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AMSA reiterates call for safeguards as Itac probe advances

JSE-listed steel producer ArcelorMittal South Africa (AMSA) has reiterated its call for additional import protection through safeguard duties, despite a “slight fall” in imports during the third quarter.

In a quarterly operational update, CEO Wim de Klerkargued that imports remained high, despite the implementation of the 10% import duties in 2015 and in 2016.

“The need for additional protection through safeguards remains critical to addressing the continuing flood of cheap imports into the local market and to ensure the sustainability of the South African steel sector,” De Klerk added.

The statement coincided with the publication of a preliminary determination by the International Trade Administration Commission of South Africa (Itac), following its investigation into whether there was a case for the introduction of safeguard duties to deal with increased imports of cold-rolled steel.

The preliminary determination found that the Southern African Customs Union steel industry was suffering injury as a result of unforeseen developments, which had resulted in a surge in the volume of cold-rolled steel imports.

Nevertheless, the commission determined not to request the South African Revenue Service commissioner to impose provisional payments on imports. Itac made a similar determination in July following a probe into hot-rolled coil (HRC) imports.

Chief commissioner Siyabulela Tsengiwe told Engineering News Online previously that Itac was in the final stages of its HRC process and that its recommendation would be delivered to Trade and Industry Minister Dr Rob Davies in November.

Despite the difficulties in the primary steel sector, there remains stiff opposition to the imposition of further protection, with downstream steel consumers warning that such a move would further damage their prospects.

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) expressed “grave concern” earlier in the month at the continuing contraction in the metals and engineering sector, as indicated by the October Purchasing Managers’ Index (PMI) released by the Bureau for Economic Research and Barclays.

Between September 2016 and November, the PMI fell by 7.9%, which led Seifsa senior economist Tafadzwa Chibanguza to warn that the metals and engineering sector would face a “deeper contraction for a sustained period”.

The National Employers’ Association of South Africa, meanwhile, has been running an online petition calling Davies to scrap the 10% duties already applied, let alone the additional safeguard duties under consideration.

AMSA said it supported the notion that a solution was required to protect the downstream industry from cheap imports of finished and semi-finished products.

“We will continue to work with the relevant stakeholders to ensure that we play our part in preserving the local steel industry,” De Klerk said.

However, the company also stressed that it continued to experience “tough trading conditions” as a result of lower steel demand and ongoing imports. Conditions were not expected to improve in the fourth quarter.

AMSA also noted that export sales decreased by 64% or 244 000 t in the third quarter, when compared with the same period in 2015.

Local sales were 20 000 t higher period on period, driven mainly by flat products, despite a planned shutdown at Saldanha Steel, in the Western Cape, for a mini-reline.

“Flat product sales increased by 3% and long product sales increased by 2%. However, local sales were still 11% less than in quarter two of 2016 due to weaker local demand.” 

 

Source: Engineering News