In this opinion piece, Steel Tube Export Association of South Africa (Steasa) CEO Keitumetse Moumakoe writes about the devastating impact the current Transnet strike is expected to have on South Africa’s export of large-bore steel pipes to the US.
The export of locally manufactured electric resistance welded (ERW) and spiral welded (SAW) steel pipe for the transportation of water, gas and petrochemicals was just about decimated in 2018 when US President Donald Trump exercised his authority under Section 232 of the Trade Expansion Act of 1962 to impose a 25% tariff on steel imports, with exemptions for Canada and Mexico, to “purportedly” protect national security.
South Africa’s oil country tubular goods exports into the US’s lucrative oil and gas market came to grounding halt as exemption had not been extended to South Africa even though South African exports accounted for less than 0.3% of US steel demand.
The imposition of Section 232 import duties on South African pipe manufacturers was a salient contributing factor to the demise of the 90-year-old Robor, once one of Southern Africa’s largest exporters of specialised steel pipe to the US.
Ranked among the leading international manufacturers of ERW and SAW steel pipe and having exported to more than 30 countries around the world, Hall Longmore has had to leverage on various means of trade instruments to be able to still export to the US although not at the same pre-Section 232 tariff tonnages. These trade instruments included negotiating better export rebates from the primary producer, being meticulously agile in periods that presented a favourable rand:dollar exchange rate for exports and streamlining any supply chain inefficiencies.
The current Transnet strike could not have come at a worse time for Hall Longmore’s current export orders to the US. The debilitating prevalence of loadshedding and the legacy uncompetitiveness of the domestic steel industry supply chain collectively compound what almost looks like an insurmountable situation.
The absence of a swift resolution to the strike and wage impasse between Transnet and the unions could result in Hall Longmore and South Africa at large losing this key export market and, mind you, the only significant one really left for our American Petroleum Institute-accredited steel pipes. The ramifications of the continued strike are dire from a cost and reputation perspective for all steel exporters irrespective of industry sector considering that:
Source: Engineering News