Large projects boost demand for steel from China

Over the past five years, steel imports from China have doubled due to large infrastructure projects in East Africa and will continue to grow.

Due to projects such as the Lamu Port-South Sudan-Ethiopia-Transport Project, the Lake Turkana Wind Power Project and the extension of the Nairobi Outer Rim Road, and the SGR Standard Railroad.

At the same time, the import of steel for construction required adaptability, in a situation of volatility in the volumes supplied to Russia.

Since then, however, other construction projects have led to renewed demand for rolled steel. These projects include the construction of a second phase of the UGR from Nairobi to Naivasha, South Sudan to Kenya, as well as the construction of the Upper Hill-Mbagati approach line.

There are also major construction projects due to start this year and span the next five years. Major projects include supporting the expansion of steel imports experienced by freight companies such as Multiple Solutions Limited.

“We have been experiencing an influx of steel imports from China since 2013, the beginning of the construction of the SGR. But despite completing the first phase last year, we are still importing 20,000 tonnes of steel, double what we previously imported, ”said John Orva, Service Manager at Multiple Solutions Limited.

To accommodate the increase, Multiple Solutions Limited was forced to hire larger vessels. For 20,000 tonnes of steel, the company uses a 180-meter ship that costs $ 80,000 to hire, 33 percent more than the original 120-meter ship, which costs $ 60,000.

His agents from China send out a manifesto on how much tonnage they expect, which is then sent by a freight company to the Kenya Ports Authority (KPA) and the Kenya Revenue Authority. The increase in steel imports meant that the Kenya Ports Authority (KPA) had to provide sufficient manpower to facilitate timely unloading of cargo to prevent overloading of the port.

An analysis of China's strategy for overproduction of steel predicted that African demand will reach three million tons per year by 2050, and cheap steel prices from Beijing will attract countries that are involved in large infrastructure projects.