South Africa is on its way to shedding 23% of production in the metals and engineering sector should the nation’s electricity woes not be resolved.

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) this week reiterated its warning on the impact of load shedding and electricity disruptions on the sector after Statistics South Africa released the lower-than-expected manufacturing production and sales findings for November.

“The warnings from [State-owned power utility] Eskom regarding the possibility of such occurrences during the year are of huge concern,” Seifsa chief economist Henk Langenhoven said.

Eskom this week warned that the national grid would remain “extremely constrained” as “even more” businesses reopen, workers return to work and scholars head back to school after the December holidays.

“The system remains vulnerable, meaning that any extra load or faults in the system may necessitate the need to implement load shedding,” the parastatal said in a weekly update.

“The impact of electricity supply disruptions to the metals and engineering sector was clearly visible in the 1% seasonally adjusted decline in manufacturing production numbers when November 2014 is compared with October 2014,” Langenhoven commented.

The potential impact of electricity disruptions on the sector had kept other industry commentators cautious on the outlook for manufacturing for 2015.

BNP Paribas Cadiz economist Jeffrey Schultz noted the Purchasing Managers’ Index manufacturing statistics, due to be released later this week, would likely reflect the concerns over electricity supply problems.

The Nedbank Economic Unit commented in a flash comment to clients that the outlook for 2015 remained subdued, given the ongoing power outages. This was in addition to the threat of renewed labour disruptions, expectations of slower growth in key export markets and sharply lower international commodity prices.

Langenhoven said that, while actual November production numbers were “better than expected”, should the outages continue into the rest of 2015, the predicted double-digit loss of production may prove “ominously close to reality”.

While production growth of more than 2% was “hoped for” during 2014, he said the cumulative effect of the production disruptions during 2014 had the opposite result, leading to a 2.5% contraction.

Langenhoven said that only three out of the 10 sub-industries, namely other fabricated metals, special purpose machinery and household appliances, expanded over the eleven months to November 2014.

The more electricity-intensive sub-industries had been hit by contractions over a 12-month period from November 2013 to November 2014.

He cited the 5.9% and 2% contractions in the rubber products and plastics sectors respectively, as well as the declines of -0.9%, -3.6%, -6.3% and -1.9% reported for basic iron and steel, nonferrous, structural steel and electrical machinery and equipment respectively. General-purpose machinery recorded a 13% contraction.