USA steel and aluminium tariffs hurt South African manufacturers – Solidarity

20 June 2019

Solidarity said today that South African exporters of steel and aluminium products are under severe pressure after the USA recently granted Canada and Mexico exemption from steel and aluminium tariffs.

According to Solidarity Deputy General Secretary Marius Croucamp, this exemption has resulted in cheaper prices for Canadian and Mexican steel and aluminium compared to the South African price for steel. In May 2019, the USA lifted the 25% tariff on steel and the 10% tariff on aluminium for Canada and Mexico.

Croucamp added that South African manufacturers, among them Duferco, Cisco, Columbus Stainless, South 32 and ArcelorMittal, which exports steel to the USA, are under immense pressure. “These manufacturers find themselves in a dire situation because exports to the USA are rapidly drying up. Factories have already started retrenching and it is possible that factories may close down,” Croucamp warned.

Croucamp argued that the lifting of the tariffs were a further setback for the struggling South African industry, which is already burdened by the increase in Eskom’s electricity tariffs and the carbon tax imposed by government.

At the beginning of June 2019, Solidarity requested Trade and Industry Minister Ebrahim Patel to set up a meeting with major role players in the South African steel industry in order to discuss issues.

According to Croucamp, Solidarity also supports the request to the minister by local manufacturers to urgently discuss the impact of the USA tariffs. “Our focus is on saving the industry from collapse and on reducing job losses. Issues need to be addressed quickly and with sincerity so that solutions can be found,” Croucamp said.

In the USA, the picture is not as rosy for the steel industry as was expected after import tariffs on steel and aluminium had been introduced. Earlier this week, U.S. Steel announced that the steel giant would be scaling down two blast furnaces in Chicago and Detroit. The announcement followed on the scaling down of a blast furnace in Europe. U.S. Steel will cut production by 200 000 tons per month. In addition, the company lowered its outlook on earnings. Two other steel manufacturers in the USA, namely Nucor and Steel Dynamics, also issued similar warnings this week.

Steel prices in the USA have dropped dramatically over the past year. Panic buying of steel stock followed after the steel tariffs were announced in March 2018. The fear of stock shortages developing was partly responsible for the panic buying and stockpiling. However, the opposite has happened with too much steel stockpiled in the USA after the demand for steel declined due to a slowdown in the automotive, energy and construction industries, which resulted in a drastic decline in steel purchases and lower steel prices.

Issued by Marius Croucamp, Deputy General Secretary, Solidarity, 20 June 2019