Metal/steel sector shows promise as output hits N63.14bn

The basic metal, iron and steel sector has demonstrated that it is a key driver of the country’s industrial development target as the production output by the second half of 2013 (H2 2013) reached N63.14 billion, from N48.57 billion recorded in the first quarter of the same year (H1 2013) and N21.26 billion posted in the corresponding period of 2012 (H2 2012), according to data from the Manufacturers Association of Nigeria (MAN).

“There was a considerable expansion in the basic metal sector, food, plastics and rubber, which indicates that the potentials are huge and are yet to be fully tapped,’ says MAN.

Key players in this sector include manufacturers in the business of steel pipe, metal packaging, foundry, metal and fabricators. Others are players in the primary aluminium, enamel wares, welding electrode, galvanised iron sheets as well as nail and wire.

Firms in this industry include First Aluminium, Priority Aluminium, Best Aluminium, Aarti Steels Limited, Industrial and Farms Equipment Company Limited, Manaksia Industries, Phoenix Steel Mills Limited, among many others.

Real Sector Watch’s checks showed a significant progress in this sector within the period under review as capacity utilisation rose to 52.3 percent in H2 2013, from 45.5 percent reported in H1 2013 and 40.2 percent in H2 2012.

Similarly, there was a significant increase in local raw materials sourcing as it reached 64.33 percent in H2 2013 as against 55.94 percent in H1 2013 and 50.23 in H2 2012.

Inventory, which means manufactured products that are ready for sale, however, rose to N8.15 billion in H2 2013, from N3.50 billion reported in H1 2013 and N5.29 billion posted in H2 2012. This, of course, shows that the industry accumulated more of inventory of finished goods by the last half of 2013.

Furthermore, the industry attracted N922.12 billion worth of investments in H2 2013. This represents a significant leap from N143.9 billion investments made in H1 2013, demonstrating that further support and better environment can bring about more investments in the sector.

But operators say one big challenge in this sector is the constant export of scrap metals, which serve as inputs at factories. They add that the situation often forces players into importation of billets (semi-finished solid metal form, generally having a cross-section of 105 to 230 square centimetres and rolled into finished ‘long products’ such as bars, channels and rods, according to the Business Dictionary), that are often expensive in the internationals market.

The sector is also capital-intensive and consequently requires regular power supply for efficiency. Players complain that irregular power supply that has characterised many industrial zones is biting hard on them.

“Power is hardly available for six hours in my area,’’ said an operator, who prefers anonymity.

But power sector managers say change is in the offing, assuring that it will positively affect this industry as well as other sectors within the economy.

“The new power sector we are engineering, through the deployment of a predictable and conducive regulatory landscape, is principally aimed at supporting the manufacturing sector, because, sustained national economic growth is principally dependent on adequate, reliable and affordable electricity,’’ according to Sam Amadi, chairman/CEO, Nigerian Electricity Regulatory Commission (NERC) last Thursday, during a business luncheon organised by MAN Apapa branch in Lagos.

ODINAKA ANUDU