Upstream and downstream steel industries need to work together to overcome imports and tariffs challenges in the steel construction industry, says South African Institute of Steel Construction (Saisc) CEO Paolo Trinchero.
He says a safeguard duty tariff on imported hot-rolled steel was not implemented as promised last month. However, the tariff might not have had the intended effect on the steel industry.
He explains that adding the safeguard duty might be beneficial for a steel mill – which is part of the upstream industry – but for downstream markets that do not have the same level of protection, it might be detrimental. This is because importers might shift away from importing raw materials to increasing the number of completed products being imported.
“We know that the safeguard duty tariff is being completed in the legislation and will eventually be implemented and there has been a lot of consultation, but there has also been quite a fierce pushback from the downstream industry,” he says.
There will be an increase in downstream imports because the downstream industry is not well protected, says Trinchero. When looking at import numbers listed by the Steel and Engineering Industries Federation of Southern Africa in previous years, it is clear that many local manufacturers are already importing parts that are required to manufacture larger components in the country.
He points out that Saisc has worked with downstream and upstream companies to try to get tariffs implemented that complement growth on both levels. However, owing to the stringent processes required by the International Trade Administration Commission (Itac), these proposed tariffs were not accepted.
Meanwhile, Trinchero highlights that the Steel Tube Export Association of South Africa and the Association of Steel and Pipe Manufacturers (ASPM) are operating from the Saisc offices in Parktown West, Johannesburg, helping Saisc to work with both industry bodies in trying to get import tariffs approved by the Itac.
He explains that, ultimately, the tariffs have been turned down because the tubing industry has not yet felt a significant loss to importers. “If we want to have a tariff applied, we have to show some form of injury and the difficulty we have is that we can see the market impact coming but until it happens, we cannot get it through the system.”
Industry has, however, started to react, with upstream and downstream industries trying to protect themselves, subsequently, causing tariffs to benefit only small sections of these industries, Trinchero notes, adding that Saisc is hoping to change the way that the steel construction industry thinks.
“We need to see a more balanced approach from all sides, rather than only large companies trying to protect themselves. We need to balance the downstream or upstream safeguards with tariffs, then we will perhaps be able to level the playing field.”
Trinchero says the downstream and upstream industry tariffs influence each other, so even if upstream was to secure all of the tariffs that it wanted, they need downstream customers to buy the raw material that the upstream industry produces.
In partnership with key sponsors, Saisc hosts the annual Steel Awards to recognise and reward excellence in the use of structural steel. Currently in its thirty-sixth year, Steel Awards 2017, sponsored by Aveng Trident Steel, will take place on September 13 in Gauteng, KwaZulu-Natal and the Western Cape. Over 1 000 guests are expected to attend.
Fifty-nine projects were entered for the awards, across a diverse range of categories including the MiTek Light Steel Frame Building Category, the Global Roofing Solutions Metal Cladding Category, the ASTPM Tubular Category, the Safintra South Africa Factory and Warehouse Category and the Safal Steel Innovation Category.
“We are not just looking at the steel mills, we are looking all the way through to the service centres, fabricators, engineers, architects and quantity surveyors. “In doing so, we are encouraged that, despite all the challenges, we still have amazing projects that have been built over the past year in the country,” Trinchero concludes.