Opportunity for China Steel Products in South Africa

Opportunity for China Steel Products in South Africa
Four years ago, according to the statistics of the South African National Industrial Development Corporation (IDC), South Africa’s steel production at that time could meet domestic consumption, but by 2020, even the most conservative forecast, consumption will reach 10 million tons, exceeding the crude steel output at that time. Glory Steel could offer A36 hot rolled steel plate. Four years later, the predictions of the South African National Industrial Development Corporation (IDC) have become a reality ahead of schedule, with South Africa’s annual steel demand reaching 10 million tons. The African and Chinese people need a community of destiny. This community of destiny is based on solid cooperative measures and deserves the common struggle of both sides. China-Africa relations have entered a golden age. This is an era of extraordinary significance and deep cooperation. The two sides are a mutually beneficial and win-win partnership. China’s relations with African countries are based on equality and mutual respect.
At present, China’s steel industry is still in the period of supply-side structural reform. In 2017, China’s steel industry completed 50 million tons of de-capacity tasks. Green development is the steel production tendency for China in the future. South Africa is the first major force in Africa’s economic development. The economy and industrial base are good, and the steel demand is strong. It is understood that South Africa has experienced strong economic growth in recent years, especially in the mining, construction and communications industries. According to relevant statistics, as of 2016, South Africa’s per capita steel consumption was only 97.1 kg, far below the world average. According to data from the World Iron and Steel Association, South Africa’s steel demand is affected by the economy in 2017, but South Africa’s total steel consumption is still low, which means a broad development space. Among the downstream steel demand industries in South Africa, the demand for A36 hot rolled steel plate is larger in the manufacturing industries of automobiles, home appliances and electric wires, accounting for 54.8%. The automobile industry accounts for 6.4% of South Africa’s total GDP and 11.8% of total exports. The overall capacity of local steel companies in South Africa is low. It is understood that after years of development, South Africa has formed a relatively complete steel industry system, but the local steel enterprises’ overall production capacity is low. Among them, the largest production capacity is ArcelorMittal South Africa. The current crude steel production capacity is only 7.1 million tons. Other steel companies such as CISCO and Davsteel have a capacity of less than 1 million tons. The South African Employers’ Federation has more than 10,000 corporate members, more than 2,000 of which are in the steel industry. South Africa’s current steel demand is about 10 million tons. Besides the annual supply of 5 million tons of Mittal South Africa, there is still a demand gap of 5 million tons that needs to be filled by imports. South Africa has a demand for some steel products and steel sheets for construction. South Africa hope to seek cooperation opportunities with Chinese steel companies.
South Africa has a huge steel market demand, and China steel market is overcapacity. It should be a win-win opportunity. But due to the vigilance of China’s steel exports, trade barriers between South Africa and China’s steel products have occurred frequently in the past few years. Although China-Africa cooperation is further deepening, trade frictions still exist. In order to curb the massive export of Chinese steel to South Africa, a 22% tariff is imposed on Chinese steel products. This is just the behavior of the state, as consumers do not want it. Despite the addition of tariffs, steel market demand still exists and cannot be blocked by human factors. This kind of government’s practice will not only affect the steel industry, but it will also affect South Africa’s steel downstream, such as automobiles and other manufacturing industries, which is extremely unwise. As long as the quality of our products is good enough and the price is favorable, trade protection can’t stop the market demand. Only by abandoning the idea of unilateral trade and strengthening cooperation can we achieve win-win cooperation.