Shem Oirere, Africa Correspondent01.11.21
South Africa’s zinc coatings market had before 2020 survived the effects of the country’s intermittent economic recession but clung onto the gains made in the galvanizing and coating of steel and iron products consumed by major infrastructure projects especially in the construction, energy and transportation sectors, to post-growth.
But in the first quarter of 2020, COVID-19 happened with South Africa’s top government officials now admitting an economic crisis not hitherto experienced has hit the country as the world grapples with the impact of the pandemic on specific economic sectors.
Some zinc coatings makers predict tough times for the market as uncertainty looms due to the evolving nature of COVID-19 that had by Dec. 20, 2020, infected nearly 922,000 people in South Africa and killed an estimated 24,000 others.
“South Africa’s economic growth is forecast to fall by 7.2 percent in 2020 as a result of the crisis, the March and April 2020 credit rating downgrades, and the compounding effects of weak investor confidence,” Finance Minister Tito Mboweni said in the 2020 Supplementary Budget Review, adding that South Africa’s economic outlook “is highly uncertain.”
Minister Mboweni said the recently eased lockdown took “a severe toll on an already fragile economy with the limited data available suggesting a steep contraction across all sectors over the past three months.”
Construction, a key consumer of coated zinc products was one of the sectors that the minister said was “particularly hard hit.”
“Reduced global demand and border closures, alongside uncertainty about the application of lockdown regulations, further hampered (economic) activity,” added Mboweni.
For Zinc coatings makers such as Specialized Coatings System, Jotun Group and AkzoNobel, the impacts of COVID-19 make the future market performance predictions uncertain.
AkzoNobel said in its 3rd Group Quarterly update, the company management had to suspend the 2020 financial ambition “in response to the significant market disruption resulting from
the pandemic.”
“Headwinds related to COVID-19 continued to ease, although demand trends differ per region and segment in an uncertain macro-economic environment,” the company said.
For Jotun Group, its performance up to the second quarter of 2020 had improved despite the corona pandemic but cautioned “there is significant uncertainty related to the future outlook.”
“In the short term, Jotun expects lower sales due to ongoing containment measures and weaker economic outlook in several key markets,” Jotun said of its global sales expectations. “There is however considerable uncertainty related to how the pandemic will affect the long-term economic conditions going forward.”
The crisis triggered by the pandemic forced South Africa to announce an R500 billion ($34 billion) fiscal relief package to support households and businesses during the COVID-19 that hopefully includes small to medium paints and coatings retailers and suppliers.
But according to Mboweni, “the government’s weak fiscal position going into the crisis means that it cannot afford to fully offset the effects of the pandemic.”
Furthermore, South Africa announced interventions to support growth in demand for anti-corrosive coatings for the stainless steel industry during and after the COVID-19 pandemic, according to the department of trade, industry and competition, including the reduction “in the general rate of customs duty on primary steel products to 10 percent and safeguard measures on hot-rolled coil and plate products.”
The government has further increased tariff “on a range of downstream products to the maximum bound rates allowed; trade remedies; deployment of rebates where products are not manufactured, or additional value-added before export.”
Additionally, “South African Revenue Service (SARS) reference price system developed for steel products to address low priced imports and inter-agency working group established to tackle illegal trade.”
South Africa is also encouraging the use of locally manufactured primary steel such as those destined for the rail infrastructure, rail rolling stock, steel products, powerlines, pipes and pipe fittings, valves, pumps and vessels.
Even before COVID-19 happened, South Africa had in 2017 set up an R1.5 billion ($103 million) Steel Competitiveness Fund “to support upgrading, working capital requirements, investments and key downstream steel sectors in distress.”
After the Government initiated the yet to be implemented Master Steel Plan in 2019, additional measures that would spur uptake of steel were announced including the amending the lending rates by the Steel Fund criteria “to improve the accessibility of the fund to the industry as well reduce the cost of lending for small and medium companies”
Even as South Africa grapples with the economic uncertainty due to COVID-19, zinc industry players had previously pushed for the full implementation of the Master Steel Plan to catalyze zinc coatings consumption and support the overall growth of the zinc industry.
According to Robin Clarke, executive director Hot Dip Galvanizers Association Southern Africa, the Master Steel Plan is an important strategic initiative “to stimulate the revival of the South African steel industry and its downstream industries must be attended to.”
“From this draft (Master Steel Plan) it is intended that Government, Labor and Business will actively engage to set out fixed actions and secure the required commitments needed to stimulate the growth of the industry in a unified and structured manner,” said Clarke.“The production of steel, fabrication of steel components and structures, as well as the essential need for steel corrosion control provides an existing means, while also promising further opportunities, for job creation and upskilling of labor in South Africa.”
For the South Africa Zinc industry, the year 2020 did not only bring uncertainty to the performance of the mining and processing segments but also was a year the International Zinc Association’s Africa Desk intensified campaigns to raise the profile of Zinc in the country.
“Notwithstanding the challenges 2020 had in store for the world, the International Zinc Association (IZA) in Africa worked strategically to fulfill its mandate: to raise the profile of zinc in South Africa,” said Simon Norton, coordinator IZA Africa Desk.
The campaigns zeroed on the application of zinc in industrial projects with delegates at the IZA Webinar events getting an electronic copy of the publications ‘Essentials of Galvanizing – a guide for consulting engineers, designers and architects to better understand the value of galvanizing in various aspects of their projects.”
IZA also made submissions in 2020 to the parliamentary standing committee to raise awareness of the role of zinc in various industrial applications in the South African economy.
In 2019, South Africa produced an estimated 5.7 million metric tons of crude steel with the World Bank’s World Integrated Trade Solution indicating the country imported 435,672 kgs of plates, sheets, strip and foil valued at $1,706,030 from key exporters including Peru, Germany, the UK, India and Netherlands.
At least 50 percent of the zinc in South Africa is for the protection of steel from corrosion. An estimated 65 percent of the zinc market is attributed to galvanizing, a dominant application of zinc coatings.
COVID-19 may have posed monumental challenges to the growth of major economic sectors such as infrastructure development, but the future growth of the zinc coatings market in South Africa is likely to be anchored in the successful implementation of the Master Steel Plan. The plan, it is hoped, would position the steel industry to reap from some key government policy pronouncements.
The pronouncements are in favor of growth in consumption of and trade in galvanized and coated steel and iron products. These include the government’s infrastructure drive backed by the establishment of the Infrastructure Fund, deliberate efforts by State enterprises such as railway operator Transnet to procure significant quantities of steel products like rail locally and the ongoing effort to increase South African exports to the rest of Africa the steel and iron products from the current annual estimates of ZAR400 billion ($27 billion).
But in the first quarter of 2020, COVID-19 happened with South Africa’s top government officials now admitting an economic crisis not hitherto experienced has hit the country as the world grapples with the impact of the pandemic on specific economic sectors.
Some zinc coatings makers predict tough times for the market as uncertainty looms due to the evolving nature of COVID-19 that had by Dec. 20, 2020, infected nearly 922,000 people in South Africa and killed an estimated 24,000 others.
“South Africa’s economic growth is forecast to fall by 7.2 percent in 2020 as a result of the crisis, the March and April 2020 credit rating downgrades, and the compounding effects of weak investor confidence,” Finance Minister Tito Mboweni said in the 2020 Supplementary Budget Review, adding that South Africa’s economic outlook “is highly uncertain.”
Minister Mboweni said the recently eased lockdown took “a severe toll on an already fragile economy with the limited data available suggesting a steep contraction across all sectors over the past three months.”
Construction, a key consumer of coated zinc products was one of the sectors that the minister said was “particularly hard hit.”
“Reduced global demand and border closures, alongside uncertainty about the application of lockdown regulations, further hampered (economic) activity,” added Mboweni.
For Zinc coatings makers such as Specialized Coatings System, Jotun Group and AkzoNobel, the impacts of COVID-19 make the future market performance predictions uncertain.
AkzoNobel said in its 3rd Group Quarterly update, the company management had to suspend the 2020 financial ambition “in response to the significant market disruption resulting from
the pandemic.”
“Headwinds related to COVID-19 continued to ease, although demand trends differ per region and segment in an uncertain macro-economic environment,” the company said.
For Jotun Group, its performance up to the second quarter of 2020 had improved despite the corona pandemic but cautioned “there is significant uncertainty related to the future outlook.”
“In the short term, Jotun expects lower sales due to ongoing containment measures and weaker economic outlook in several key markets,” Jotun said of its global sales expectations. “There is however considerable uncertainty related to how the pandemic will affect the long-term economic conditions going forward.”
The crisis triggered by the pandemic forced South Africa to announce an R500 billion ($34 billion) fiscal relief package to support households and businesses during the COVID-19 that hopefully includes small to medium paints and coatings retailers and suppliers.
But according to Mboweni, “the government’s weak fiscal position going into the crisis means that it cannot afford to fully offset the effects of the pandemic.”
Furthermore, South Africa announced interventions to support growth in demand for anti-corrosive coatings for the stainless steel industry during and after the COVID-19 pandemic, according to the department of trade, industry and competition, including the reduction “in the general rate of customs duty on primary steel products to 10 percent and safeguard measures on hot-rolled coil and plate products.”
The government has further increased tariff “on a range of downstream products to the maximum bound rates allowed; trade remedies; deployment of rebates where products are not manufactured, or additional value-added before export.”
Additionally, “South African Revenue Service (SARS) reference price system developed for steel products to address low priced imports and inter-agency working group established to tackle illegal trade.”
South Africa is also encouraging the use of locally manufactured primary steel such as those destined for the rail infrastructure, rail rolling stock, steel products, powerlines, pipes and pipe fittings, valves, pumps and vessels.
Even before COVID-19 happened, South Africa had in 2017 set up an R1.5 billion ($103 million) Steel Competitiveness Fund “to support upgrading, working capital requirements, investments and key downstream steel sectors in distress.”
After the Government initiated the yet to be implemented Master Steel Plan in 2019, additional measures that would spur uptake of steel were announced including the amending the lending rates by the Steel Fund criteria “to improve the accessibility of the fund to the industry as well reduce the cost of lending for small and medium companies”
Even as South Africa grapples with the economic uncertainty due to COVID-19, zinc industry players had previously pushed for the full implementation of the Master Steel Plan to catalyze zinc coatings consumption and support the overall growth of the zinc industry.
According to Robin Clarke, executive director Hot Dip Galvanizers Association Southern Africa, the Master Steel Plan is an important strategic initiative “to stimulate the revival of the South African steel industry and its downstream industries must be attended to.”
“From this draft (Master Steel Plan) it is intended that Government, Labor and Business will actively engage to set out fixed actions and secure the required commitments needed to stimulate the growth of the industry in a unified and structured manner,” said Clarke.“The production of steel, fabrication of steel components and structures, as well as the essential need for steel corrosion control provides an existing means, while also promising further opportunities, for job creation and upskilling of labor in South Africa.”
For the South Africa Zinc industry, the year 2020 did not only bring uncertainty to the performance of the mining and processing segments but also was a year the International Zinc Association’s Africa Desk intensified campaigns to raise the profile of Zinc in the country.
“Notwithstanding the challenges 2020 had in store for the world, the International Zinc Association (IZA) in Africa worked strategically to fulfill its mandate: to raise the profile of zinc in South Africa,” said Simon Norton, coordinator IZA Africa Desk.
The campaigns zeroed on the application of zinc in industrial projects with delegates at the IZA Webinar events getting an electronic copy of the publications ‘Essentials of Galvanizing – a guide for consulting engineers, designers and architects to better understand the value of galvanizing in various aspects of their projects.”
IZA also made submissions in 2020 to the parliamentary standing committee to raise awareness of the role of zinc in various industrial applications in the South African economy.
In 2019, South Africa produced an estimated 5.7 million metric tons of crude steel with the World Bank’s World Integrated Trade Solution indicating the country imported 435,672 kgs of plates, sheets, strip and foil valued at $1,706,030 from key exporters including Peru, Germany, the UK, India and Netherlands.
At least 50 percent of the zinc in South Africa is for the protection of steel from corrosion. An estimated 65 percent of the zinc market is attributed to galvanizing, a dominant application of zinc coatings.
COVID-19 may have posed monumental challenges to the growth of major economic sectors such as infrastructure development, but the future growth of the zinc coatings market in South Africa is likely to be anchored in the successful implementation of the Master Steel Plan. The plan, it is hoped, would position the steel industry to reap from some key government policy pronouncements.
The pronouncements are in favor of growth in consumption of and trade in galvanized and coated steel and iron products. These include the government’s infrastructure drive backed by the establishment of the Infrastructure Fund, deliberate efforts by State enterprises such as railway operator Transnet to procure significant quantities of steel products like rail locally and the ongoing effort to increase South African exports to the rest of Africa the steel and iron products from the current annual estimates of ZAR400 billion ($27 billion).
