The International Trade Administration Commission of South Africa (ITAC) has launched an investigation into the surge of flat-rolled steel imports. This investigation, prompted by Minister Parks Tau, comes as the impact of these imports on local manufacturers is felt through recent business closures. The tariff review, which encompasses chapters 72, 73, 82, and 83 of the Customs and Excise Act, aims to address potential harm and find a balanced approach to protect the domestic market, which sees approximately R66bn worth of imports annually.
The investigation focuses on flat-rolled products of iron or non-alloy steel, particularly those clad, plated, or coated with aluminium-zinc alloys or zinc.
These products are classified under tariff subheadings 7210.61.20, 7210.61.30, 7225.92.25, and 7225.92.35.
The domestic industry, represented by ArcelorMittal South Africa (Amsa) with support from Safal, argues that unforeseen global developments have triggered a surge in these imports.
During the period from May 2022 to April 2024, imports of these steel products increased significantly, reportedly leading to declines in sales, output, profit margins, and employment within the Southern African Customs Union (SACU).
Global market dynamics
Several international factors have contributed to the trend of increased steel imports, according to Amsa.
One of the primary issues is the overproduction of steel globally, particularly in China, which has been exporting its surplus stock at significantly reduced prices.
This oversupply has flooded the market, making it challenging for local manufacturers to compete.
Economic slowdowns in key markets have deepened the crisis, intensifying competition for export destinations.
As demand dwindles in major economies, countries are seeking alternative markets to absorb their excess steel production.
This shift has resulted in an influx of imports into South Africa, adding pressure on the domestic industry.
Competing tariffs
Additionally, recent tariff adjustments by other countries have played a role in redirecting steel imports to South Africa.
As nations modify their trade policies to protect local industries, surplus steel that would have otherwise been absorbed by these markets is being diverted.
This has led to an increase in steel imports, affecting the local market dynamics.
These developments have placed local manufacturers in a precarious position, prompting calls for remedial action.
ITAC is looking to address these concerns by evaluating the potential harm to the domestic industry and recommending measures to protect local producers.
The outcome of this inquiry will be critical in determining the future stability and competitiveness of South Africa’s steel sector.
Legal loopholes
The investigation will adhere to the International Trade Administration Act of 2002 and related regulations, with stakeholders invited to submit written comments or request oral hearings to present their case.
Depending on the findings, the commission may recommend measures such as import tariffs to protect local producers from further harm.
If the investigation confirms the allegations, safeguard measures could provide much-needed relief for domestic manufacturers, helping to stabilise production and employment levels.
However, they could also lead to higher prices for downstream industries relying on imported steel.
