S. Africa imposes 9% import duty on hot-rolled steel

A provisional import tariff of 9% has been levied on hot-rolled steel coming into South Africa in a bid to protect ArcelorMittal SA (AMSA) from a flood of cheap Chinese imports.

The application for tariff protection was lodged with the government’s International Trade Administration Commission (ITAC) in February by the South African Iron & Steel Institute (SASI) on behalf of AMSA, the country’s main primary steelmaker.

ITAC’s probe into the matter is ongoing but the commission made a preliminary determination that the circumstances are such that a delay in the imposition of a provisional measure would cause damage that would be difficult to repair.

As such, a provisional 9% safe-guard tariff will be levied on imports of hot-rolled steel products for a period of 200 days, pending the finalization of ITAC’s investigation.

This comes on top of an existing 10% import tariff, which is applied to all raw steel imports.
ITAC said it will evaluate public interest considerations of a safeguard duty in the next phase of its investigation.

AMSA has previously enjoyed safeguard duties on hot-rolled steel which were implemented from 2017 to 2020.

Last week, the steelmaker warned its interim losses have skyrocketed due to tough market conditions and severe operational issues in the first half of the year.

AMSA CEO Kobus Verster said the need for market protection is urgent given Chinese integrated mills are selling below their cost to the international market. But the 9% is actually substantially less than what the company hoped for, he said.

“That will bring us still below the protection that other countries are receiving …. In terms of average duties, what we want is what other countries have. And that’s about 25%.”

Meanwhile, the downstream steel sector is up in arms over the provisional tariff.

Gerhard Papenfus, CEO of the National Employers’ Association of South Africa (NEASA), said the tariff will undoubtedly result in job losses in the downstream steel sector.

The manufacturing downstream wants the cheapest and best quality of steel from wherever it can be sourced, and the customers want competitively priced goods too, he said. “AMSA is actually a bit of an unwelcome supplier of steel … if you can’t compete, then you’re not welcome,” he said.

SS Profiling CEO Theunis Duvenage, said the import levies are disastrous for the downstream. “If we look at the list, as long as my arm of people that opposed this, then it’s very hard to understand how government would still do this, and even worse, on a temporary basis. The investigation is not even completed,” he said.

“If we want to get the economy growing, steel is key because it is the backbone of industry. And now you make it more expensive …. It just doesn’t make sense. … you are making the raw material expensive, and the manufacturing industry becomes uncompetitive.”

Nico van Wyk, marketing manager at Duferco Steel Processing, said AMSA has no competition on hot-rolled steel in South Africa and could not be compared to other markets with higher tariffs.

“In South Africa, we have one mill. So, everyone is essentially forced to talk to AMSA,” he said. “We’ve always opposed the import protection granted to AMSA because it does not consider competition in South Africa…we are becoming more uncompetitive in the export market and against finished products that are being imported,” van Wyk said.