Itac Expects to Finalise Review of Scrap Export Regulations During First Half of 2025

The intention, he says, is to strike the right balance between protection for the domestic steel industry, while facilitating imports where needed by downstream steel users.

SEATTLE (Scrap Monster): International Trade Administration of South Africa (Itac) chief commissioner Ayabonga Cawe reports that a summary report relating to the commission’s review of the Price Preference System (PPS) for scrap metal has been handed to the Department of Trade, Industry and Competition (dtic).

The document reflects public comments received by the November 8 deadline arising from the initiation, in late September, of the review of the PPS guidelines. However, Cawe tells Engineering News that it does not represent a final recommendation, with further work ongoing.

The PPS is designed to regulate scrap exports to facilitate the affordable supply of ferrous and nonferrous material to domestic consumers.

It has come under the spotlight again after ArcelorMittal South Africa (AMSA) cited the PPS and the scrap export tax as one of the reasons for its decision to wind down its long-products business and place its Newcastle facility into care and maintenance, at the expense of 3 500 jobs.

Other reasons provided related to weak domestic demand, surging imports and high and rising rail and electricity costs.

AMSA claims that the benefits arising as a result of the 30% ferrous scrap discount and 10% export tax have placed its Newcastle mill, which produces steel from iron-ore using blast-furnace technology, at a competitive disadvantage when compared with steelmakers using scrap in electric arc furnaces.

Cawe confirms that the comments received covered a range of issues, including the discount rates, transactional costs, delivery periods and costs, as well as payment terms that deviated from the cash-on-delivery method envisaged.

Some stakeholders raised questions about the effectiveness and desirability of the policy itself, but because Itac is not the policymaker, its review is limited to the administrative and procedural aspects of the PPS.

Cawe expects Itac to finalise its recommendations on the PPS guidelines during the first half of the year and says AMSA, which also made comments on the guidelines, had been appraised of progress during meetings held under the auspices of a task team set up to address obstacles to the sustainability of its longs unit.

“It’s regrettable, therefore, that AMSA has made the wind-down announcement, as we would have hoped that the company would have had more faith in the dialogue that was under way,” Cawe tells Engineering News.

In line with the dtic’s reaction to the AMSA announcement, he says Itac remains committed to seeking a resolution.

He also confirmed that Itac was making progress on the review of the tariff structure for primary, midstream and downstream steel products, in line with a directive given to it in May.

The review will look at the existing trade-related measures in the steel sector and assess their effectiveness. It will also consider the suitability of further measures to raise the level of protection for the domestic steel sector.

The intention, he says, is to strike the right balance between protection for the domestic steel industry, while facilitating imports where needed by downstream steel users.

“We are taking a value-chain approach and we are analysing the entire tariff book in relation to primary, midstream and downstream steel products to assess what the tariff structure looks like, while seeking input from market participants on the adequacy or inadequacy of the existing measures of protection.”

Opportunities will be provided, during various stages of the review process, for public and stakeholder comment and Itac is aiming to make its recommendations to the Minister during the coming few months.

The review forms part of what Cawe describes as a move by Itac to become more strategic and proactive amid expectations that trade instruments are likely to be used more assertively by governments in light of the tariff signals being sent by US President-elect Donald Trump.

There is no intention for Itac to deviate from the evidence-based approach that has come to define its work, which is time-consuming by nature and which Cawe acknowledges is regarded as sluggish by many market participants.

However, it is looking to streamline its processes as well as to integrate the use of AI to improve its real-time visibility of global changes to trade restrictions, price anomalies and import patterns, as well as the effectiveness of trade measures.

“These are some of the reforms that we intend to institute in a bid to speed up our investigations and recommendations so that decision-making processes can be accelerated,” he tells Engineering News. 

Courtesy: www.engineeringnews.co.za

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