Steel Sector: Largest steel review in ITAC's history: future of the Steel Industry hangs in the balance.

STEEL SECTOR

LARGEST STEEL REVIEW IN ITAC’s HISTORY

FUTURE OF THE STEEL INDUSTRY HANGS IN THE BALANCE

Adapted from an article by Donald MacKay

In November 2023, AMSA announced the closure of their long steel business in Newcastle. In their official announcement, AMSA cited the Price Preference System (PPS) on scrap steel as one of the contributing factors of its decline.

Discussions between AMSA and Government, exploring additional and alternative support measures from Government to keep AMSA open and operating, continued after this initial announcement. However, the steel policies of the day remained unchanged. Additional anti-dumping and safeguard duties were introduced, but no other policies were amended with the goal of assisting AMSA.

In January 2025, AMSA again announced the closure of their long steel business. To keep that business open beyond 31 January 2025, Government injected a further R380 million into AMSA’s coffers. Bear in mind, the same destructive and protectionist steel policies are still in effect, AMSA has just been paid to stay open for longer while the “negotiations” continue behind the scenes. In the meantime, AMSA has made it clear to Government, it requires additional billions to stay afloat.

Then, on 19 March 2025, in an absolute shocking turn of events, the International Trade Administration Commission (ITAC) published the largest tariff-, duty- and import measures review in their 22-year history, exclusively focused on steel. This review considers 609 tariff codes, over four chapters, covering everything from chapters 72 (primary steel and stainless steel), 73 (articles of steel, i.e., pipes and wire), 82 (tools and cutlery), and 83 (miscellaneous steel articles, i.e., padlocks).

This is R67 billion worth of imports. 355 of those tariff codes are being considered for a duty increase, adding R1.76 billion to the tariff bill if they are all approved. Three rebates (duty exemptions) may be removed, costing the 24 importers who use these rebates R87 million in duties per year if they are removed. Import permits are being considered for 61% of all steel imports. In other words, it’s not just about the tariff anymore, steel companies may be faced with a simple refusal to be allowed to import.

This, however, is not the end, as the review extends even further. With no detail being provided, scrap metal, iron ore and coking coal are being reviewed to see how their cost can be brought down for local consumers. This means ITAC may consider extending PPS to iron ore and coal. South Africa exported R104 billion of bituminous coal and R109 billion of iron ore in 2024. Imagine the impact of now forcing these mines, already under strain from our rail and ports, to also offer their minerals at a discount locally before being allowed to obtain an export permit. ITAC itself has complained about the difficulties in applying this system to scrap metal, imagine now implementing this system on a scale at least 20 times larger than scrap metal.

What is also being reviewed in this investigation, are possible safeguards and compulsory standards on “high-risk steel products”.

ITAC promised that tariff investigations will be completed in six months, however, usually it takes 27 months, on average, and only covers a small handful of tariff codes per review. If one considers every single other current open tariff investigation, some of which have been open for over 50 months, it is but a fraction of the scope of this planned investigation. ITAC has to give initial feedback on their progress with the investigation to the Minister by the end of June 2025.

There are nine other open tariff investigations covering these four chapters, along with three anti-dumping and two safeguard investigations. In addition, an anti-dumping investigation was launched on 20 March 2023 on galvanised steel from China.

The scale of the trade-offs to be made in this investigation are staggering. The greatest concern is not with the scope of the investigation, but the fact that this is happening in a single review. It seems as if everything that was not done in the steel sector in a decade is now being done in a month.

ITAC has still not published the results of their review of PPS on scrap metal, which was completed months ago. Given the enormous impact of this policy on AMSA, and the inclusion of scrap in this review, it is of the utmost importance for ITAC to publish the outcome of that review first, before considering alternative measures to reduce the price of scrap steel.

Consequential decisions made under pressure, even by the greatest minds, carry disproportionate risk. The downstream sector, employing 90% of the people in the steel value chain, is at existential risk… but so is AMSA and so are the mini mills.

Policy makers should carefully count the cost of the decisions they are about to take on the steel sector. There will be losers. Let’s not pretend otherwise. No matter what is decided, the steel industry will never look the same.

For more information

NEASA Media Department

media@neasa.co.za

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