Harare — Zimbabwe's second biggest steel making giant, Steelmakers has increased production capacity from around 15 percent last year to 40 percent despite a sharp fall in the price of steel on the global market.

Group general manager for southern Africa Alexander Johnson told New Ziana on Friday that business was gradually picking up although the global recession remained a major challenge.

The price of steel had plummeted from US$1 000 last year to around US$500 per tonne due to the recession.

"Demand for steel has dropped all over the world," he said. "The prices are crumbling and Zimbabwe has not been spared." As a result of the recession, the company was struggling to meet its operational costs.

Other challenges facing the company included an influx of imports, which were likely to threaten viability of the local industry as well as high labour, utility charges and other fixed costs. He called on the government to protect the local industry from imported cheaper steel products through imposition of duties. Competition on the regional market, Johnson said, was stiff with giant steel makers in South Africa dominating the market.

The Rand also continued to firm against major currencies thereby disadvantaging countries using the United States dollar as a trading currency.

Despite introduction of multiple currencies early this year, Johnson said foreign currency remained in short supply and this had reduced demand for steel on the local market.