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AMSA makes yet more submissions to Itac for steel protection

AMSA makes yet more submissions to Itac for steel protection

Photo by Duane Daws

5th August 2015

By: Terence Creamer

Creamer Media Editor

  

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Steel producer ArcelorMittal South Africa (AMSA) has confirmed the submission of seven new applications to the International Trade Administration Commission of South Africa (Itac) for an increase of customs duties on certain steel products to 10%.

The new submissions cover plate, hot-rolled coil, cold-rolled coil, tin plate, sections, bars and rods and semi-finished products such as slabs, blooms and billets.

The applications were over-and-above a submission, made 18 months ago together with industry associations, for protection on galvanised and colour-coated steel, as well as more recent applications for the imposition of duties on reinforcing bar and wire rod.

AMSA said it had received no indication as to the status of its application on galvanised and colour-coated steel submitted on June 5, 2014. But Itac had told Engineering News Online recently that the investigation was at an advanced stage and that recommendations would be delivered to Trade and Industry Minister Dr Rob Davies for a determination.

AMSA had not yet made any antidumping applications, but CEO Paul O’Flaherty said it could well make such applications in future.

He argued strongly last week that protection was required in light of the current global steel glut, which had depressed prices to multiyear lows and increased imports. AMSA expected the oversupply situation and depressed prices to linger for up to five years.

He argued that South Africa was currently an outlier among the 60-odd steel-producing countries in not offering protection for its primary-steel sector, which was now in distress.

AMSA was currently considering the future of the Vereeniging mill, with the review to be finalised by the end of August.

Despite reports that the JSE-listed group had pulled back from a retrenchment process, AMSA told Engineering News Online that all options were being considered prior to embarking on a Section 189 consultation that could lead to the loss of jobs.

“The outcome of this review might lead to a possible mothballing of some of the plants at the Vereeniging works,” the company said, adding that it was consulting widely with all stakeholders during this process.

“The previous submission to the Commission for Conciliation, Mediation and Arbitration has been retracted to allow a proper analysis and discussion with all parties, after which formal processes will be initiated.”

Meanwhile, South Africa’s second-largest steel producer Evraz Highveld Steel & Vanadium had entered business rescue, and had initiated retrenchment consultations, while reports had emerged steel products manufacturer Scaw could shed up to 1 000 jobs.

AMSA was particularly concerned about the role of Chinese manufacturers, which produce about half of the 1.6-billion tons of steel made globally.

The company claimed that “subsidised” Chinese exports where flooding the world market at prices below South Africa’s cost of production.

The subsidies, AMSA said, took the form of preferential loans and/or direct credit from State, commercial and policy banks, equity infusions, the provision of power and water at below cost, export-credit reimbursements, land-use tax refunds and direct cash grants.

During the first half of 2015, O’Flaherty reports that as much as 30% of South African consumption was supplied through imports.

Prices had fallen in tandem, which had benefited some steel consumers. However, O’Flaherty insisted that the benefits would be short-lived. “If you think that Chinese imports of steel are a good thing and you think that we don’t need a primary-steel industry, it won’t stop there . . . and there will be imports of subsidised steel products at low prices right down the value chain.”

Protection for primary steel, AMSA argued, would ultimately help South Africa’s top-five steel consuming industries, of building and construction, structural steel, cables and wire products, automotive and mining, which collectively contribute 15%, or R600-billion, to gross domestic product, and employ eight-million people.

In response to the commentary made by former Trade and Industry and Finance Minister Trevor Manuel that tariffs were not the answer and that the focus should instead be on competitiveness, AMSA said it “fully supported competitiveness . . . based on fair trade”.

“Other steel manufacturers in other countries have also sought this type of support from their respective governments. Essentially, no private company can compete with the Chinese government as steel mills in that country are State-owned and supported,” the company said.

Edited by Creamer Media Reporter

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