South Africa’s exclusion from a list of countries exempted from tariffs imposed by the US on steel and aluminium imports should not have an immediate impact on local producer Hulamin, but it has increased long-term risks, the JSE-listed company said on Friday.
Hulamin, whose share price has suffered since the April 30 announcement that South African aluminum products will not be exempt from the Section 232 import duties, said that markets for niche products in the US should remain strong.
Outgoing chairperson Mafika Mkwanazi said in a letter to shareholders that efforts were under way to address regulatory issues with customers.
President Donald Trump on March 8 announced a 10% ad valorem tariff on imports of aluminium articles and a 25% ad valorem tariff on imports of steel articles, but later granted some countries exemption.
Mkwanazi said that South Africa’s competitive position, relative to countries and regions that have been granted exemption status, was being eroded by the import tariff.
He noted that Hulamin had a “flexible and nimble strategy” that allowed the company to adjust export destinations for its standard products in response to changing market conditions.
“Long-standing market positions and customer relationships in key markets around the world remain available, should conditions in the US worsen,” he averred.
Meanwhile, Hulamin said that it continued to focus on operational and manufacturing excellence in order to deliver further cost saving, improved efficiencies and growth in sales volumes.
In 2018 to date, manufacturing performance is steady, while sales volumes have lagged production, as was usual this time of year, the company noted.
“With change and progress accelerating, often driven by technology, Hulamin is particularly well placed. Being in aluminium, a truly remarkable metal we are at the forefront of material choices that support leading technological innovation.”
Shares in Hulamin traded at R4.57 each on Friday afternoon. The stock fell 11% since May 2, when Hulamin traded at R5.16 a share.