South African pipe producers object to proposed trade policy

South African pipe producers object to proposed trade policy

South Africa's Steel Tube Export Association (STEA) is in opposition to the government's proposed free trade agreement with Latin America's trade bloc, Mercosur. According to STEA's director, Mike Robertson, reduced or no import duties could have a major negative impact on the country's steel tube and pipe industry, which produces about 480'000 tons of welded carbon steel and seamless pipe a year. South Africa and Brazil, the powerhouse of the Mercosur, are major competitors in many areas, including steel products. Therefore, South Africa's domestic businesses are strongly opposed to free trade with the Latin American trade bloc. Moreover, Robertson stated that the domestic steel industry is also concerned about the government's choice of other free trading partners, particularly China. They say that the domestic steel tube and pipe producers cannot compete against Chinese counterparts who benefit from low wage bills and government subsidies. The South African steel tube and pipe industry is the largest user of hot-rolled coil produced by Africa's largest steel maker, Ispat Iscor. There are a total of eight significant manufacturers in South Africa, exporting a total of around 165'000 tons of welded carbon steel and seamless pipe per year. According to Robertson, the urgency of increasing South Africa's carbon steel tube and pipe exports is especially evident from the low factory capacity utilization in this industry. There is about 30-40% excess capacity in South Africa's small bore pipe manufacturing base. The US is South Africa's tube and pipe industry's largest export market, followed by the EU, and then by the rapidly growing Far East market. South Africa's carbon steel pipe is considered satisfactory around the world, however, according to domestic steel industry experts, it would be ideal for companies to obtain accreditation from the American Petroleum Institute, as this is generally recognized as the global benchmark for quality for companies involved in the petrochemical and oil and gas industries.