In this letter to Engineering News, Allied Steelrode CEO Arun Chadha calls for urgent policy interventions to support the struggling domestic steel sector and to safeguard South Africa’s industrial capacity.

South Africa’s steel industry is in deep crisis. Cheap imports from Asia – particularly China – are flooding our market, undercutting domestic producers and pushing primary mills to the brink. We now face the potential closure of ore-based steelmaking capacity and, with it, a critical pillar of industrial sovereignty.

A decline of over $60/t in Chinese steel prices in recent months, coupled with US tariff barriers, has redirected surplus Chinese steel into African markets. This is hitting South Africa hard. Even with the recently reinstated safeguard duty, imported steel remains cheaper than local production. The situation is unsustainable.

The loss of over 1.4-million tonnes of locally replaceable production volume has pushed up fixed costs per tonne, threatening the viability of South Africa’s only integrated mills. Meanwhile, Transnet inefficiencies add logistical burdens and cost, weakening competitiveness further.

The downstream industry – fabricators and manufacturers – is also under siege. Finished products are landing at prices local firms cannot match. Jobs are at stake across the entire steel value chain.

Government support has been inconsistent. The six-month safeguard on hot-rolled coil expired in January, but took over three months to reimplement. During the lapse, importers claimed back paid duties, costing the public purse hundreds of millions. In contrast, countries like Zambia and Zimbabwe moved swiftly to protect their markets with 30% tariffs on South African steel.

Scrap dynamics present an additional challenge. Domestic scrap consumption has surged, but availability has not. Exporting scrap in the form of billets is a missed opportunity to generate local value. South Africa must maintain a balance between scrap- and ore-based capacity. Currently, we are split 50:50 – most countries are not.

We urgently need policy intervention: immediate tariffs on steel products where local capacity exists; revised scrap regulations, including a relook at the Price Preference System; and bulk electricity tariff support for domestic producers. This must go hand-in-hand with fair pricing to protect downstream manufacturers, ensuring they are not squeezed by upstream monopolies.

South Africa cannot industrialise – or even retain its existing industrial base – without a functioning primary steel sector. Let’s act decisively, or prepare to tell our grandchildren how we once made steel and then gave it all away.