Eskom woes hurt metals sector recovery - CNBC Africa

Eskom woes hurt metals sector recovery

Southern Africa

by Trust Matsilele 0

Electrification Online

The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said in a statement that the impact of electricity supply disruptions was clearly visible in the one per cent seasonally-adjusted decline in manufacturing production numbers when November 2014 is compared with October 2014.

(READ MORE: S.Africa’s Eskom implements rolling power outages)

SEIFSA’s Chief Economist Henk Langenhoven said that the cumulative effect of the production disruptions during 2014 now amounts to a 2.5 per cent contraction (eleven months of 2014 compared to the same period in 2013, bringing the 12 month decline to 2.1 per cent of production).

Langenhoven added that only three out of 10 of the sub-industries – other fabricated metals, special purpose machinery and household appliances – re-recorded expansion over the eleven months of 2014.

“The warnings from Eskom regarding the possibility of such occurrences during the year are of huge concern,” he said.

“The actual November production numbers are better than expected, but if the situation repeats itself during 2015, the calculations may prove ominously close to reality,” Langenhoven added.

Langenhoven said while growth of more than two per cent was hoped for during 2014 on 2013, the reality seemed to be a contraction of more than two per cent.

(READ MORE: Is Eskom’s load shedding becoming a crisis?)

“Representing 34 per cent of manufacturing production, these numbers drive home the importance of recovery in the sector for manufacturing to gain momentum,” Mr Langenhoven concluded.

According to the statement, over a 12-month period, the more electricity-intensive sub-industries contracted, rubber products with a -5.9 per cent, plastics –two per cent, basic iron and steel -0.9 per cebt, non-ferrous -3.6 per cent. 

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