STEEL INDUSTRY… in crisis. SOUTH AFRICA HAS TO FIND A MORE BALANCED SOLUTION
Dear Minister Davies
This is our fourth letter addressed to you regarding this very important matter. Our previous letters (respectively dated 15 March 2016, 18 May 2016 and 8 June 2016) are enclosed for ease of reference.
In our view the current crisis in the Steel Industry is caused by three interventions:
- the introduction of protectionist duties;
- the consequent creation of an environment in which opportunistic and unchecked price increases by AMSA is implemented; and
- the paralysing effect of the looming safeguard duties.
Minister, the first meeting of the ITAC Pricing Committee to investigate the impact of duties on the downstream Industry took place on Monday, 20 June 2016. However, concurrently with the commencement of the Pricing Committee’s activities, further duties were announced on nine more tariff codes. It has become clear that nothing prevents AMSA from applying their import parity pricing, but now with the new duties priced in.Government have long been suspected of steam-rolling these duties and that consultation with the downstream Industry is pure window-dressing; or perhaps too little too late. This is probably fuelled by government’s belief that South Africa, in comparison with other countries, is behind in protecting our Steel Industry. With a single monopolistic primary steel producer that produces steel at high prices, South Africa’s position is vastly different.
There is an ever increasing sentiment among downstream manufacturers, namely that South Africa does not need a primary