Cheaper cement imports are hurting the local cement industry which is already taking strain from years of weak demand because of low infrastructure investment and an ailing construction industry.
As a result the industry’s representative body wants International Trade Administration Commission (Itac) to impose tariffs to curb the imports. The Concrete Institute, which represents cement makers PPC, AfriSam, Lafarge, Sephaku and Natal Portland Cement, says Itac should also consider a total ban of imports for a limited period.
The institute provides a range of services in concrete to the construction industry, including acting as an independent body representative of the cement, concrete and broader construction industry, to interact effectively with the government and regulatory bodies.
“The imports are a big problem. That is why we are busy preparing an application to the International Trade Administration Commission,” the institute’s MD Bryan Perrie says.
When the imports started, they were from Pakistan. “They peaked at approximately 1,400,000 tons a year in 2014. After an application from the industry to investigate allegation of dumping by Pakistan, Itac in 2014 said there was prima facie proof of dumping of bagged cement. With effect from May 2015, SA introduced anti-dumping duties ranging between 14.29% and 77.15% on cement from Pakistan. Then the imports dropped to about 400,000 tons in 2016,” Perrie says.
But as soon as the tariffs on Pakistan cement were introduced, floodgates of imports from Chinese producers opened. Imports from China have been increasing steadily in 2016 and 2017 and in 2018 imports from Vietnam started taking over, totalling more than 1-million tons of cement imported into SA in 2018. The Chinese and now Vietnamese imports replaced Pakistani products.
Perrie says China and Vietnam account for most of the imports into the country currently.
The local industry has capacity for about 19-million tons. “We are producing between 13-million tons and 14-million tons. We have spare capacity of about 5-million tons. We have overcapacity,” he says.
As a result, the local industry has to contend with depressed prices. “Prices have dropped drastically, especially in the coastal areas. This is starting to have an effect on jobs because the local companies are not producing enough product,” Perrie says.
He says some local companies have considered mothballing some of their plants and retrenching employees. The companies have also put on hold expansion plans.
Perrie says the local industry was looking primarily for a so-called safeguard measure, which entailed temporary restriction of impost in order to protect the local industry. He says the cement manufacturers will approach Itac through the institute.
“Because of Competition Commission rulings it is difficult to collate information. The producers are not allowed to share information. An independent team of attorneys is busy collating data in terms of sales, production and employment numbers. All of that will be put in the application,” Perrie says.
He says the institute is “pretty close” to making the application to Itac. He says they intend to submit the application before the end of March.
“This industry, which employs a lot of people, is really battling at the moment. The imports just amplify its troubles. That is why, as an industry, we are looking for protection from the government. Cement is a vital industry for the country. It needs protection,” the Institute’s chair Rob Rein says.
Perrie says the industry is collating its employment figures. “The problem is that, with the history with the Competition Commission, no-one really shares those numbers. It has to be submitted to the firm of attorneys on a confidentiality basis,” he says.
Except for PPC, the Institute member companies are unlisted.
Rein says there are substantial jobs on the line as a result of the influx of imports.
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