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South African steel, aluminum firms watchful, but not overly anxious, as US tariff hikes loom

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South African steel, aluminum firms watchful, but not overly anxious, as US tariff hikes loom

US President Donald Trump

6th March 2018

By: Terence Creamer
Creamer Media Editor


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South African steel and aluminium firms remain watchful and uncertain about the effects that proposed increased US trade protection could have n their businesses. However, the companies also indicate that they will seek to mitigate the risk through export diversification, as well as a continued focus on markets outside of the US.

Nevertheless, industry stakeholders and the South African government remain keen to receive final details from the US authorities as to the exact nature of the protection to be imposed, as well as which products will be affected. They are also keeping tabs on developments in other countries and territories, where retaliatory actions are being considered.


On March 1, President Donald Trump announced that tariffs on steel would be hiked by 25%, while tariffs on aluminium products would be increased by 10%. He tweeted later that “trade wars are good and easy to win”, as negative reaction to the move poured in and the European Union indicated that it was preparing tit-for-tat tariffs on a range of consumer, agricultural and steel products imported from the US.

South Africa’s Department of Trade and Industry (DTI) immediate stressed that the country’s steel and aluminium exports did not represent a threat to either US industry or jobs. The department also noted that, in some cases, South African-made materials were used as inputs into further processing by American manufacturers.


South Africa’s steel exports to the US in 2017 made up only 1.4% of America’s steel imports and were valued at $950-million. Aluminum exports, meanwhile, were $375-million in 2017, accounting for 1.6% of US imports from all global suppliers.

JSE-listed steel producer ArcelorMittal South Africa (AMSA) underlined this point, stating that it had dispatched only 70 000 t to the US in 2017, representing less than 2% of the company’s total sales of over 4-million tons. AMSA also highlighted that its primary market remained South Africa, while its export focus remained the “Africa overland” market.

However, the impact was not limited to AMSA, with analysis by the South African Iron and Steel Institute (Saisi) cautioning that increased US protection could have negative employment and output impacts.

US Census Bureau data shows that, in 2017, the US imported a total of 33.4-million tons of steel products, of which only 311 000 t came from South Africa.

Saisi says that, while the South African import contribution represents a “miniscule portion” of total US steel demand of 105-million tons, the figure still represents around 5% of South African production. Therefore, losing the US market could put 300 000 t of steel production at risk and with it roughly 7 500 jobs in the steel and manufacturing supply chain.

Steel and Engineering Federation of Southern Africa (Seifsa) CEO Kaizer Nyatsumba expressed similar concern, describing the US action as “unfortunate”, despite the fact that sub-Saharan Africa has emerged as the most important market for South African metal-product exports.

Nyatsumba said Seifsa was monitoring developments and would seek to work with the DTI in outlining the case for continued access for South African exports into the US.

Likewise, AMSA tells Engineering News Online that it is engaging with the DTI and other stakeholders to address some of the concerns.

Meanwhile, South 32, which produces aluminium in South Africa and Mozambique, says its diversified portfolio means it is well placed to manage any potential impact.

The natural resources group tells Engineering News Online that the US contribution remains small “as a share of total sales across our diversified book selling into the Americas, Europe, Africa and Asia”. However, the company did not offer a breakdown of its international sales by value or volume.

Meanwhile, South African aluminium products manufacturer Hulamin tells Engineering News Online that the impact of the proposed hike is not immediately clear, as details are still to be provided by the US authorities.

Nearly 22% of Hulamin’s yearly sales by mass and around 20% by value are made to US customers, which buy the company’s heat-treated plate, foil, flat sheet and coils, can stock and tread plates. Nevertheless, these sales represent less than 2% of US aluminium product imports.

Interestingly, all of Hulamin’s products enter the US under the preferential Africa Growth and Opportunity Act preferential trade dispensation; a factor that could raise the company’s competitiveness should broad-based hikes be introduced.

Hulamin stresses, though, that it is too early to speculate on either the positive or negative impacts, highlighting only that “differential or duty-free access to the US market could be positive for Hulamin”.

The DTI promises that it is “fully engaged with the matter” and will offer further insight into South Africa’s response once further information arises.

The next milestone will be the release of a Presidential Proclamation providing official notice of the specific actions, including details as to when the tariffs will be instituted, as well as which products are affected.

However, the proposed restrictions are expected to be limited to primary steel and aluminium products.


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