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Bringing demand-supply gap in Nigeria steel sector

Steel News - Published on Thu, 24 May 2018

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Business Day Online reported that there is a yawning demand-supply gap in Nigeria’s steel sector. Official data show that the country imports steel valued at USD 3.3 billion every year. An average of steel products such as standard plates, hot-rolled coil, cold-rolled coil and rebar is estimated at USD 464.7 using Chinese prices, which means that Nigeria imports roughly 7.1 million metric tonnes of steel annually.

Eighteen of the 30 functional steel firms in Nigeria produce about 2.2 million tonnes a year with scraps and billets imported mainly from China.

The steel sector is driven by the private sector, which is filling the gap left by Ajaokuta Steel Complex, a behemoth expected to have added at least 1 million tonnes to the national production.

With the demand for infrastructure such as railways, power, bridges and roads rising in Africa’s most populous country, steel firms are expanding capacity and investments to tap growing opportunity.

African Industries Limited has 12 subsidiaries, with six steel plants, which all together produce one million metric tonnes of steel. The group also produces iron rods, angles, channels, pipes, and wire related products.

It likewise produces 50 percent of iron rods consumed in the country, having so far invested USD 1.1 billion in the Nigerian economy already.

Mr Raj Gupta, chairman of African Industries Limited, said that “We believe that steel sector is the backbone of any major economy in the world. Without steel, there cannot be any other industry in the real sector of any economy.”

Its African Foundries is building new furnaces and capacity with a view to capturing the South-West Nigerian market.

The group now exports finished steel products to Morocco, Ghana and other parts of Africa.

Similarly, Aarti Steel Nigeria Limited, an indigenous steel mill, completed a cold-rolled mill in Ota, Ogun State, in 2017. The mill has a capacity to produce 120,000 tonnes of products per annum.

The steel maker spent USD 20 million to USD 30 million on the mill, which is expected to serve the downstream players in Nigeria using cold-rolled steel to produce home appliances, roofing sheets, metal furniture and filling cabinets, tables and chairs, among others.

Mr Aniket Singal, Aarti’s vice chairman, told BusinessDay in Lagos said that “The mill just started in March (2017) and it is now fully stabilized. It is producing already. It is a big investment and it will also be good for the Nigerian economy.”

Mr Singal said Aarti was already exporting steel to West African countries such as Togo and Mali and was expanding to Central Africa, Ivory Coast, Benin and other parts of the continent in order to earn more foreign exchange.

Standard Metallurgical Company Limited (SMC) is set to launch a billet mill to produce standard wire rods in Nigeria. The mill will likely create 1000 jobs in the country.

Mohammed Saade, managing director, SMC, told BusinessDay that “This will be the first factory to produce billet suitable for producing standard wire rods in Nigeria. All wire rods produced today in Nigeria are being made from imported billets, we are starting production of billets in Nigeria.”

Mr Saade said that “Currently we are producing 300,000 tonnes of wire rods per year. With phase two, we would produce 260,000 tons of billets in Nigeria. Nigeria today is a big market and we are committed to meeting local demands and the surplus can go to the ECOWAS market.”

Qualitec Industries Limited is investing up to N100 billion in its steel factory in Ogun State, according to Oluyinka Kufile, CEO of the firm, who is also the chairman, Basic Metal, Iron and Steel Group of MAN.

The strategy of local steel firms is to expand operations to tap into the growing demand. By so doing, they close the yawning demand-supply gap and earn FX through exports.

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Posted By : Nanda Koijam on Thu, 24 May 2018
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