Tariff protection sought
CEMENT INDUSTRY: ‘LOW QUALITY’ IMPORTS ARE WEAKENING LOCAL MANUFACTURERS
Imposing duty could give the South African sector some protection.
Cement imports into the SA market are accelerating as local producers scurry to finalise applications to the International Trade Administration Commission (Itac) for the imposition of tariff protection, and to the department of trade and industry for the designation of cement.
That will make it mandatory for local cement to be used in all government contracts.
David Metelerkamp, senior economist at construction market intelligence firm Industry Insight, says cement imports during the first 11 months of last year increased 7.6% year on year to 971 623 tons after escalating 84% year on year in 2018.
The volume of imports has remained at an elevated level and is even higher than the surge seen in 2018, he says, while the currency has remained relatively unchanged.
Countries of origin
Metelerkamp says imports of cement clinker increased 137% in the first 11 months of last year to 210 485 tons.
The origin of these imports has changed from mainly Vietnam in 2017 to the United Arab Emirates and Saudi Arabia in 2018 and 2019.
Cement producers in Pakistan reported a 22% year-on-year increase in export volumes during the second half of 2019 to 4.38 million tons versus an increase of just 3.5% in domestic consumption.
“After being hit by tariffs imposed by South Africa, Pakistan exported 40 000 tons to SA in October 2019 [first time since May 2019] and just over 80 000 tons in 2019, compared to a total of 201 680 tons in 2018.”
Vietnam, responsible for over 70% of total imports into SA, is currently the largest threat to local cement producers, he says.
Sub-Saharan Africa demand to grow
Despite the threat from imports, Industry Insight reports that World Cement Association chief executive Ian Riley expects the sub-Saharan Africa cement industry to grow faster than in any other region over the next 30 years.
Morag Evans, CEO of Databuild, a knowledge hub for construction and related industries, says local cement manufacturers are being severely undermined by cheap imports from countries such as China, Vietnam and Pakistan.
Evans adds that government’s failure to stem the influx of these products could have a severely detrimental impact on an already struggling industry.
“Not only are these imports negatively impacting the competitiveness of our local manufacturers, but independent studies have shown the quality of these international products to be inferior.”
Evans adds that allowing substandard products to be released into the market is unacceptable because the long-term health, safety and environmental implications could be severe.
She says government should urgently consider imposing stricter cement standards while cement producers need to continue educating users on the importance of using cement that has been certified as compliant with technical regulations.
SA’s cement industry, represented by the Concrete Institute, has applied to Itac for tariff protection and for the designation of cement.