Market review

Global steel demand improved moderately, growing at an estimated 5.9% in 2011, despite a series of expected and unanticipated negative developments, such as the European sovereign debt crisis, political unrest in the Middle East and North Africa region, and the earthquake in Japan, coupled with tighter monetary measures in emerging economies.

A sustained recovery in international steel prices remains uncertain on the back of sluggish global economic activity. Global steel prices were on a downward trend towards the latter part of 2011 from higher levels earlier in the year.

Economic growth in South Africa was relatively modest, with domestic GDP growth rates registering a declining trend on a quarterly basis, reaching an estimated 2.9% in the fourth quarter of 2011 from a high of 3.3% in the first quarter. This effect was magnified in the main steel-consuming sectors of mining, construction and manufacturing, although some sub-sectors within the manufacturing sector such as vehicles and electrical appliances stimulated steel demand to some degree.

The recent weakening in the South African rand against major currencies improved the competitiveness of the country’s export industries and the ability of domestic manufacturers to compete with imports. However, the South African economy has not been spared from the global economic slowdown.