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Johannesburg - South African chemicals and explosives group AECI Ltd said on Friday demand for its products from manufacturing customers was fragile as the market suffers under the weight of a stronger rand currency.
The rand, which gained about 30 percent in 2009, has hardly moved in either direction from its elevated level this year, putting pressure on importers such as manufacturers.
"Manufacturing volumes (are) fragile at current R/US$ rates but also appear to have bottomed," AECI said in presentation posted on its website.
Output by South African manufacturers grew more slowly than expected in January as Africa's biggest economy struggles to fully emerge out of a recession.
AECI has been struggling as key customers in the mining industry cut capital expenditure and manufacturing customers rein in on spending due to slower consumer demand and the stronger rand.
But the Johannesburg-based company said demand for its mining products had stabilised thanks to higher commodity prices, adding it had maintained market share and margins since its fiscal year-end.
AECI, which expects a ramp up of new plants to boost revenue and margins, warned last month that while it expects some pick-up in demand this year, there was a danger of markets being hit by the stronger rand.
- Reuters