Steelbank Merchants requested a rebate of duty on

Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, in coils, not further worked than hot-rolled, pickled, of a thickness of 3 mm or more but less than 4,75 mm, classifiable in tariff subheading 7208.26, in such quantities, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the products are not available in the products are not available in the SACU market; and

Flat-rolled products of iron or non-alloy steel, of a width of 600 mm or more, in coils, not further worked than hot-rolled, pickled, of a thickness of less than 3 mm, classifiable in tariff subheading 7208.27, in such quantities, at such times and subject to such conditions as the International Trade Administration Commission may allow by specific permit, provided the products are not available in the SACU market”

If approved, this would bring the total number of rebates on hot-rolled steel to 51. If there was any confusion, this is a very very large number of rebates on a heavily protected product. So protected in fact that ArcelorMittal, the Minister of Trade Industry and Competition and ITAC are prepared to go to court to ensure this protection remains, while at the same time rebating 50 (soon to be 51) variations of hot-rolled steel.

The reasons given by the applicant is that these products are not manufactured locally, which means they have been burdened by the safeguard duty on hot-rolled steel (currently 8%), for 3.5 years. On top of this, they have also lived with the 10% duty on this same product since 12 February 2016, while it was not manufactured in SACU. This is 6 years of paying an unnecessary duty, making the downstream industry less competitive, with no local option and thus no local producer to benefit from the protection. I have no idea what you manufacture with this steel, but whatever it is, these duties on the raw material have made the thing manufactured less competitive and may very well have driven imports into that space.

Interested parties have until 22 April 2021 to respond.

Contact us on info@xa.co.za for assistance.

And now for the largest on steel ever requested!

Pour yourself a stiff drink and step with me through the looking glass.

The Department of Trade, Industry and Competition have requested a temporary rebate of duty on pretty much all primary steel products. Hot rolled cold-rolled, clad, plated and coated. The tariff headings covered are 72.08, 72.09, 72.10, 72.11, 72.12, 7225.1 and 7225.99. However in the rush to rebate duties on products which ArcelorMittal cannot supply, they have also included downstream items such as corrugated sheeting in the scope of the rebate review. This is an industry facing severe challenges with undervalued imports and has seen an astonishing surge in volumes (3 400 tons in 2016 to 11 500 tons in 2020, with the average price falling from R4 790 per ton in 2016 to R3 350 in 2020, while the Rand depreciated over that period).

There is not much that ArcelorMittal manufacture that the DTIC have not asked ITAC to investigate and possibly rebate. The reasons given by the DTIC are:

  • Concerns received from a number of downstream sectors indicating that there are interruptions in the reliable supply of steel domestically which has resulted in critical shortage of steel;
  • The critical shortage of steel is mainly attributable to unplanned and unforeseen shutdown at ArcelorMittal South Africa Limited (“AMSA”) plants which have worsened due to the company’s decision to restart its second blast-furnace at its Vanderbijlpark post the Covid- 19 lockdown;
  • Furthermore, the reliability of supply by AMSA has been an ongoing issue prior to Covid- 19; and
  • The ongoing primary steel shortages and supply challenges of flat steel products is placing the value chain at risk.

The last point is perhaps the most pertinent of all. When there is not enough steel been produced locally and you apply a duty on this product, then the downstream industry is placed at risk. None of this is novel economic theory. Some might even say it is common sense. However, rather than remove duties which clearly are not achieving anything positive at all, yet another rebate is proposed (number 52 if approved and this almost certainly will be approved).

In 2019, a year untouched by Covid, this proposed rebate covered R6.4bn in imports. In 2020, this has increased to R6.9bn. The R500m increase of imports in a year is not due to a thriving downstream sector, outpacing an efficient but busy supplier. No. This is simply a very large shortage of materials which are normally supplied locally and now have to be imported. Looking at the top 5 supply countries (China, Japan, Germany, Turkey and the UK), the duties paid in 2020 amount to R725m. This is R725m, of cost added to the downstream sector on products largely not available locally for 2020.

The irony of being in court to defend extending the 8% safeguard duty on hot-rolled steel, while asking ITAC for a complete rebate on that very duty should not be lost on you.

Now drink up.

“Why, sometimes I believe as many as six impossible things before breakfast”

Lewis Carroll, Alice in Wonderland

If you are a user of steel, contact us on info@xa.co.za, so we can assist you to ensure the rebate is approved.

Interested parties have until 30 March 2021 to respond. Do not miss this deadline and try not to ask for an extension (even though this is allowed). Any delay here could have terrible consequences.

More about rebates

Rebates are created when a domestic industry exists but cannot supply a particular variety of the product they manufacture, either because of technical reasons or because demand significantly exceeds supply.

Rebates can be permanent, known as manufacturing or industrial rebates and are usually connected to a particular application. Such rebates connect a raw material, which is not available locally, to a particular end use. Manufacturing rebates require the imported raw material to be converted into something else completely.

Temporary rebates on the other hand deal with shortages in local supply and do not require the raw material to be further processed. Temporary rebates are only active while the local industry cannot supply the material. This is managed by way of a permit issued (usually) by ITAC . If the imported product is available locally in the quantities demanded, then the permit will not be issued and the duty will be payable.

Both of the steel rebates in this blog post (along with the other 50 rebate on hot-rolled steel) are all temporary rebates.

STAY CONNECTED -SIGN UP TO OUR NEWSLETTERS

STAY CONNECTED -SIGN UP TO OUR NEWSLETTERS

Join our mailing list to receive the latest news and updates from our team.

You have Successfully Subscribed!