The Southern African Institute of Steel Construction (SAISC) says its fabricating members are facing supply constraints following the closure of ArcelorMittal South Africa’s Newcastle long-steel operations. The institute is calling for temporary tariff relief as a bridging measure while alternative local supply is developed.
Project designs have also had to be reconsidered or changed to accommodate the steel that is available, adding engineering, procurement and fabrication costs.
“This is particularly concerning in sectors such as infrastructure, mining, energy, logistics and commercial construction, where certainty of material supply is critical to project planning and delivery,” Gebremeskel says.
Timing of tariffs and supply constraints
A key concern for the downstream industry is the timing of the supply disruption. The loss of Newcastle’s production capacity coincided with the introduction of additional tariff protection on a range of long structural steel products, before alternative domestic production had developed sufficiently to fill the gap.
Following the first phase of a steel tariff review by the International Trade Administration Commission of South Africa (Itac), general tariffs on several long-steel imports were raised to 10% from May.
Separately, an anti-dumping investigation resulted in duties on structural steel and steel sections imported from China and Thailand. Since March, the duties have been 74.98% for imports from China and 20.32% for imports from Thailand.
New tariff rebates have been proposed but, so far, have been implemented for only a limited number of tariff subheadings. Itac has indicated that further rebates may be considered after the second phase of the tariff review is complete.
Preliminary determinations on new protection measures and rebates arising from the second phase were published in the Government Gazette on September 18. A four-week period was set aside for public comment.
SAISC seeks a practical supply test
SAISC is calling for temporary tariff relief on affected long-steel products until alternative local supply can adequately serve the market.
“We support the development of sustainable domestic steelmaking capacity, but trade protection and localisation objectives need to be balanced against the practical requirements of the downstream industry,” Gebremeskel says.
Where local producers cannot supply specific structural products in the required quantities, within commercially reasonable lead times and at the necessary quality, he says, fabricators need an effective way to access the material required.
Gebremeskel proposes assessing steel availability against three criteria: whether the product is manufactured in South Africa; whether it is available in the required quantity and within a reasonable timeframe; and whether it meets the required quality, compliance and traceability standards.
“A product being theoretically manufactured domestically does not necessarily mean that it is practically available to a fabricator facing a project delivery deadline,” he says.
Balancing domestic production and downstream competitiveness
SAISC says localisation and downstream competitiveness should not be treated as opposing goals.
“A strong and sustainable domestic steelmaking industry is strategically important to South Africa and to the constructional steel sector,” Gebremeskel says. “At the same time, protection measures need to recognise periods where domestic capacity cannot yet meet the full requirements of the downstream market.”
If fabricators cannot obtain the right steel, at the required quality and within project timelines, South Africa risks losing fabrication work and industrial value further downstream.
SAISC says its objective is a balanced and sustainable steel ecosystem: one that supports competitive domestic production while ensuring downstream fabricators can reliably access the materials they need for South African and export projects.
