Flat stainless steel products producer Columbus Stainless Steel expects its 2015 production – at 500 000 t – to remain similar to that of the past two years, says Columbus CEO Lucien Matthews, noting that, given the challenging commodity prices, the company is satisfied with its performance.
Columbus reached record production of over 700 000 t in 2006; however, issues such as overcapacity and power restrictions have resulted in Columbus currently averaging 500 000 t/y in production.
“As a competitive international producer of stainless steel, we supply directly, through distributors in South Africa, or through the Acerinox SA group sales network to many end-users. These are usually through contracts negotiated on a quarterly, annual or biannual basis,” says Matthews.
Columbus notes that local sales make up between 25% to 30% of the company’s business, while export has remained at between 75% to 70% for several years.
Columbus also notes the South African stainless steel market shrunk by 4% to 5% in 2014, noting that the same is expected for this year.
Despite the drop in South African stainless steel consumption in 2014 Columbus’s deliveries remained level in the local market during 2014; however, the company expects its local sales to drop by 4% to 5% in 2015, as China grows its exports.
Matthews notes that the local market is under pressure for two reasons. The first reason is the general drop in manufacturing levels in South Africa over the past two years. This is mainly driven by the drop in activity of mines, petrochemicals producers and automotive components manufacturers, with commodity businesses having stopped or cut back on projects.
However, some sectors, such as storage vessels for the food and beverage industry, remain healthy. “Also, we are seeing more South African fabricators doing work in Africa, which is a very positive and encouraging trend,” he adds.
The second reason is that there is a rise in imports of stainless steel goods manufactured outside of South Africa. He says that this is a worrying trend as there is clear evidence of cheap articles being brought in and effectively dumped in South Africa. Not all of these fit into neat categories that can be defended by trade actions – for example, tube and pipe or kitchen sinks.
Columbus works closely with the Southern Africa Stainless Steel Development Association (Sassda) and the industry to address the challenges relating to the quality of products being imported.
However, Matthews says the greatest challenge to the stainless steel industry is volatile raw material prices.
This applies particularly to the cost of nickel, which is typically more than 50% of the input cost of austenitic (304, 310) stainless steel. The volatility in the nickel price is evident to all as it is traded on the London Metal Exchange (LME). Thus, prices of stainless steel are continuously going up or down to match the LME nickel traded price.
Customers are advised to reduce excess stock levels and are encouraged to work with suppliers who have a short lead time to protect them from this volatility.
Another option is to request technical assistance in the substitution of austenitic stainless steel with ferritic alternatives. “The ferritic grades do not contain nickel and are thus less exposed to price volatility. In this sense, a grade like 441 has adequately been used as an alternative to 304 in industrial kitchen equipment, lifts and escalators. Customers must please seek advice on such changes from Sassda technical staff or the supplying mill technical staff,” explains Matthews.
Columbus has been on a turnaround plan since 2013. It is built on the Acerinox group excellence plan, which drives a holistic approach to efficiency and cost improvements, as well as many cost-saving projects developed by its staff.
“This turnaround plan has been successful, as Columbus returned to profitability in 2014 and is continuing on this path in 2015. Columbus expects to more than double the profit it made in 2014 during 2015. With the current operating model, Columbus is confident it can remain competitive. The focus will now return to grow participation in all markets and grow the South African market for stainless steel,” says Matthews.
Stainless Steel Products
The 301 austenitic stainless steel for train body panels is the latest Columbus stainless steel product and was released during 2014 for use in body panels of passenger rail cars, such as Gautrain and now the Passenger Rail Agency of South Africa rail cars.
Most popular are the common grades of stainless steel: 304, 316, 430, 409, 441 and the company’s own invention, 3CR12.
Columbus supplies 3CR12 worldwide for construction of coal wagons, buses and fire engine construction. The company further supplies automotive-grade stainless steel, such as 409, 441, 439, 309, 316Ti, to the automotive industry in various parts of the world. Columbus 430 Bright Anneal is also popular in the export market.