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Global steel industry set for remake thanks to lower gas prices

21st January 2014

  

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The Global Steel  (0.07 MB)

The global steel industry is set to undergo a radical make over due to the discovery and exploration of shale gas in the United Sates and other parts of the globe.

Gas prices are set to remain at historic low levels for the next three decades and set to reduce the cost of energy.  This will force steel companies worldwide to rethink their business model, seeing that 40% of its costs are energy related. For South Africa to benefit from this and see its steel industry boost manufacturing and create jobs, the country could look to take a number of important steps to reshape its steel industry. “In order for South Africa’s steel industry to benefit as much as it could from the upside of lower gas prices, it should consider beneficiating its steel much further along the value chain.  Protectionism policies also need to be put in place to rebuild the intermediate steel value chain.” says Eugene De Klerk, Consulting Director at Deloitte.

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