Banks have generally tightened their lending policies for steel businesses due to the fierce competitive environment and still subdued domestic demand.

  • South Africa ranks 22nd globally in terms of crude steel production (about six million metric tons per year). The steel and metals industry plays a pivotal role in the South African economy and is a key supplier to the domestic mining, construction, energy and infrastructure sectors.
  • In 2015 and 2016 the steel industry was affected by global oversupply and the dumping of cheap import steel. Thisprompted the South African government to impose tariffs and safeguard duties. Following a 4.3% year-on-year decline in 2016, South African steel production decreased further between January and August 2017, by 1.3%, according to the World Steel Association. Domestic steel demand has remained subdued so far in 2017 as economic growth remains modest (forecast 0.8% in 2017, followed by 1.8% in 2018), and the performance of the main buyer sectors is still sluggish. Long-term steel production growth is expected to remain constrained by power supply issues and higher production costs.
  • While the overall indebtedness of steel and metals businesses is about the same as other industries, banks have generally tightened their lending policies due to the fierce competitive environment (which puts persistent pressure on margins) and the still subdued demand.
  • Although the number of payment delays and business failures is not expected to increase sharply in the coming 12 months, sizeable payment defaults or insolvencies by large businesses cannot be ruled out. Therefore, our current underwriting strategy continues to be restrictive, especially in the commodity traders segment.

 

 

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De informatie in dit document wordt uitsluitend ter algemene informatie verstrekt en hieraan kunnen geen rechten worden ontleend. De toepasselijke voorwaarden zijn te vinden in de polis of de betreffende product- of dienstverleningsovereenkomst. Niets in dit document mag worden opgevat als strekkende tot enigerlei recht, verplichting, verantwoordelijkheid of advies aan de zijde van Atradius en derhalve ook niet tot enigerlei verplichting tot het uitvoeren van due diligence op afnemers of ten behoeve van uzelf. Indien Atradius due diligence op een afnemer uitvoert, gebeurt dit ten behoeve van haar eigen acceptatiedoeleinden en niet ten behoeve van de verzekeringsnemer of enige andere persoon. Daarnaast zijn noch Atradius noch enige aan haar verbonden ondernemingen, deelnemingen of dochterondernemingen aansprakelijk voor welke directe, indirecte, speciale, incidentele of gevolgschade dan ook voortvloeiende uit het gebruik van de in dit document opgenomen informatie.