JSE-listed steel producer ArcelorMittal South Africa (AMSA) expects imposition of safeguard duties on hot rolled coil (HRC) to come into effect on July 1, but says certain stakeholder processes still have to be completed before the decision is confirmed.

Trade and Industry Minister Dr Rob Davies revealed earlier that he had signed off on an International Trade Administration Commission of South Africa (Itac) determination that safeguard duties should be imposed. This followed an investigation, which confirmed a surge in imports and that the imports harmed the local steel industry.

The Minister refused to be drawn on the proposed duty level, saying that he would do so only once Word Trade Organisation (WTO) processes had been finalised.

In a statement issued along with first-quarter operational information, AMSA said Itac had notified the WTO of its decision to implement safeguards with effect from July 1, 2017, but said there were “certain processes to be completed before this is confirmed with all stakeholders”.

AMSA has led the lobbying effort for addition protection, arguing that, in the context of steel oversupply, base protection of 10% is insufficient to stem the flow of cheap imports.

CEO Wim de Klerk said safeguard duties would provide AMSA with sales volume benefits, as well as an ability to “consistently achieve the basket price”. As part of negotiations with government to secure further protection, AMSA agreed to move away from import parity pricing to a new flat-steel pricing methodology, which employs a weighted basket of domestic selling prices of several countries and is adjusted for the exchange rate.

De Klerk said import levels during the first quarter had remained elevated at 275 000 t, but were below the 310 000 t recorded during the corresponding period last year. “Although having declined slightly from 2016 levels, imports are still high despite the 10% duties having been imposed.”

AMSA said local steel demand had been subdued during the period, despite the implementation of import duties on certain steel products and the designation of South African steel for use in state infrastructure projects by the Department of Trade and Industry.

The company’s local sales were 3.4% lower at 30 000 t, mainly as a result of weaker local demand for long products, the sales of which decreased by 27.7%. AMSA had also decided to institute a review of the long steel business in light of the price of scrap in relation to the raw material basket.

Both local and export sales were expected to remain under pressure in the second quarter.