Steel wire and wire products producer Hendok, of Durban, has called on ArcelorMittal South Africa (AMSA) to withdraw its application for protection on wire rod, warning that any increase in the cost of the key input material will result in a reduction of domestic output and further increase the importation of finished wire products from China.

Wire rod is used to produce wire products that are used in a range of sectors, including construction, industry, farming and mining, as well as for fencing applications. It accounts for about 8% of steel production in South Africa.

MD Freddie de Kock tells Engineering News that independent wire producers, such as Hendok, represent over 50% of wire rod consumed domestically, with the balance used by steel-mill-owned companies.

They have traditionally sourced wire rod from AMSA, but imports rose during the 2011 rebuild of the Newcastle furnace and continued, thereafter, owing to AMSA’s pricing being higher than imported alternatives.

In 2014, AMSA instituted a rebate scheme to recapture market share, but has subsequently scrapped the rebate, which had pushed up the costs for wire-rod processors.

De Kock cautions that, should AMSA receive protection, the independent producers could face serious survival risks, while wire-products manufacturers associated with the primary producers would be unfairly advantaged.

AMSA is seeking 10% duty protection on wire rod and a range of other steel products and CEO Paul O’Flaherty has indicated that it is also prepar- ing antidumping applications, which could raise import pro-tection to over 50% on some wire products.

But in a recent presentation to the International Trade Adminis-tration Commission of South Africa (Itac), Hendok called for an alternative remedy, arguing that blanket protection would have severe consequences for independent wire-product producers.

The company wants AMSA to withdraw its application and enter into a new arrangement with South Africa’s potential wire-rod importers – Hendok, Allens Meshco, Barnes Fencing Industries and Wire Supplies and Vulcania.

Under the proposed deal, the wire firms would commit to halting importation, in return for AMSA agreeing not to increase prices and to holding quarterly meetings with wire producers to settle on a competitive wire-rod price for the domestic market.