Month: Mar 2018

The SEIFSA Price and Index Pages (PIPS), a Steel and Engineering Industries Federation of Southern Africa publication, has reached its 60^th successful year of production. Subscriptions to PIPS have more than doubled since 2010 from 800 to more than1200 companies.

An estimated readership of 16 000 comprises mainly of buyers and contract procurement managers of most large companies in the transport, construction and manufacturing industries, as well as government and large parastals such as Eskom, Transnet and the water boards.

PIPS consists of more than 200 independent market- or product-specific indices that SEIFSA reviews and updates on a monthly basis. These indices are widely used to determine and negotiate Contract Price Adjustments to ensure a fair and equitable deal for both client and supplier.

In fact, Eskom insists that all of their suppliers use SEIFSA PIPS in their cost escalation exercises.

THE INDICES: OUR CATEGORIES

1. Labour Indices
2. Consumer Price Index
3. Steel Indices
4. Metal Indices
5. Construction Material Indices
6. Distribution and Power Transformers
7. Road Freight Indices
8. Petroleum Products
9. Production Price Indices
10. Electrical Cable Manufacturing Materials
11. Stainless Steel Indices
12. Aluminium Indices
13. Chemical Indices
14. Commodities
15. Export and Import Price Indices
16. Interest Rates
17. International Production Prices Indices
18. Exchange Rates

THE MISSION OF SEIFSA’S ECONOMICS AND COMMERCIAL DIVISION

It is the mission of SEIFSA’s Economics and Commercial Division to give voice to and raise the profile of the metals and engineering sector in the national discourse on economic, industrial and trade policies. The Economics and Commercial Division also produces its PIPS product and hosts training workshops in which the Division highlights the essence of the indices and the importance of Contract Price Adjustments.

The metals and engineering sector is a strategic industry for South Africa, comprising 45% of manufacturing and contributing 6% to the gross domestic product of the country. Real output in the manufacturing sector accelerated to 4.3% in the third quarter of 2017, following an increase of 1.5% in the second quarter, as activity in manufacturing expanded at a faster pace,  contributing 0.5 percentage points to overall GDP growth. The companies in the sector export 52.1% of their production to the rest of the world, earning valuable foreign currency for South Africa.

The health of the industry is vitally important.

The SEIFSA Economics and Commercial Division accomplishes its mission through:

• Research of economic and cost trends;
• Communicating sector market intelligence to its members, associates and the general public;
• Monitoring the international and domestic economic and policy environment;
• Supporting companies in the sector to make more informed business decisions;
• Having a particular focus on small and medium size businesses; and
• Offering a comprehensive advisory service on black economic empowerment and assisting companies to achieve this business imperative.

SEIFSA INFLUENCE

The Economic and Commercial Division strives to influence the business environment positively by representing the sector in debates and forums about monetary, fiscal, industrial and trade policies.

This is done through:

• Direct interaction with the relevant institutions in the public sector, like the South African Reserve Bank, the National Treasury, the Department of Trade and Industry, Customs, the National Empowerment Fund and many similar organisations or institutions.
• It is also done through participation in multilateral forums through Business Unity South Africa and the National Development and Labour Council.

Particular ad hoc research is done from time to time on subjects like the electricity crisis, or the extent and impact of import penetration into the metals and engineering market. In many instances, the very rich knowledge present amongst individuals, or within associations or sub-industries is harnessed and utilised in compiling position papers on issues of importance to the sector.

An example of our market commentary can be seen in our press releases like the one issued  on 28 February 2018, which highlighted the impact of the Producer Price Index (PPI) data released by  StatsSA.

The Stats SA data showed that the PPI for intermediate manufactured goods decreased to 1.5 percent year on year in January 2018, from the 3.2 percent recorded in December 2017.

“This is a poor performance, especially given the four consecutive months of PPI increases for intermediate manufactured goods prior to December 2017,” SEIFSA Economist Marique Kruger said.

Also, given the volatility of input costs in the sector, the deceleration in the PPI data leaves manufacturers with little leeway to pass cost increases on to the market. Correspondingly, SEIFSA’s composite input cost index, which tracks the average cost structure for the M&E sector, was recorded at 1.4 percent in January 2018, up from 3.4 percent in December 2017.

Ms Kruger said it is important to maintain a positive differential in the selling price inflation and input cost inflation in order for the sector to stay attractive for existing and new investments.

“Hopefully, the PPI for intermediate manufactured goods will rebound against the backdrop of a continued improvement in business confidence, especially in light of recent developments in South Africa’s political landscape,” Ms Kruger said.

This analysis on PPI Provides insights into SEIFSA’s Economic and Commercial Division and demonstrates its capacity and wide-ranging media influence.