Resumo

VAN DER MERWE, W R  e  KLEYNHANS, Ewert P J. Chinese Competitiveness and the crisis in the South African steel industry. Tydskr. geesteswet. [online]. 2017, vol.57, n.2-2, pp.521-541. ISSN 2224-7912.  http://dx.doi.org/10.17159/2224-7912/2017/v57n2-2a3.

This article examines the impact of increased steel imports on the South African steel manufacturing industry and possible measures to counteract the negative effects thereof. In the years following the international economic crisis of 2008, China was able to increase steel production levels to high rates causing an increase in product surplus in their steel industry. This placed them in the position to export steel products at a discount rate to South Africa and other countries. Econometric regression analyses showed that Chinese competition has a significant impact on the South African steel manufacturing industry and that steel production is significantly compromised. Data used includes exchange rates and currency values, prices of products, input costs and import versus export data. South Africa has always been successful in the production and export of steel because the country is in the possession of large iron ore deposits and there was a high demand for South African steel on international markets. Following the 2008 global financial crisis, China has become a threat to the South African steel industry. China has been a nett exporter of steel products since 2005 and provides approximately a third of the world's steel. It invested much in its steel production industry and secondary steel production capacity during the boom period in the world steel industry running up to 2008. When the economies of the United States of America and most Western countries experienced a decline at the end of 2008, leading into 2009, the Chinese economy still had an economic growth rate of approximately ten per cent, acting as a buffer to their booming steel market, and wider economy, against other failing economies. Domestic steel demand in South Africa, on the other hand, could not absorb the large capacity availability. China is in a position to sell steel at much lower prices than other steel mills in the world due to their government subsidies, export rebates, a philosophy that emphasises social factors and employment rather than a return on capital investment, and other contributing factors. After the peak GDP growth rate of just under twelve per cent at the beginning of 2010, the Chinese economic growth rate fluctuated into a decade low of seven per cent during 2015. The sharp decline in the Chinese economic growth rate forced China to expand their export efforts to keep their large steelmaking capacity running. Since 2008, China was able to infiltrate and expand into international markets that South African steel manufacturers traditionally relied on to absorb excess steel capacity that cannot be sold locally. Not only were South Africa's traditional export markets negatively influenced by the Chinese export expansion programme, imports of Chinese steel and steel products escalated. In the period 2010 to 2015, Chinese imports of steel for manufacturing purposes to South Africa have increased substantially. Competition from Chinese steel producers forced South African steel manufacturers to cut down on production, and many steel plants have been forced either to close down or downsize on their production capacity. Furthermore, it has become cheaper for many users of steel products and steel merchants to import steel from China, than sourcing locally or from other international mills. The same applies to many other steel-consuming industries, such as the trailer building and the nail industry. The current study focuses on the increased steel production from China and the effect on global markets, as well as on South Africa's economy. Empirical econometric regression analysis estimated the specific effect on South African steel imports. This article investigated the measures already undertaken to rescue the South African steel manufacturing industry and market conditions and concludes with suggestions and recommendations to contain the Chinese competitive threat, which may support the South African economy and the steel industry in particular. The main findings are that increased import volumes of Chinese steel have a negative impact on the South African steel industry.

Palavras-chave : Manufacturing; production; steel industry; economic growth; competitiveness; China; South Africa.

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