Home » SAISC calls for quality, innovation and closer collaboration to secure the future of the steel industry

SAISC calls for quality, innovation and closer collaboration to secure the future of the steel industry

by Tia

Despite last year’s announcement that AccelorMittal South Africa (AMSA) would close its long products facilities – and amidst warnings of projected product shortages, quality issues and supply chain disruptions – it is ‘business as usual’. This is according to steel value chain attendees and SA Institute of Steel Construction (SAISC) members at a recent industry breakfast and steel supply panel discussion hosted by the SAISC.

Nonetheless, during a robust debate attended by over 90 steel supply chain role players – including industry heavyweights – and chaired by SAISC Chief Executive Officer (CEO) Amanuel Gebremeskel, it emerged that while there are no shortages at present, the sector remains on the brink of seismic change.

AMSA representatives present reassured the audience that their Newcastle long products facility would remain operational until June – and that the company was still accepting orders until year-end. It was also stated that negotiations around potentially keeping the long products facilities in production were progressing well.   

Seismic changes

However, Gebremeskel and Adam Oldfield, Director at leading structural steel company Cousins Steel International (CSI), SAISC Board member and leader of its technical committee, are both concerned about the future of the entire steel value chain – of which the SAISC is a longstanding champion and custodian.  

Gebremeskel and Oldfield agree that the potential long product facilities closure has unearthed deeper steel sector concerns, including disconnects across the entire supply chain: “With these in mind, the SAISC seeks to play a proactive role in encouraging strong linkages and relationships between engineers, merchants and fabricators – and by addressing the twin issues of steel quality and availability through the creation of an overarching quality programme, which will include – amongst other initiatives – a new SAISC Red Book,” says Gebremeskel.

“Having said this, one of our greatest challenges in the steel sector is that there are so many conflicting interests and agendas throughout the industry. Therefore, there needs to be greater trust across the entire steel value chain, with role players collaborating more closely to innovate and adapt in order to accommodate and drive change,” Gebremeskel notes.

Quality the ‘golden thread’ of industry unity

“Irrespective of the time frame, the closure of AMSA’s long products division would have a strong ripple effect across the sector – with the largest impacts being cost escalations and the potential loss of long-term pricing – not to mention project delays resulting from logistics challenges, such as the port delays which are already negatively impacting steel imports,” Oldfield points out.

“Other pertinent issues that emerged from the panel discussion included the potential loss of steel product profiles unique to South Africa, the impact which a lack of local content could have on downstream customers (such as the automotive sector) and the possibility of finished products being imported – all of which are indications that the local steel sector is confronting many sobering issues, which could result in massive income losses for local fabricators and galvanizers,” Oldfield adds.

One of the greatest concerns voiced during the panel discussion centre on the critical – and at times thorny – issue of quality, with many SAISC members and industry heavyweights questioning the uniformity of quality standards and the traceability of product in the event of failures.

The panel discussion revealed that many are very disgruntled about low quality steel and deeply concerned about related quality issues, should local production scale down. However, all agreed that independent testing of imported product would also add unnecessary costs.

Gebremeskel believes that quality concerns will be the one area where consensus can be reached – and that this will be the common ‘golden thread’ which unites a divided industry.

Engineers as a link

Oldfield concurs, emphasising however that this starts with the engineering sector working closely with the SAISC and its well-known technical ‘bible’, the Red Book:

“This is a longstanding, trusted technical resource and an invaluable guide for engineers – but compiling the next edition thereof will not be easy. This is because the greatest challenge will be figuring out what the imminent steel sector disruption will do – for example, what will happen when steel merchants stop stocking certain products, narrowing and limiting available profile ranges.” 

 “We are facing a tough transition in the steel sector, driven by all the factors raised. Typically, at the SAISC, we focus on merchants and fabricators – the downstream sector. I think engineers need to be more involved, forming a link between the upstream and downstream sectors so that collectively, we can adapt to the new demands and realities of the industry,” Oldfield adds.

Innovative industry adaption

This could entail engineers designing steel structures differently – or closing the gap created by unavailable products by using those which are available.  

Oldfield uses the example of how a potentially long delay in ordering columns saw his company, Cousins Steel International, manufacture these from steel plate. Although more costly, this kept the project on track. 

To enable others to follow suit, or to avoid another problem – designers specifying product in accordance with software design packages rather than availability – Oldfield suggests that industry professionals require an extra layer of steel supply market intelligence:

“A key aim of the SAISC technical committee is to create a database which allows them to understand – and design around – the particular products which fabricators can access. At the moment, no-one is working like that,’ he explains, adding that the extensive technical training which the SAISC conducts annually will also be crucial going forward to assist the sector in agile adaption to market changes.

A call to action

Gebremeskel and Oldfield are therefore calling on all echelons of the steel industry to proactively engage with the SAISC, and are also voicing their appreciation for industry leaders who are already bridging the gap between the downstream sector and the primary steel producer (AMSA):

“This approach will ultimately force a more united industry approach with which to negotiate with government,” Gebremeskel advises.

“Meanwhile, the SAISC is committed to doing our part to ensure that the closure of AMSA’s long products facilities will not have the same negative impact on the downstream steel sector as similar upstream closures had in Australia.

Instead, our local steel industry needs to emulate Canada where – despite a lack of upstream primary steel producers or mills – engineers design innovatively in steel, and work closely with fabricators to bring these projects to fruition, contributing positively to the sustainability of the steel sector in that country but also to its greater economy,” he concludes.

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