On July 10, ITAC initiated both anti-dumping and safeguard investigations into cold-rolled steel, with the anti-dumping investigation focusing on China.
Primary steel is now the most protected sector in SACU, with these two cases adding to an already significant duty burden. The result is an arbitrage that makes it more attractive to import products manufactured from steel rather than the steel itself, eroding the entire value chain. When downstream products are imported, we not only lose local manufacturing but also the demand those manufacturers create for locally produced steel, creating a death spiral for the entire industry.
The world is awash with steel, yet South Africa continues to support the creation of additional steel production through subsidies and concessional finance for steel mini-mills. This places even greater pressure on local steel prices, which cannot simply be offset by continuously increasing duties.
Between subsidies, tariffs, permits, temporary rebates, anti-dumping duties and safeguard measures, the steel sector has become extraordinarily complex. In such an environment, circumvention of duties is almost inevitable. As the system becomes more complicated, detecting that circumvention also becomes increasingly difficult, creating additional risks for both local producers and legitimate importers.
Both investigations were brought by ArcelorMittal South Africa (Amsa) and together cover approximately R3.05 billion worth of imports.
The requested duties
Cold-rolled steel currently attracts a 10% import duty unless it is imported from a country or region covered by a trade agreement, such as the European Union.
In addition, Amsa has requested anti-dumping duties of 119% on cold-rolled steel imported from China.
It has also applied for safeguard duties of 40%, which would apply to imports from almost the entire world, including regions such as the EU with which South Africa has trade agreements.
If both applications succeed, the duties will be cumulative. That means imports from China would attract a combined duty of 169% (10% + 119% + 40%) on the overlapping tariff codes.
The anti-dumping investigation
The investigation covers cold-rolled (cold-reduced) flat-rolled products, whether in coils or cut-to-length, classifiable under tariff subheadings 7209.16, 7209.17, 7209.18 and 7225.50.
According to ITAC, there is prima facie evidence that these products are being dumped into the SACU market, causing material injury to the domestic industry.
If no one opposes the application, the requested 119% anti-dumping duties are likely to be imposed. The most important responses will come from Chinese producers. While it is essential for importers and, perhaps even more importantly, local users of the products to participate in the investigation, the absence of responses from Chinese producers will make it difficult to secure duties lower than those requested.
Interested parties have until August 9 to file their responses.
The safeguard investigation
Unlike anti-dumping duties, which target imports from a specific country, safeguard duties apply to imports from almost all countries, subject to limited exceptions.
Exporters therefore play a less significant role in this investigation. However, if you import or use cold-rolled steel, responding to the investigation is critically important.
If safeguard duties are imposed, they will remain in force for three years, although the duty must be reduced each year before expiring at the end of the third year.
The investigation covers products classifiable under tariff subheadings 7209.15, 7209.16, 7209.17, 7209.18, 7209.25, 7209.26, 7209.27, 7209.29, 7211.23, 7211.29, 7211.90 and 7225.50. Several of these tariff codes are also included in the anti-dumping investigation.
The notice also lists tariff subheading 7209.29, which does not appear to exist in the South African tariff schedule. This may simply be a typographical error.
The timelines for the safeguard investigation are even tighter, with interested parties having until July 30 to submit their responses.
