Trade commission protects legacy steel giant from competitive imports

Mail & Guardian

04-05-2025

The International Trade Administration Commission of South Africa (Itac) has imposed a 9% tariff on imported hot-rolled steel to protect domestic producers, in particular the legacy steelmaker ArcelorMittal South Africa (Amsa).
The decision follows an application by the South African Iron and Steel Institute (Saisi) on behalf of Amsa for remedial action. The tariff applies to all countries except listed developing countries which collectively account for less than 10% of imports.
Itac announced the final determination on Friday, citing a 105% surge in steel imports between 2020 and 2023—almost half of which originated from China, 22% from the E.U and 6.7% from the U.S—as the
Saisi requested protection against a flood of imports, which Itac agreed to by imposing the annual 9% tariff on hot-rolled steel for the next three years.
Hot-rolled steel, which is processed above 972°C for strength and flexibility, is used in mining and earth-moving equipment, pipes, tubes and water tanks. Domestic merchants largely import this product due to pricing for machinery and construction equipment.
In its investigation, Itac found that 'unforeseen developments' such as global oversupply had harmed producers in the Southern African Customs Union (Sacu), which comprises South Africa, Namibia, Botswana, Lesotho and Eswatini.
While the commission acknowledged that overwhelming competition in itself is not inherently unfair, it concluded there is a clear 'causal link' between the surge in imports and
In its submission to the commission, the Botswana government reported that it had conducted a similar analysis between 2020 and 2024, which confirmed that imports had the same impact on its local industry.
Critics argue instead that Amsa's outdated production methods and high prices make it uncompetitive in the current global market, thus necessitating protective measures.
Once the continent's leading producer of steel products such as rods, bars and rails, Amsa has received three bailouts since 2024 amounting to R3-billion in an effort to stave off downsizing.
In addition to the new bailout, the department of trade, industry and competition (dtic) previously imposed a 9% tariff on long steel and a 52% anti-dumping duty on steel imports at the behest of Amsa.
Speaking to the Mail & Guardian, Itac commissioner Ayabonga Cawe said domestic production was in crisis and required urgent intervention. However, he added that local demand remains worryingly weak.
According to the Steel and Engineering Industries Federation of Southern Africa (Seifsa), the country's per capita steel consumption dropped by 37% — from 92 kilograms in 2013 to just 67 kilograms in 2024 — far below the global average of 230 kilograms.
'We need a hybrid production model that accommodates both traditional iron ore beneficiation and modern electric arc furnaces that use scrap metal,' Cawe said. 'India is scrambling to import scrap, while we sit with both scrap metal and iron ore. There has been an effort to turn the country into a construction site, and we have to be honest it is taking very long to kick off.'
National Employers' Association of South Africa chair Gerhard Papenfus said that the government's continued support for Amsa is 'just delaying the inevitable' and 'denying the reality' of the company's inability to compete.
'The bottom line is that the mill is uncompetitive and running on 50% production. That is why they want protection, lowered electricity prices and subsidies on iron ore,' said Papenfus, adding 'Everyone is paying to keep this old mill alive.'
Following its announcement to shut down operations at its Newcastle and Vereeniging plants —
Amsa maintains that it cannot delay the closures beyond August without further state support, including import duties on foreign steel and an end to subsidised scrap-based steelmaking.
In February, Gauteng Premier Panyaza Lesufi announced that a BRICS partner will take over steel production after Amsa's wind down in Vereeniging, already investing R2.5 million to preserve 100 jobs.
The International Development Corporation (IDC) and China's Hubei Iron and Steel Group (HBIS) signed a multi-phase R82.7-billion memorandum of understanding in September to establish a local low-cost iron and steel facility.
The latest Amsa bailout includes a six-month due diligence review by the IDC, which will determine whether to increase its 7% stake or exit entirely.
Asked about the review's objectives, IDC head of corporate affairs Tshepo Ramodibe told the M&G that the corporation 'can't pre-empt outcomes or the next course of action'.
'The due diligence will inform the nature and extent of our support to the business,' he said. 'Transitioning Amsa's processes to scrap-based steel production is one of the questions the review seeks to interrogate.'
The company,
Dtic spokesperson Yamkela Fanini added that Amsa remains the country's sole producer of hot-rolled and long steel products and that the
'While the government cannot dictate production technologies, decarbonisation and diversification are central to South Africa's industrial policy. This includes decarbonising steel production and promoting green methods for both flat and long steel,' Fanini said.
Cawe acknowledged a persistent misalignment between upstream and downstream players in the steel industry — something that the government's
While downstream manufacturers want to import cheaper and climate compliant steel to lower input costs, upstream producers such as Amsa want protection from international competition, creating uncertainty across the sector.
Despite Amsa's determination to remain a central player, downstream industries increasingly favour competitive imports.
In its report Seifsa said the metal industry, which accounts for 25.5% of the manufacturing sector, has not recovered since its 2007 peak. It contracted by 12.2% at the start of the Covid-19 pandemic and declined by a further 1.4% in 2024.
The federation states the industry has shed over 200 000 jobs since the global recession from employing 570 000 in 2008 to a little over 360 000 in 2025 and continues to see an annual 0.7% decline in fixed capital investment.
It warns that the prolonged weakness in production may become structural. Steel-related goods such as fabricated metals and machinery, accounting for 43% production, experienced a combined 15% decline in output last year.
'Post-Covid deterioration is most notable in capacity utilisation, with all steel subsectors operating below the optimal 85% level,' the federation said.
Seifsa also noted a R188-billion trade deficit on steel imports from China, while South Africa's steel exports to China amounted to just R43-billion.
On behalf of Amsa the steel institute argued that China's state-subsidised economy creates unfair advantages, flooding the global market and depressing domestic demand in emerging economies.
'Given the nature of the steel industry excess capacity in one region can potentially displace production in other regions, harming producers in those markets,' Saisi said in its submission to Itac.
However, the UK government, submitting as a concerned party, expressed doubts about the commission's claim that unforeseen global developments directly harmed local producers.
While the UK acknowledged that Chinese subsidies contribute to overcapacity, it said the commission failed to consider the full extent of local preference for cheaper foreign steel.
Japan's Mills Steel Corporation also questioned the scope of the investigation, arguing that the data window of 2020 to 2023 shows a misleading increase trend narrative, as imports had declined pre-pandemic and fluctuated during the post-pandemic recovery period.
The company argued Amsa
The commission stressed that the 9% tariff will remain in place for 200 days to allow domestic producers time to adjust.
It is yet to be seen if Amsa will improve its competitiveness and whether the country will ever rebuild its status as a construction hub given the government's continued support for the legacy steel giant.