Flood of imports undercut local production cost, threaten industry
CAPE TOWN – The South Africa cement industry is calling for the International Trade Administration Commission (Itac) to probe a flood of imports.
South Africa, with six cement producers and more than 30 percent over-capacity, had become a net importer after imports increased by 139 percent since 2016, The Concrete Institute (TC) managing director Brian Perrie said yesterday.
He said in an interview that TCI, representing AfriSam, Dangote Cement South Africa, Lafarge Industries South Africa, Natal Portland Cement and PPC were approaching Itac to investigate whether the industry required protection from an 18-month surge in imports.
He said imported cement was undercutting South African prices by 45 percent, while local producers also had to meet demand from the Southern African Customs Union, meet black empowerment and other social requirements, and at the same time protect thousands of jobs in the local industry.
Also, the recent carbon tax translated into a 2 percent increase in selling prices, putting the local industry at a further price disadvantage.
Local producers needed to plan capital expenditure to meet emission requirements, but could not do so in an environment where importers were undercutting prices.
This combined with unprecedented low levels of demand due to the dearth of infrastructure development meant the industry was facing a crisis, he said.
“Trade remedy protection is required,” he said. They did not envisage a total ban on imports, just some form of blanket protection “to level the playing field”.
South Africa instituted anti-dumping duties of 17 to 70 percent against importers from Pakistan in 2015, imports fell in 2016, but started increasing again in 2017 and 2018, mainly from Vietnam and China.
South African cement manufacturing processes are regulated, from environmental impact assessments to quality controls, and from labour and employment regulations to sustainability requirements, costs which are typically not borne by cement importers.
He said 350 441 tons of cement arrived in the second quarter, the most since the third quarter of 2015. Most came in through Durban (260 909 tons), an 85 percent increase on the first quarter. Imports from Vietnam amounted to 3011 872 tons.
Imports exceeded exports by more than 50 000 tons year-to-date. The local industry has the capacity to produce about 20 million tons per year, but only produces around 13 million tons due to weak demand.
Perrie said South Africa represented roughly 1 percent of total exports from Vietnam, for example, where exports had increased by 50 percent in the first half of 2018. Growing Vietnam exports had already been attributed to a halt in cement production in a number of cities in China, he said.
Perrie said the economy was positioned at a crossroad, where trade policy determinations would play a critical role in the industrial direction of the country.