Amsa keeps ports busy
But US tariffs starting to have an impact on local business
A DECLINE in local steel production in January suggests that US steel and aluminium tariffs are affecting the industry locally, which could threaten jobs in the field in Richards Bay and Newcastle, Kwazulu-natal.
South African steel production fell by 9.6 percent year-on-year in January to an estimated 521000 tons, according to the World Steel Association (worldsteel).
The January decline was despite the reopening of the Vereeniging Electric Arc Furnace by Arcelormittal South Africa (Amsa).
This could be a delayed reaction to the US having imposed a 25 percent tariff on steel imports and 10 percent tariff on aluminium imports early last year.
The Department of Trade and Industry had made representations to the US to secure exemption from the imposition of the tariffs, but these overtures fell on deaf ears.
“South Africa is disappointed that it was not granted an exemption from the duties,” the department said, but “remains open to engaging US authorities with a view to finding a mutually acceptable outcome.”
In its submissions, South Africa argued that it was also battling with the consequences of the global steel glut and had stringent customs control measures with no risk of circumvention or the transshipment of steel from other countries.
The 330000 tons South Africa exported in 2017 represented less than 1 percent of US steel imports, but it made up 5 percent of local production – equivalent to roughly 7500 jobs in the steel supply chain.
Last year, South African steel production grew by only 0.4 percent to 6.3million tons (Mt), the second consecutive year it was less than Egyptian production, which rose by 13.6 percent to 7.8Mt.
World crude steel production for the 64 countries reporting to worldsteel showed a 4.6 percent increase even after the imposition of the US tariffs, which applied equally to friends and foes.
The Trump administration has made the renegotiation of foreign trade relations a core part of its foreign policy. More than half the world’s production in January came from China, which boosted its steel output by 4.3 percent y/y to 75Mt, while global production increased by 1 percent y/y at 146.7Mt. US steel
More than half of the world’s production in January came from China, which boosted its output by 4.3 percent year-onyear to 75 million tons
production grew by 11 percent y/y in January to 7.6Mt after increasing by only 0.8 percent y/y in June 2018 and 2.9% y/y in the first half of 2018.
The good news, from a KZN perspective, is that due to weak domestic demand, Amsa increased its exports by 21 percent in 2018. As most of the steel exports transit through the KZN ports of Durban and Richards Bay, this provides employment for KZN workers on the railways, roads and ports that handle the exports.