Itac to make HRC steel safeguard recommendation in November

18 Oct 2016

Engineering News, 17 October 2016
By Terence Creamer

The head of the International Trade Administration Commission of South Africa (Itac) reports that, following the completion of public consultations on the possible imposition of safeguard duties for hot-rolled coil (HRC) steel, the commission intends delivering its recommendation to Trade and Industry Minister Dr Rob Davies in November.

Chief commissioner Siyabulela Tsengiwe tells Engineering News Online that Itac is in the final stages of its HRC process – one that has included an investigation of HRC imports and their effect on domestic steel producers, as well as hearings to canvass the views of both upstream and downstream industry participants.

The primary steel industry is pursuing safeguards rather than antidumping or countervailing duties, as the instrument can been implemented even in instances where trade may be regarded as fair, but where an unforeseen surge of imports threatens and/or causes injury to the domestic producers.

In a July 22 Government Gazette, Itac reported that its investigation found that HRC imports had surged as a result of “unforeseen developments” and that there was a “causal link between the serious injury suffered by the Southern African Customs Union industry” and the rise in imports. However, it refrained from imposing provisional safeguards until receiving comment from stakeholders.

Tsengiwe refuses to be drawn on the possible quantum of the safeguard duty, which would be levied in addition to the 10% duty already instituted earlier this year. He says only that, should safeguards be recommended, it will not be as high as the 30% suggested by some industry commentators.

Itac is “not oblivious” to the possible negative consequences of additional protection for domestic steel consumers, some of which having already expressed a concern that some types and grades of materials not manufactured locally. In these cases, Itac is considering applications for rebates.

In addition, the commission has “self-initiated” several investigations into the possible introduction of greater protection for various finished products under 16 tariff headings. The products covered by the review range from wire, rope and cables to cooking appliances and prefabricated buildings. In a number of categories duties already apply, but there are also a number of downstream product categories where no duties apply.

The commission is assessing whether there is scope to increase tariffs from the rate currently being applied to the bound rate allowed for under South Africa’s commitments to the World Trade Organisation. In a number of instances there is “space” for upward adjustments, Tsengiwe reports.
He also highlights the conditions placed on ArcelorMittal South Africa (AMSA) as part of a package of measures that have been agreed with government to ensure the survival of a domestic primary steel industry. These conditions include a new pricing methodology for flat steel, as well as promises relating to investment, employment and transformation. A steel committee has been established under the aegis of Itac to monitor adherence to these commitments.

Nevertheless, there is still significant opposition to the imposition of further protection, with the National Employers' Association of South Africa currently running an online petition calling Davies to scrap the 10% duties already applied, let alone the additional safeguard duties under consideration.

To date, AMSA has applied for, and received, 10% protection on bar and wire rod, as well as plate, cold-rolled coil (CRC), sections, and semi-finished products such as slabs, blooms and billets, HRC and other steel bars and rods.

AMSA has also indicated that it will submit five safeguard duty applications covering HRC, CRC, colour, galvanised and rebar and wire rod.

Tsengiwe says it has only received safeguard application for HRC and CRC, with its CRC probe still at an early stage. Nevertheless, a preliminary CRC report should be published within weeks, which will be followed by further public consultation.