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Johannesburg - ArcelorMittal South Africa said it’s “going to fight” subsidised steel from China.
The steel is being sent to South African ports at prices as much as 25% below local production costs, making producers uncompetitive. AMSA, as the company is known, asked the government for tariffs on Chinese steel imports of 10% to 15% on three products, and will submit more applications by the end of the month, CEO Paul O’Flaherty said on a conference call on Thursday.
AMSA, South Africa’s largest steelmaker and a unit of ArcelorMittal, has reported losses for four years amid weakening demand and rising operating costs. Steel prices slumped in 2015 as China, the biggest producer, shipped excess output overseas.
“This is unsustainable,” O’Flaherty said. “We will do whatever is required, but that may not be enough.”
A consequence of lower prices may be job cuts. AMSA is reviewing its Vereeniging plant in the central Gauteng province, the country’s oldest steelworks, which may lead to a cut of 1 200 jobs, O’Flaherty said.
Evraz’s South African unit is in talks with unions to cut staff by 50% as it undergoes the local equivalent of bankruptcy protection.
South Africa’s steel demand for 2015 isn’t expected to exceed the 4.9 million metric tonnes consumed last year, O’Flaherty said. Imports may increase as much as 60% to 1.6 million tonnes, he said. The company is considering anti- dumping applications on wire rods and rebar products.
“When we have product coming from overseas that is subsidised and is coming at prices that are lower than the variable cost of your production, that is a problem for everybody,” he said.
Even with the losses, the company is still able to fund itself, he said.
“We have no issues of being a going concern and there’s many things we can do to remain a going concern,” he said.
