Steel Industry Body Seeks Relief From Harmful Tariffs

30 August 2016

Tariff protection against cheap Chinese steel imports was harmful for local downstream steel manufacturers and should be abolished, an industry body said.

The tariffs were imposed to protect primary steel producer ArcelorMittal SA (Amsa), which has now agreed to drop import parity pricing and adopt a new pricing model for flat steel products.

But the National Employers’ Association of SA (Neasa) — which represents downstream manufacturers — objects to both the tariffs and the new pricing model.

The association’s CE, Gerhard Papenfus, said Amsa should compete with Chinese steel and if the producer could not do so, it should suffer the consequences.

He said that it was not possible to use tariffs to protect downstream manufacturers because "the downstream industry is simply too diverse".

Neasa’s position is that the only way to foster the downstream industry would be to allow it to import cheap steel.

This is not the view of the Department of Trade and Industry, which wants to preserve SA’s steel producing capacity.

The department has approved 10% hikes in tariffs on 10 primary steel products.

In addition Amsa has applied to the International Trade Administration Commission (Itac) for safeguard duties of an additional 30% on hot-rolled and cold-rolled steel.

Itac senior manager for trade remedies Carina Janse van Vuuren said on Monday Itac had prepared a preliminary report on the duty increase application and would hold public hearings on Tuesday on the matter.

Trade and Industry Minister Rob Davies said in Parliament last week that SA needed its own steel producing capacity to industrialise and to beneficiate the iron ore it produced. "The loss of SA’s primary steel production capacity will leave SA at the mercy of the global steel market in the long run."

Davies also insisted that government had supported the downstream industry with rebates on the customs duty paid on the imported steel used in the manufacture of goods destined for export.

Rebates were also available on the customs duty on imported steel or steel products that were not, or not sufficiently, produced locally. This allowed downstream manufacturers to source intermediate material at world prices.

But Papenfus said that the rebates were not the answer as they were impractical and an "administrative nightmare".

A 30% duty increase would cause businesses to shut down and would be a "huge crisis" for the industry, he said.


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