Customs

Iron/Non-alloy of Angles, Shapes and Sections Safeguard Investigation

Publish Date:

22 Jun 2020

On 19 June the International Trade Administration Commission of South Africa (Itac) announced the initiation of a safeguard investigation against the increased imports of U, I, H, L and T sections of iron or non-alloy steel, not further worked than hot-rolled, hot-drawn or extruded, of a height of 80 mm or more and other angles, shapes and sections of iron or non-alloy steel, not further worked than hot-rolled, hot drawn or extruded, classifiable in tariff subheading 7228.70, on which comment is due by 09 July.

The application was lodged by Evraz Highveld Steel and Vanadium Corporation Limited (Highveld), Highveld structural Mill (Pty) Ltd (Highveld Structural Mill) and ArcelorMittal South Africa Limited (AMSA), being the only producer of the subject product in the Southern African Customs Union (SACU).

The applicant alleged and submitted prima facie evidence indicating that it had experienced serious injury in the form of a decline in sales volumes, output, market share, utilisation of capacity and employment for the period 01 January 2014 to 31 December 2019. AMSA also experienced net losses during the period of investigation. On this basis Itac found that prima facie evidence had been submitted to indicate that the SACU industry was experiencing serious injury which could be causally linked to the recent, sudden, serious, and significant surge in imports of the subject products.

The applicant stated that a confluence of events formed the basis of the unforeseen development that supported this application, which was ultimately the considerable oversupply of steel, and specifically the subject product, in the world today causing a surge in the volume of imports into the SACU. These events are listed below:

The applicant stated that during the Uruguay Round negotiations in 1986-1994, South Africa did not foresee the following events:

The unprecedented steep rate of increase in steel production capacity (including the subject product) over the ensuing two decades (more than doubled since 1994) to support growing construction and manufacturing activity, as well as to help build infrastructure, particularly in emerging economies.
The significant market downturns in emerging (and other) economies and the resultant contraction of demand for steel that contributed to the imbalance between capacity and demand, that is, the global oversupply of steel (including the subject product).
Record export volumes by countries with excess capacity, fuelled by excess steel supply.
Given the global nature of the steel industry, excess capacity in one region can potentially displace production in other regions, thus harming producers in those markets. This has already led to several trade actions by major steel markets. Recent trade measures by those countries are a result of all the above. Over capacity and a flood in the market of low-priced products, and the fact that the markets are now protected, contracts the global demand for steel even further, exacerbating the problem of increased imports into the SACU.
The oversupply of steel (including the subject product) has led to deterioration in the financial situation of steelmakers globally and also the SACU. The excess capacity is considered as one of the main challenges facing the global steel sector today, and
Despite slowing demand growth and the existing excess capacity, there are several new investment projects under way and planned (especially in current net-importing countries) in the steel industry that will result in global steelmaking capacity conitinuing to expand and causing the SACU to expect further increases of imports of the subject product.