"South Africa Metals Report Q2 2014" now available at Fast Market Research
New Materials market report from Business Monitor International: "South Africa Metals Report Q2 2014"
[USPRwire, Tue Feb 18 2014] The outlook for South Africa's metals industry is increasingly troubled as persistently low output prices, rising energy costs and further intense wage negotiations with unions are set to plague the sector. Metals consumption growth will perform better than production growth, due to solid demand growth from the autos sector. We expect this demand growth to be met in large part by increased imports, as investment in South African production facilities will be held back by the glut of metals, particularly steel, on the world market.
In terms of the domestic market, metals consumption will track broader economic growth in South Africa, which we anticipate to be slow but steady with a modest recovery expected over coming years. We see autos production growth as a key driver of metals consumption. We forecast autos production to grow by an annual average of 2.9% over 2014-2018, while construction industry value will grow by 3.9% y-o-y over the same period.
The key immediate threat to the South African metals industry is the disruption of raw material supplies from strikes in the mining sector, but long-term structural problems such as high electricity prices will also be detrimental to investment. Moreover, a national carbon tax is scheduled to be implemented in 2015. Although concessions will potentially be implemented for energy-intensive industries such as steel production, the tax will further weigh on a deteriorating environment for metals production in South Africa.
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