US dumping inquiry troubles SA steel body

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) says US department of commerce claims that South African steel producers are dumping steel wire rod in the US only highlights SA’s inwardlooking trade policies.

It says the investigation by the US is “tit-for-tat” retaliation against the country’s steel industry for requesting the imposition of import tariffs and safeguard duties on cheap international steel imports.

Dumping is when a foreign company sells an imported product at less than fair value.

“This highlights the longterm demerits of inwardlooking protectionist trade policies,” Seifsa chief economist Michael Ade says. The body is “extremely concerned” that the already grievous state of SA’s steel industry will now only worsen, it says.

Seifsa represents 23 independent employer associations in the metals and engineering industries, with a combined membership of 1,600 companies employing about 200,000 people. The US inquiry appears to be “only the tip of the iceberg” and may be a precursor to many of SA’s overseas trading partners starting to retaliate and protect their steel industries.

“This is of grave concern to Seifsa, given the strategic importance of the local steel industry,” Ade says.

South African steel producer Scaw Metals has dismissed an “affirmative preliminary determination” by the US department of commerce that it is involved in dumping carbon and alloy steel wire rod in the US, along with firms from Italy, South Korea, Spain, Turkey, Ukraine and the UK.

The department is scheduled to announce its final antidumping determinations on January 9 2018.

“The duty referred to ... relates to wire rod — primary steel — not wire or wire products. CWI [Consolidated Wire Industries] does not manufacture wire rod,” Dudu Ndlovu, Scaw’s head of public affairs and communications, says. “We are aware that the US International Trade Administration was investigating possible dumping of wire rod into the US from SA and assumed this was related to ArcelorMittal SA, as Scaw does not, nor has it for years, exported wire rod to the US. The details are unknown to us.”

In the South African investigation, the US government assigned a preliminary dumping rate of 142.26% on the “collapsed entity” composed of ArcelorMittal SA, Scaw and CWI, based on “adverse facts” due to their stated failure to respond to the department’s request for information.

ArcelorMittal SA and Scaw, the latter majority-owned by the state-mandated Industrial Development Corporation (IDC), jointly own CWI Holdings. CWI is a major producer of mild steel wire and wire products.

All other producers and exporters in SA have been assigned a preliminary dumping rate of 135.46%.

South African companies had among the highest rates mentioned. Ade says affirmative determinations will result in the US commerce department issuing anti-dumping orders that will increase export costs for South African steel producers and further squeeze profit margins.

ArcelorMittal SA says it does not agree with the conclusions drawn by the US department of commerce. The country’s largest steel maker says there is no single entity composed of ArcelorMittal SA, Scaw and CWI as stated by US authorities.

The group says it sold 19,000 tonnes of wire rod into the US in 2016 among total wire rod imports of about 1.6-million tonnes. “Based on the criteria applied by the US authorities, they concluded that ArcelorMittal SA, Scaw and CWI were affiliated entities and therefore treated as a single entity,” it says. “The reason is that we have an interest in CWI with the IDC, but that Scaw is appointed to manage CWI. Also IDC has an interest in ArcelorMittal SA.”

The group says it has put a lot of effort into responding “in a complete and timely manner” to the multitude of information requests received from the US department of commerce. “This included hiring lawyers in the US to guide us through the arduous process. Indeed, ArcelorMittal SA’s efforts were acknowledged in the full report from the US department of commerce,” the company says.

“For our part, ArcelorMittal SA will discuss the findings with our legal counsel in the US before deciding on how to respond,” the group says.

THIS IS OF GRAVE CONCERN TO SEIFSA, GIVEN THE IMPORTANCE OF THE LOCAL STEEL INDUSTRY