The International Trade Administration Commission of South Africa (Itac) has requested the South African Revenue Service (Sars) to impose a provisional safeguard duty of 52.34% of the value of imports of thin-gauge corrosion-resistant steel coil for 200 days, effective from June 27.

These provisional measures apply to all countries except those developing countries whose individual import volumes do not exceed 3% of total imports or collectively account for less than 9% of total imports.

This comes after Southern African Customs Union (Sacu) metal producer ArcelorMittal South Africa (AMSA) applied for remedial action against increased imports of corrosion-resistant steel coil. The application was supported by Safal Steel, another Sacu-based producer.

Steel coils are widely used in key downstream industries such as construction, roofing and cladding, appliance manufacturing and the automotive and engineering sectors. Their quality and corrosion-resistant properties make them a critical input for structural and fabricated steel applications.

The commission made a preliminary decision to impose a provisional safeguard duty on imports of corrosion-resistant steel coil. The provisional safeguard duty is a short-term emergency measure imposed before a final determination is made, in order to prevent further injury while the investigation is concluded.

Itac has found, so far, that the surge in imports is the result of unforeseen developments and is recent, sudden, sharp and significant.

Further, it determined that the Sacu industry is experiencing serious injury owing to this surge.

While other factors such as market contraction and rising input, electricity and transport costs were considered, Itac found that they did not sufficiently detract the causal link between the serious injury and the import surge.

The commission determined that critical circumstances existed that warranted immediate action to prevent irreparable harm.

TRANSFORMER CORES

Itac has also recommended that the rate of customs duty on transformer cores, having a power handling capacity not exceeding 50 000 kVA, be increased from 5% to the World Trade Organization-bound rate of 15% its value.

This comes after STI Electrical applied for an increase in the general rate of customs duty on such transformer cores.

These cores are an integral component of transformers, regarded as the magnetic circuit part. It is made up of thin laminations of cold-rolled grain-oriented silicon steel, commonly known as core steel.

Itac found that the domestic manufacturing industry’s total production and sales volumes of the subject product declined during the three-year period under investigation.

Also, the commission found that the domestic industry manufacturing transformation core is relatively price uncompetitive when compared with imports of similar imported products, experiencing declining profits, coupled with an escalating cost structure, in relation to the manufacturing of transformer cores, primarily driven by the cost of raw materials.

As such, Itac concluded that additional tariff support should enable the domestic industry manufacturing the subject products to use its existing under-used production capacity and achieve economies of scale, resulting in increased volumes with a reduction in the marginal cost of production.

The commission further recommended that the duty be reviewed to monitor the performance of the industry after three years from the date of implementation.