Does ZA Need a New Steel Mill?

The steel industry has been a troubled one in South Africa, and government seems worried that despite many attempts to secure a supply of cut-price steel for SA manufacturing, our steel customers are still paying too much. One solution to this, which has been mulled over for more than a decade, is to bring a new steel mill to SA.

ZA Confidential looks at the issue today with IDC Divisional Executive responsible for Mining and Manufacturing, Abel Malinga, and with Duane Newman from Cova Advisory.

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Die Vine Intervention 16Aug. Cederberg 2010 Cabernet Sauvignon.

John Fraser and Michael Olivier are joined for this week’s podcast tasting by economist and analyst Ian Cruickshanks and by Malcolm MacDonald of Tersos. They discuss the 2010 Cederberg 2010 Cabernet Sauvignon.

These podcasts do not just focus on the week’s tasting but also provide a discussion of wine-related topics, concerns and issues.

Top Economist Warns of Jobs Crisis in Manufacturing

SPECIAL REPORT.

The Manufacturing Circle has produced its review of the second quarter of 2013, with a warning that although there is growth in output, jobs are being lost. Dr Iraj Abedian of Pan African Investment and Research Services presented the findings in Sandton today, and highlighted a major issue facing manufacturing – the lack of job creation.

More details in today’s ZA Confidential newsletter.

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Mixed Signals from Retail Numbers

Retail sales growth moderated sharply in June after the strong jump in May. Annual growth in retail sales fell to 1.9% from 6% in May. On the face of this, we should be worried, but what is the underlying picture? We asked our experts……

There was expert comment from Nedbank’ Economic Unit, from Shireen Darmalingam of Standard Bank and from Mike Schussler of economists.co.za

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Will a Wage Bargaining Stalemate Threaten Growth

The Deputy Governor of the Reserve Bank Daniel Mminele has warned that the country’s GDP growth rate might fall below 2% if there is a deadlock in wage negotiations. It is already hard to see how there can be any job creation at a 2% level, and yesterday’s numbers from Adcorp suggest that we are continuing to shed labour. How seriously should we take this warning? We asked our experts……

Today’s newsletter contains comment from Russell Lamberti of ETM, Luke Doig from Credit Guarantee and Adcorp’s Loane Sharp.

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G5 Recovery Overshadowed by Competition Concerns

Positive results for the year to June came out today from Group 5, but the shadow of the Competition Commission continues to darken the prospects for, and reputation of, the company. CEO Mike Upton announced a 27 percent rise in revenue. There has also been a turnaround in fully diluted headline earnings. Provision (of an undisclosed amount) has been made for Competition Commission administrative penalties in four cases which recently came to light, and which were not part of the initial G5 dialogue with the Competition authorities.

The full newsletter has been sent to subscribers, with comment from Gavin Maile, Lavan Gopaul and Ron Klipin.

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Sluggish Manufacturing and Mining Data

Nedbank tells us that annual growth in manufacturing production slowed to 0,4 % in June, from a downwardly revised 2,1 % in May, and compared with market expectations of 3,8 %. Total mining output shrunk 6.2 % y-o-y in June after a 1.1 % decline in May. On a seasonally adjusted basis, mining production was down by 3.0 % m-o-m and was up by 0.1 % q-o-q for the second quarter. What do our experts think?

Nedbank Economic Unit:
These manufacturing production figures, together with the weak mining production data released earlier today, highlight that production and exports remain under pressure, which will impact on growth negatively. The latest mining numbers continue to reflect the tough business conditions in a sector beset by labour instability, falling commodity prices and rising production costs. Prospects for the mining sector remain poor as global demand conditions will remain unfavourable for the foreseeable future.

Coenraad Bezuidenhout of the Manufacturing Circle:
While the StatsSA figures released today show South African manufacturing capacity is principally under-utilised because of a lack of demand, general indications are that this would be mostly on the back of teetering domestic demand, as exports have enjoyed support from the weaker rand. Indicators in respect of current research being undertaken by the Manufacturing Circle would seem to indicate that demand from African export markets are currently enjoying a surge.This would suggest that international players wishing to use South Africa as a manufacturing base from which to export to African markets would serve their interests best partnering with established South African manufacturers, where their product lines and distribution networks may be complimentary.

Conclusion:
Both manufacturing and mining numbers show an economy under strain.

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Should Business Back the NDP?

There seems to have been a cheery chat between business and government this week, resulting in today’s headlines that business is backing the National Development Plan (NDP). Yet some critics of the NDP are worried that it is deeply flawed and will not achieve the desired goals of substantially boosting growth and job creation.

Expert comment on today’s ZA Confidential from Peter Attard Montalto, Dawie Roodt and Frans Cronje.

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BMW Moving Exports Through Maputo – A Sign of Frustration with Durban and Transnet?

BMW says it is to ship vehicles from its Rosslyn, Pretoria assembly plant through Maputo in Mozambique for the first time. Grindrod is a catalyst for this, due to its investment in Maputo. BMW will also expand shipments through Durban. Is the decision to start using Maputo something we should welcome? Or are we seeing signs that the inefficiencies and delays at Durban, and the hazards of moving vehicles by rail to Durban, or more expensively by road, are beginning to trigger a change in strategy?

Today’s ZA Confidential features expert comment from Mike Schussler, Francois Dubbelman and Neren Rau.

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