The gap in local supply of lighter long steel products, following the closure of steel producer ArcelorMittal South Africa’s Newcastle Works in November last year, compounded by tariffs, has significantly affected infrastructure projects and the steel value chain, says industry association Southern African Institute of Steel Construction (SAISC) CEO Amanuel Gebremeskel.

Several infrastructure project categories have been affected by the steel shortage, including transmission lines, renewable- energy installations, logistics infrastructure, municipal services and commercial developments.

“The disruption of our supply chain is coming at an unfortunate time, coinciding with a meaningful uptick in project demand, so we have to work hard to see how we can overcome these challenges,” Gebremeskel says.

While new suppliers, including a scrap-based producer, are expected to start operating this year, the interim shortage of light long steel products will continue to affect the steel industry.

Compounding this shortage is the International Trade Administration Commission of South Africa’s (Itac’s) introducing anti-dumping tariffs on long products that are no longer locally produced.

While a precise percentage increase is difficult to quantify, Gebremeskel says tariff rates on many products have risen to the legally permissible 15% maximum import tariff rate alongside additional safeguard duties. Further, reduced local supply following Newcastle’s closure and longer lead times on imports have pushed steel input costs upward across the board.

“Itac’s investigations take very long, so it’s hard for them to keep aligned with the dynamic nature of our industry,” he adds.

Consequently, SAISC is leading an initiative of industry associations in seeking temporary waivers – anticipated to last for six months – to bridge the period until new mills are operational. It is also encouraging Itac to consider numerous factors when determining availability.

Gebremeskel notes that Itac has acknowledged two out of the three dimensions of availability put forward by SAISC, specifically whether steel is available and whether it can be delivered in time.

SAISC is advocating for quality to be recognised as the third dimension. Gebremeskel elaborates that the downstream industry is significant, with fabricators and related entities accounting for over 90% of industry employment, compared with 5% to 10% employed by mills that benefit directly from tariff protection.

He adds that imports are unavoidable in the near term, given the absence of smaller mills and the scale of current project demand, adding that import dependency will likely extend to years, as the product diversity previously offered by Newcastle cannot be readily replicated.

Further, even when new mills reach capacity and demonstrate acceptable quality, some product lines and profiles will continue to require importation.