A Serious Reinforcing Steel Shortage Looming

Already feeling the effects of a bitumen shortage, the beleaguered construction sector is now facing a serious reinforcing steel shortage. Currently, the construction sector is operating at 40 percent under its normal operating capacity and the downturn experienced is the severest in decades.

Reinforcing steel is an essential component in most building and civil engineering projects said Rob Mountford, Director of the South African Reinforced Concrete Engineers` Association (SARCEA). The recent closure of the Cisco manufacturing facility of Murray & Roberts in the Western Cape was the main cause of the shortage. This entity was responsible for providing 25% of market requirements. The matter was aggravated by a closure of manufacturing facilities at the beginning of the year, for a few weeks, at the Newcastle Works of Arcellor Mittal for essential maintenance work.

Mountford said that there was currently three main suppliers of reinforcing steel to the South African market namely Arcellor Mittal (Newcastle), Cape Gate`s Dav Steel in the Vaal Triangle and Scaw Metal in Germiston.

These manufacturers provide SARCEA members with rolls of steel rod and they fabricate the reinforcement steel to specification for projects under construction. In terms of supply contracts there is a general inability to meet agreed contractual supply dates. At end of March 2011, the members of SARCEA were responsible for providing 180 000 tons of reinforcement steel which is almost half of the 350 000 tons provided two years ago. According to Mountford, the total market share of the SARCEA members varies between 60 to 70%.To ensure equity and avoid disruption, the three largest suppliers are imposing restrictions and introduced quotas to ensure that none of their customers are without reinforcement steel.

Mounford said the alternative is to import steel which requires a large capital outlay and a two to three months delivery period delay which could cause major problems for medium and smaller contractors.

SARCEA PRESS RELEASe

Pieter Rautenbach