New steel products duty has industry players singing different tunes

The 9% provisional safeguard duty on hot-rolled steel products to protect the local industry against a surge of imports has elicited. SUPPLIED.

The 9% provisional safeguard duty on hot-rolled steel products to protect the local industry against a surge of imports has elicited. SUPPLIED.

Published Jul 11, 2024


The South African Iron and Steel Institute (Saisi) yesterday said the 9% provisional safeguard duty on hot-rolled steel products to protect the local industry against a surge of imports is unlikely to build any bridges in the strained sector.

This comes as downstream industry anticipates job losses from higher input costs, while its proponents maintain the measure will help the country keep up with global counterparts already building up even higher barriers.

The provisional measure was gazetted last week following approval by the International Trade Administration Commission (ITAC), which determined that surge in volume of imports is recent enough, sudden enough, sharp enough and significant enough to warrant intervention.

ITAC said the Southern African Customs Union (SACU) industry suffered serious injury.

ITAC found that though there were factors other than the imports that contributed to the injury such as reduced demand in the steel market demand and lack of infrastructure investment, inputs costs, energy supply, and logistics constraints; these factors did not sufficiently detract from the causal link between the serious injury suffered by Arcelormittal South Africa (Amsa).

The provision to be implemented for a 200-day period was applied for by Saisi on behalf of Amsa, arguing that the SACU experienced significant harm, causally linked to the recent surge in imports of the subject products.

A Saisi official yesterday said unforeseen developments had led to a surge in imports of hot-rolled steel products.

“This is not just here in South Africa. The European Union has extended its measures for the third time on steel products across the board,” he said.

“The United States had the so-called 25% Trump duties which the Biden administration continued with. There is global overcapacity that is exceeding the demand to the detriment of unprotected territories like South Africa.”

Saisi said the volumes and prices flooding the country were disruptive and not informed by the market except the pressure for over-capacitated countries, including China.

“The EU, UK, US, India, Brazil would not have reason to deploy the trade remedy measures. For any country to be sustainable, there is need to safeguard the industry,” Saisi said, pointing to an extension of the period following investigations on the lapse of the 200-day period.

Amsa spokesperson, Tami Didiza, yesterday said the intervention would benefit the entire steel industry and not just the group, as it would allow an opportunity for the local steel industry to adjust and deal with “unfair” trade.

“This benefit is for the entire steel value chain as the existence of local manufacturing capability allows some downstream measure of protection against volatile international prices compared to a situation where no local supply is available,” Didiza said.

However, the National Employers Association of South Africa (Neasa) yesterday said the government should reverse the protectionist strategy and, in order to increase competition, allow the steel downstream access to cost-effective raw material as the decrease in competition due to the increase in duties has significantly contributed to the contraction of the entire steel downstream.

Neasa CEO Gerhard Papenfus said the levy would affect the entire downstream industry with increased costs for importing the steel, forcing the local market to be price-takers of Amsa.

“The industry should not be held to ransom to protect Amsa which has outdated mills and equipment against competition with the latest technology,” Papenfus said.

“This levy will only benefit Amsa and that should stop, they must strive to be competitive as well. How will business be sustainable if there is in all a 19% price increase?”

Papenfus also said the about 3 000 jobs protected at Amsa did not equate to the job losses in the downstream industry, with companies forced to shut down.

ITAC said the provisional measure is imposed against all countries except the developing countries identified, as the imports from each of these countries do not exceed 3% of the total volume of imports or collectively account for more than 9% of total imports.

It said it considered that there are critical circumstances where a delay in the imposition of provisional measures would cause damage that would be difficult to repair, and that these critical circumstances justify the imposition of provisional measures.

ITAC made a preliminary determination for the South African Revenue Service (Sars) to impose a provisional measure in the form of a 9% ad valorem on imports of hot-rolled steel products for a period of 200 days, pending finalisation of the investigation.


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