On 22 August 2014 the International Trade Administration Commission of South Africa (Itac) announced the initiation of an investigation into the alleged dumping of portland cement, classifiable under tariff subheading 2523.29, originating in or imported from Pakistan and being dumped on the Southern African Customs Union (SACU) market, causing material injury to the SACU cement industry.
The application was lodged by Afrisam (South Africa) (Proprietary) Limited, Lafarge Industries South Africa (Proprietary) Limited, NPC Cimpor (RF) (Proprietary) Limited and PPC Limited who submitted sufficient evidence and established a prima facie case to enable Itac to arrive at a reasonable conclusion that an investigation should be initiated on the basis of dumping, material injury and/or threat of material injury and causality.
The allegation of dumping is based on the comparison between the normal value in Pakistan and the export price from Pakistan. The domestic selling price for Pakistan was determined based on a report by Genesis Analytics titled "Pakistan cement price data for January 2013 to December 2013". The export price for Pakistan was determined based on the official South African Revenue Service (Sars) import statistics. The dumping margin for Pakistan was determined to be 48%. On this basis, Itac found that there was a prima facie proof of dumping.
The Application was brought on "Portland Cement" - whether in "bulk" or "bagged cement", and although the Applicant provided injury information for the subject product, being "Portland cement" it requested Itac to focus the analysis of injury on "bagged cement" due to the following reasons: The product, Portland cement classifiable under tariff heading 2523.29 originating from Pakistan, is imported in bag form only. There are no bulk cement imports from Pakistan. This is because it would be prohibitively expensive to import the product in any form other than in bagged form. There are two separate and distinct markets for ordinary Portland cement, namely, the market for bagged cement and the market for bulk cement.
The bagged cement market comprises the major portion of the combined bag and bulk cement market (comprising the SACU industry). The purpose for which bagged cement and bulk cement are used differs. Bulk cement is used in large construction projects and sold to concrete product manufacturers, ready mix producers and blenders while bagged cement is mainly used in small construction projects.
Bagged customers are mainly retailers which on-sell to customers for small projects. It is therefore in the bagged cement market where Pakistani imports compete with the domestic industry and where the domestic industry is suffering material injury as clearly demonstrated in the injury information furnished. The injury information also demonstrates that injury in the bagged cement market is even higher in the areas close to the Ports of entry for Pakistan imports, particularly in KwaZulu-Natal, the Eastern and the Western Cape because of transportation costs.
Because the dumped imports of bagged Pakistani cement do not compete in the bulk cement market, the bulk cement market is not as severely affected by those imports. Whilst the material injury reflected in the combined bulk and bag market is accordingly diluted, the material injury caused to the SACU Industry is nevertheless significant. The loss of market share of bagged cement, both volume and value, has impacted negatively on the profitability of the SACU Industry, plant utilisation and economies of scale. The Applicant's information indicated a decline in sales volumes, profit, output, utilisation of production capacity and market share, as well as a negative effect on cash flow, return on investment and employment. The Commission further noted that the Applicant lost market share in a growing market, whilst the market share of imports increased over the period of investigation. The Applicant further alleged that a threat of material injury existed and submitted evidence with regard to the freely disposable capacity of the exporters; the significant increase of the alleged dumped imports; and the state of the economy in Pakistan. On this basis the Commission found that there was prima facie proof of material injury, a threat of material injury and causal link.
The period of investigation for purposes of determining the dumping in the country of origin will be from 1 January 2013 to 31 December 2013. The period of investigation for purposes of determining material injury and/or a threat of material injury will be from 1 January 2010 to 31 December 2013.
Comment is due by 02 October 2014.