1. Metals & Engineering Outlook
PRESENTED BY:
Henk Langenhoven & Taffie Chibanguza
EC Department
Metals & Engineering Outlook
March 2016

2. DISCLAIMER
The views expressed in this presentation do not necessarily represent those of SEIFSA Associations and/or their member-companies

3. CONTENT Where are we; Metals & Engineering 2016?
Profitability, higher production, capacity utilization & investment = growth
INTERNATIONAL ECONOMIC ENVIRONMENT (50%)
World Economic growth
Commodities, instability and poor outlook (5 to 10 years)
WILL THE ECONOMY BE STRONGER OR WEAKER?
Estimates of potential and actual growth
Outlook by National Treasury, SARB, Reuters
DOMESTIC ECONOMIC SITUATION (50%)
Dependence on Mining, Construction, Auto’s
Costs, electricity
Outlook 5 years
SHORT-TERM OUTLOOK: 3 Years
Production, Investment, Employment

4. DEMAND GROWTH OR DECLINE – THE DYNAMICS PROFITABILITY PRODUCTION
UNDER- CAPACITY UTILISATION
PROFITABILITY
DEMAND
PRODUCTION
INVESTMENT
GROWTH
EMPLOYMENT
+/- 50%
+/- 50%
MINING
AUTO SECTOR
CONSTRUCTION
EXPORTS

5. Metals & Engineering Production

6. Below optimum CAPACITY Utilisation

7. Metals & Engineering Net Surplus Trends

8. Net Surpluses & Fixed Investment within the Sector

9. Production & Employment: Summary

10. Structural Adjustments taking place

11. DEMAND GROWTH OR DECLINE – THE DYNAMICS PROFITABILITY PRODUCTION
UNDER- CAPACITY UTILISATION
PROFITABILITY
DEMAND
PRODUCTION
INVESTMENT
GROWTH
EMPLOYMENT
+/- 50%
+/- 50%
MINING
AUTO SECTOR
CONSTRUCTION
EXPORTS

12. Metals & Engineering Sector: Economy Dynamics

14. World Economic Growth: IMF

15. Commodity Prices: Economist Indices

16. Oversupply in International Steel Market

17. Commodity Prices: World Bank Forecast

18. HOW LONG ERE RECOVERY: COMMODITY CYCLES

19. Weaker Rand & Export Response

21. Growth Forecasts: Economy & Investment

22. Potential & Actual Economic Growth

23. Confidence & Political Constraints

24. The Fiscal Dilemma

25. GOVERNMENT BUDGET 2016/17
There is a need for a fundamental shift in the economy and economic policy. It is important therefore, to assess whether this budget supports (or gives enough support to) such a shift in direction. It is argued that the criteria for such an evaluation are threefold;
did it go far enough to re-establish general confidence in government and the country again,
are the fiscal measures credible in terms of domestic economic players AND, crucially international credit rating agencies, and
are there indications of policy shifts in progress or to be expected that clarifies the way out of the malaise described above?

26. Metals & Engineering Sector: Economy Dynamics

27. Domestic Economic Sector Interdependence
R620 bill VA = 17% of GDP
Total Impact X 1,5 to 4 times to GDP
80% of Foreign Exchange
Employ 1,7 million

28. Mining Production since 2000
(2010 = 100)

29. Auto Sector Performance

31. GFCF & Metals & Engineering Outlook

32. Metals & Engineering Future Growth Estimates

33. Confidence and Metals & Engineering Production

34. DEMAND FIVE YEAR OUTLOOK:THE MOST LIKELY OUTCOME PROFITABILITY
PRODUCTION
EXPORTS 50%
MINING
AUTO SECTOR
CONSTRUCTION

39. Factory Gate Prices vs Basket of Input Costs

40. Electricity Costs Scenario: SARB

41. Remuneration/Value Add Ratio

42. Labour Costs & Strikes

43. Production Trends & Strikes

44. THANK YOU Henk Langenhoven PRESENTED BY:
Henk Langenhoven & Taffie Chibanguza
EC Department
Web:
Tel: 0861 SEIFSA
THANK YOU
Henk Langenhoven