AMSA wants customers to unite behind call for industry-wide protection

Steel producer ArcelorMittal South Africa (AMSA) has appealed to its downstream customers to join it in a united lobbying effort for higher levels of tariff protection on both primary and value-added steel products, which, it claims, are being displaced by cheap, subsidised imports that are threatening local firms and jobs.

CEO Wim de Klerk made the call to 130 steel clients at a function in Johannesburg on Wednesday, organised by the South African Institute of Steel Construction (SAISC).

He told them that AMSA stood ready to assist industry participants in pursuing greater protection for downstream industry and insisted that further safeguards were required to protect the domestic steel industry – upstream and downstream – as the current levels of protection were not enough to stem the influx of imports.

Some steel consumers have, however, expressed open opposition to AMSA’s recent successful move to secure 10% base protection on a range of steel products, introduced in 2015 and 2016. There is also vocal opposition from some consumers to AMSA’s application for additional “safeguard duties” on hot-rolled and cold-rolled coil.

In an interview with Engineering News Online De Klerk said that the 10% protection, while welcome, “had simply not moved the needle, with imports falling only marginally to 1.1-million tons last year, from 1.3-million tons in 2015. He also notes that real steel consumption in 2016 fell by 4%.

The International Trade Administration of South Africa (Itac) is in the process of deliberating on whether there is a case for instituting further safeguard duties and has, as part of the process, requested AMSA to provide it with additional information on the possible impacts on steel consumers.

De Klerk said it had requested additional time to provide responses, as well as to canvass its customers. However, AMSA intends responding during the course of the first quarter of 2017.

He said the group’s approach was also being broadened from the initial strategy, which focused primarily on securing protection for products produced by AMSA. The aim currently was to collaborate with downstream customers so as to make the case for industry-wide protection.

In 2016, Itac initiated investigations on a number of downstream steel industry products and revealed recently that it had received responses from the firms that manufacture wire products; screws, bolts and nuts; tube and pipe fittings; appliances; prefabricated structures; grinding media; and roofing products.

“If the downstream fails, there will be no upstream and vice versa – our downstream industry is under siege from finished product imports. We should have a common agenda to lobby for protection,” De Klerk said at the SAISC function.

He indicated that the steel sector should draw lessons from the poultry sector, which, through a united lobbying effort, succeeded in securing an immediate provisional safeguard duty of 13.9% in December on bone-in-chicken imports from the European Union, which is over and above protection of 37% imposed in 2013.

“Unfortunately, in the steel sector it has become a case of ‘us versus them’, which is why we are looking to realign the discussion to one that is more inclusive and takes account of the survival of the entire sector.”

However, he admits that there is unlikely to ever be full consensus, with some participants opposed in principle to any increase in protection, “even when we can factually demonstrate that the recent 10% duties have had no bearing on prices and that all increases are based on international price movements”.

AMSA has requested professional services group PwC to consult with those downstream companies willing to open their books and show how cheap imports are affecting their businesses. Through the process, De Klerk hopes that industry will be able to secure the evidence necessary under Itac rules to motivate for greater protection.

He also makes a distinction between the approach being taken in South Africa with the more “emotional” protectionist stance of President Donald Trump’s administration, which is looking to aggressively raise tariff barriers to protect the American steel industry.

“Fortunately, our approach is based on evidence and consultation,” De Klerk stresses, while acknowledging that he does nevertheless marvel at the speed at which the US moves to protect its interests.