Johannesburg — THE local steel manufacturing sector is looking increasingly red-faced after the Competition Commission's announcement yesterday it had discovered evidence of collusion in the mining roof bolts market. This is the third sub- sector of the industry where the commission has discovered anticompetitive behaviour.

Apart from the complaint lodged by Harmony and DRDGold against Arcelor Mittal SA's historical pricing policy -- which it recently dropped -- the commission has launched probes into the pricing of long steel products and into wire and wire products.

Anticompetitive behaviour is not just a principle, it has direct negative consequences. One of the biggest users of steel in SA is the labour-intensive mining industry. As the cost of inputs such as steel have risen in the past five years, mines have had to cut costs in other areas -- like jobs.

On the face of it, it looks as if Iscor's dominance of SA's steel market in the 1980s and 1990s spawned some particularly dubious practices in the industry. But the commission is also looking at other industries, including the food sector, so perhaps the steel industry is not unusual in SA.

The growing number of steel sector investigations could simply reflect the fact that as the commission deepens its probe, participants with a guilty conscience are coming forward to take advantage of the leniency offered to informants.

IT's amazing how quickly things change. A couple of years ago, there was huge angst over the rapid pace of borrowing in the private sector, particularly among households.

Private sector credit extension rose a staggering 27,5% in the year to October 2006, at the height of the boom. In August this year, it grew just 2,3% -- its lowest since October 1966 -- the year in which that particular data series began.

Company borrowing is shrinking while household borrowing is slowing too sharply, say analysts. Yet, the ratio of household debt to disposable income is at 76,3% -- not far off its record of 78,2% reached in the first quarter of last year. SA's savings rate is still too low for comfort at 16,5% of gross domestic product, and households are scrambling to "consolidate" their balance sheets and cut debt. A consumer confidence survey yesterday bemoaned the fact that even if income starts to improve, consumers are likely to favour saving over spending.

These trends would have been widely welcomed by SA's authorities a few years back, when they took banks to task for reckless lending. Now, banks are under pressure to relax stringent lending criteria -- some already have -- so that consumers can borrow freely again, particularly to obtain mortgages.

Surely nobody wants consumer spending -- the main growth engine in SA -- to be driven by borrowing, which may then prove to be unsustainable?

AT THE start of the global recession last year, currency movements took an unexpected turn. Instead of investment flowing out of the US, capital flooded in, something many analysts found difficult to explain. The result was dollar strength.

As oxygen returned to the US and interest rates fell, the more logical trend -- of capital flowing out -- has begun to exert itself.

South Africans might tend to think that the recent rand strength is a local phenomenon. But in fact, what we have seen is the return of the carry trade -- with a vengeance.

While the rand might have strengthened 26% this year -- enough to worry the Reserve Bank and hammer manufacturing -- the Brazilian real has risen even more. Resource-based economies have been the notable gainers.

The question now is whether this tide has turned too, since the interest rate gap is much lower. Rather than turning, it seems the tide is holding at its high point.

From the point of view of a first world investor, even the lower interest rates now on offer in SA are better than the nothing they are getting back home.

The Bottom Line is edited by Colin Anthony