Global economics, politics cause uncertainty in chemicals manufacture

Volatile global political and economic conditions are making it difficult for South African companies to predict what 2017 holds as far as profitability is concerned, says leading admixture supplier Chryso Southern Africa CEO and Chryso Group international VP Norman Seymore.

The Chryso Southern Africa Group includes major and long- established supplier of specialised construction products, a.b.e. Construction Chemicals.

Seymore says although the feedback regarding 2017 from Chryso’s local customer base is generally positive with many companies hoping for improved business conditions, Chryso believes there is still a strong need for caution.

“We are trading in unprecedented volatile and uncertain times where situations can change overnight. Planning ahead is virtually impossible when economic and political forecasts are repeatedly being shown to be totally wrong in all parts of the world – and South Africa’s headlines can affect the strength of our currency and business confidence overnight.”

Such fluctuation in exchange rates particularly dampened progress for both Chryso and a.b.e. in the past year as both companies require a high level of imported raw materials as well as finished products in its manufacturing processes. ‘’It was a major challenge to try and absorb as much of these unexpected increased production costs. A rand devaluation of as much as 16% compared with the euro and US dollar simply could not be passed on to end-users who were also in a precarious position economically,” he says.

Chryso Southern Africa therefore had to offset the poor market conditions in 2016 by expanding its product range as well as investing in manufacturing facilities to reduce reliance on imports – and this trend will continue in 2017. “We do not expect a major upswing in demand from the construction and related industries. I personally believe there will be some growth in sales but not to the levels we require. And, as stated before, the new municipal leaders will have to expedite long-overdue infrastructural projects in the new year if the building industry’s fortunes are not to slump further.”

On a brighter side, Chryso saw some improvement in fortunes in 2016 in the Western Cape and KwaZulu-Natal where demand for products were encouragingly higher than anticipated. “But, in all other areas of Southern Africa, where building activity was relatively dormant, the drops in demand negated the building resurgence in the Cape and KZN.’’