Trade union Solidarity says that the 25% import tariff on steel and 10% tariff on aluminium proclaimed by US President Donald Trump, which came into effect on March 23 2018, will negatively affect jobs in SA soon.

SA exports about 330,000 tonnes — or 5% of annual steel production — to the US.

In real terms the lag in data will take some time to be felt across the bottom line. But counting the cost in jobs in time will perhaps be the most empirical of indications of the US trade actions.

The South African steel and aluminium industry has experienced severe contraction over the past few years and remains under huge pressure. "There is real concern among players that the tariffs imposed by the US on steel and aluminium products will hurt our local industry, resulting in possible job losses," Solidarity deputy general secretary for the metal and engineering industry, Marius Croucamp, says.

However, 2017 was a much better year for SA’s metals and engineering sector, according to the Steel and Engineering Industries Federation of Southern Africa (Seifsa). It clawed back from four successive years of negative growth from 2013 to 2016, registering annual growth of 2.7% in the period.

That said, investment into the sector has generally been declining over a 23-year period, amid a lack of domestic demand, low production levels and under-utilisation of capacity. This comes as SA has set up tariff barriers to mainly cheaper Chinese steel imports, also designating minimum local content thresholds for steel used in state projects.

Kobus Verster, CEO of ArcelorMittal SA, the country’s largest steel maker, says the nation’s top five steel-consuming industries together contribute R600bn to GDP, or 15% of the total, and employ more than 8-million people.

Meanwhile, SA is sub-Saharan Africa’s only primary producer, making it an industry that is precious and exceedingly difficult to replace.

Trade and Industry Minister Rob Davies has formally requested that SA be excluded from US duties on steel and aluminium. The US has temporarily exempted the EU, Canada, Mexico, Argentina, Australia, Brazil and South Korea from these tariffs.

Levy negotiations

These "friendly" nations have until May 1 2018 to negotiate "levies".

US Census Bureau data indicates that in 2017 the US imported a total of 33.4-million tonnes of steel, of which imports from SA were less than 1% of total US imports, and 0.3% of total US steel demand of 107-million tonnes in the year.

In its submission to the Americans, SA emphasises that its annual exports of aluminium products to the US are equal to about 1.6% of the total. The products include specialised aluminium sheet, coil and plate used for processing in the US automotive, battery and aerospace industries.

"As such, SA does not pose a threat to US national security and to the US steel and aluminium industries, but is a source of strategic primary and secondary products used in further value-added manufacturing in the US, contributing to jobs in both countries," the Department of Trade and Industry says.

SA’s rich output of primary minerals and metals products, including ferro-alloys, vanadium, manganese, base and precious metals, are key materials for advanced manufacturing in the US.

But the department says SA’s total exports account for a small percentage of total US aluminium and steel imports — between 1% and 2% — mainly comprising semi-processed and in some cases niche steel and aluminium products.

Croucamp says Davies has already indicated to the US that domestic steel and aluminium producers are willing to agree to 70% export quotas to that country, but says this "is not good news at all".

ArcelorMittal SA exports about 70,000 tonnes of steel to the US annually, while Hulamin, a KwaZulu-Natal-based semi-fabricator of rolled aluminium products and extrusions, supplies specific product and end-use markets in the US, including for Tesla electric vehicles.

World Trade Organisation rules mean that adjudication over the steel and aluminium tariffs first requires consultation between the US and affected nations, before the world trade body steps in.

So far, and based on preliminary US Census Bureau data, the American Iron and Steel Institute has reported that the US imported a total of 2.36-million tonnes of steel in February 2018, including 1.92-million net tonnes of finished steel. This was down 18% and 17.6%, respectively, on January 2018 final data.

This means annualised total and finished steel imports in 2018 will be down an estimated 17.5% and 13.6%, respectively, against 2017 import totals.

But the data also shows that key finished steel product imports into the US in February 2018 rose significantly compared with January 2018. These include heavy structural shapes — up 60% — and wire rods, which were up 37%.