Banele Ginindza
ARCELORMITTAL SA has applied to the International Trade Administration Commission (Itac) for anti-dumping duties as they claim Chinese steel is coming into South Africa and being sold at a price below the cost of production.
In an interview, ArcelorMittal chief executive Paul O’Flaherty said this week that this came as over 600 000 tons of steel was imported into South Africa from China last year, which was sold at least R500 per ton cheaper than local prices.
“We believe they are offering their products at prices lower than their costs,” he said.
O’Flaherty said ArcelorMittal had asked for tariff protection on four steel products. “We have put our application through and it is going through the process.”
He said the company had undertaken all the cost cutting it could and that the tariff intervention was more of a last resort for the industry, particularly as the price of steel was on a downward spiral.
“To counter this we are producing at full capacity so we can benefit from economies of scale,” he said.
An official of the Steel and Engineering Federation of South Africa (Seifsa) confirmed that China had a surplus of steel that had resulted in depressed world prices.
ArcelorMittal employs 13 500 people at its South African operations.
In another development, the wire and mesh industry has successfully applied to Itac for the introduction of tariffs on some of their products as a result of imports from China.
The wire industry was granted an ad valorem tariff that was increased from 5 percent to 15 percent on barbed wire, wire mesh and hexagonal wire netting. An ad valorem tariff is a duty or other charges levied on an item on the basis of its value and not on the basis of its quantity, size, weight or any other factor.
The wire and mesh industry was also granted an increase to 10 percent ad valorem tariff from tariff free for wire of iron or non-alloy steel.
The latest increase was granted in early February, while the first was granted in December.
An application for the introduction of tariffs on galvanised wire was turned down by Itac, but a source at the South African Wire Association (Sawa) said they would be appealing the decision in a year’s time.
The reason was that galvanised wire was an input product and its cost in South Africa was very competitive.
Sawa’s membership includes Scaw Minerals Group, Hendok, ArcelorMittal SA, Ram Trading, Consolidated Wire Industries, Fournel, Galvco Engineering and Cape Gate among others and collectively employ about 3 000 people.
The association said the intervention by Itac came as a number of their members were on the verge of bankruptcy, having lost market share in large parts of Africa, North America, Europe, as well as the Far East.
“There have always been some wire products coming in, but they have been increasing to a greater extent in recent years. The Chinese have become very aggressive of late,” the source said.
The Sawa members will now focus on exporting to the rest of Africa, where they hope to have a competitive advantage over Chinese producers.
He
said Sawa was pleased that Itac had intervened favourably, and said the benefits of the new tariffs would perhaps be seen from the next quarter.
Itac spokesman Foster Mohale confirmed that “most of the imports originate in East Asian countries”.
“The commission did not support the application for an increase in customs duty on galvanised wire. However, the application for an increase in customs duty on the other three wire products was supported,” he added.
He said the commission had found that import volumes for galvanised wire declined from about 21 200 tons in 2011 to about 15 700 tons in 2013.
Mohale said with regards to the other three wire products, the commission had found that import volumes grew significantly during the three years.
In volume terms, imports of barbed wire increased from about 3 000 tons in 2011 to almost 4 400 tons in 2013; wire mesh imports rose from about 800 tons in 2011 to almost 1 400 tons in 2013; and imports of hexagonal wire netting climbed from about 1 300 tons in 2011 to roughly 4 300 tons in 2013.
“As a result of increased imports, the domestic industry is unable to utilise its existing production capacity to achieve economies of scale,” he said.