South Africa has imposed a substantial anti-dumping tariff on structural steel from key trade partner and geopolitical ally China, along with Thailand, in a bid to protect the embattled local industry.
The move comes after imports from the Asian superpower and Thailand surged 19-fold in the 2023/24 financial year, placing the struggling local industry, and most notably ArcelorMittal South Africa (Amsa), under further pressure.
Trade, industry & competition minister Parks Tau has endorsed the recommendation by the International Trade Administration Commission of South Africa (Itac) to impose definitive anti-dumping duties on the subject product originating in or imported from the two countries for a period of five years.
An investigation by Itac found that about 28,800 tonnes of structural steel imports from China and Thailand flooded the domestic market in the 2023/24 financial year, with China accounting for 65% of the total.
As such Chinese are now subject to a 74.98% tariff, while those from from Thailand include a 20.32% duty, effective since Thursday.
The net effect of the dumping was that it undercut prices for the local industry by 20%, heaping pressure on Amsa’s rail and structures business, known as Amras, which is the sole producer of mainline rail in in the Southern African Customs Union (Sacu), comprising Botswana, Eswatini, Lesotho, Namibia, and South Africa.
Structural steel is a high-strength, carbon-steel construction material used to form skeletons for buildings, bridges, and industrial infrastructure. It is known for high durability and high weldability.
Clear evidence
The move to push back against cheap imports comes as government officials and management at the Industrial Development Corporation (IDC) and Amsa hold talks to save the group’s long steel business.
Amsa announced the closure of its long steel plants in Newcastle, Vereeniging and Mpumalanga last year, placing as many as 3,500 jobs at risk.
Itac’s probe considered that the 20% price undercutting in 2023/24 coincided with Amras’s inability to increase prices over the same period, resulting in it reporting a loss that year, an indication of causality.
The data before Itac also shows that the cumulative market share of the imports increased six-fold in 2022/23 and 19-fold in 2023/24.
In its investigation into the effects of the cheap imports, Itac focused on Amras’ investment in Highveld Structural Steel in 2021 via a manufacturing agreement after Highveld entered business rescue.
The manufacturing agreement remained in place until 2023, when Amras took full ownership of plant. However, the facility could absorb only 98 employees on a permanent basis. The mill had previously employed 1,700 people and the additional jobs were cut when Highveld was placed in business rescue.
Proof of harm
Itac said current lower employment levels at Amras were an indication of the adverse effect of cheap imports on the local industry and Sacu.
The trade commission also imposed anti-dumping duties on certain flat-rolled products of iron, non-alloy or other alloy steel from China, Japan and Taiwan for a period of five years.
The remedial action covers flat-rolled products of iron or non-alloy steel, of a width of 600mm or more, clad, plated or coated with aluminum-zinc alloys.
Itac made a final determination that the subject product originating in or imported from China, Japan and Taiwan was being imported into the Sacu market at dumped prices, a determination that Tau has endorsed.
Chinese imports of such products will attract duties of between 6.99% and 47.92%, while those from Japan are subject to a 44.95% duty and Taiwan 23.3%.
The most recent trade data from the IDC shows South Africa exported R164bn worth of merchandise to China between January and September, compared with imports of R304bn over the same period. South Africa also runs a huge deficit with its other Brics partners.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.