S. Africa to impose tariffs on steel imports from China

South Africa's Minister of Trade and Industry Rob Davies on Friday approved recommendations to impose a 10-percent import tariff on some Chinese steel imports.

The minister's approval is based on the recommendation by the International Trade Administration Commission of South Africa (ITAC) for the tariff increases following its own extensive investigation, the Department Trade and Industry (DTI) said.

The investigation was initiated after an application from the South African Coil Coaters Association on behalf of Arcelor Mittal South Africa Limited (AMSA) and Safal Steel (Pty) Ltd (SAFAL).

The DTI said the ITAC recommendations approved by the minister are subject to the following conditions:

-- There will be no price increases for the steel products in question as a result of this tariff adjustment and that pre-existing commitments to reduce prices on some products are honoured;

-- The ITAC will conduct a review of the duty structure to determine its impact on the industry value chain, three years from the date of implementation;

-- The AMSA will invest an additional 250 million rand (about 19 million U.S. dollars) in its colour line and SAFAL will investment an additional 300 million rand (about 23 million dollars) in its metal coating line in 2017;

-- Both companies commit to no retrenchments in these production lines over the next three years;

-- The ITAC will establish a committee comprising the applicants, downstream users, the Departments of Trade and Industry and Economic Development and relevant experts to monitor the impact of the change in tariffs and steel prices on downstream users as well as the performance of the applicants against the commitments agreed upon; and

-- The ITAC will initiate an immediate review of the tariff dispensation in the event of default.

Last week, the government reached an agreement with the steel industry and trade unions to protect South Africa from duty free or zero tariff Asian steel imports.

The government had imposed the duty free regime after the industry refused to scrap import parity pricing of locally manufactured steel. The latter refers to a strategy of marking locally made products as if they have been imported from abroad.

The steel industry and trade unions have pressed the government to impose tariffs on steel imports from China so as to lessen the effect of a surge in imports, which are being supplied at prices as much as 25 percent below local production costs.

The SA steel industry is facing challenges arising mainly from global factors including the current glut of steel resulting in increasing imports of steel products into South Africa and cost-pressures on the industry.

There have been reports that SA steel companies would cut thousands of jobs after the cheap iron and steel prices have hurt the local industry. Endit