ARCELORMITTAL South Africa (Amsa), Africa’s largest steel producer, has supported the extension of steel duty safeguards on imports amid a legal challenge by a major oil trader ‘steel to cancel the rights.
Speaking to reporters on the state of the steel industry, Amsa chief executive Kobus Verster said safeguards had been implemented to level the playing field.
“We are not in a favorable position like other countries in the world, whether it is China or the countries of the Eastern bloc. We do not have subsidized electricity. We don’t have competitive rail. We’re not competitive, ”Verster said.
Amsa was granted an 8% import duty on hot-rolled coils which expired last December, but it was extended following the company’s application to the International Trade Commission and the administration of South Africa.
Amsa is the only producer of hot-rolled coils in South Africa. He had argued that if the government did not act, there was a threat that the primary steel industry would not survive, given the plight of the steel industry.
However, Macsteel has approached the court to challenge the extension of the safeguard to Amsa, with the court hearing scheduled for this month, according to reports.
The National Association of South African Employers (Neasa) also complained last week that Amsa introduced massive price hikes for flat steel products, totaling 23 percent in the past two month.
Neasa chief executive Gerhard Papenfus said in a statement that locally made steel products had
become uncompetitive because manufacturers have been forced to buy expensive Amsa steel as a raw material.
“As long as the duties are imposed, ‘offshoring’ will continue in South Africa as the import of finished products intensifies,” Papenfus said.
In terms of operations, Verster said the capacity utilization of Amsa’s flat steel products was 80%.
Verster said that over the past four months, Amsa was unlikely to be able to produce significantly more flat steel products due to supply constraints.
“We also have constraints on the supply side, and one of the big constraints is Transnet. Transnet is unable to provide us with a constant flow of raw materials in the form of coal and iron ore. They have major cable thefts and that sort of thing, ”Verster said.
Verster said there was no apparent demand for steel in South Africa like elsewhere in the world.
“There is little evidence of large, substantial infrastructure projects that are commissioned,” he said.
When asked if the group would consider restarting the Saldanha plant, which was closed in 2019, Verster said the company would consider supplying the scrap market long-term in a competitive price environment for rail and electricity.
Inherent competition concerns included the costs of iron ore at Saldanha, Verster said, claiming that, for example, the parity price of iron ore for Saldanha was $ 200 (about R2 745) per tonne he was mining from. imported coke, which was north of $ 500 per ton, and paid a flat rate premium of $ 60 per ton.
“You’ll need a reasonable electricity and rail rate for the scrap market,” Verster said.
Amsa shares yesterday closed 6.3% at 5.23 rand on the JSE.