Pakistan cement producers challenge SA import duties

Updated:2019-06-21 13:20

Pakistan cement exporters are putting pressure on their government to convince SA to overturn the existing anti-dumping duty on imported cement from that country.

The surge of cement imports from various countries have put local producers such as listed cement and lime firm PPC on the back foot. In 2018, cement imports soared 85%.

For the local cement companies, the influx of imports aggravates the affect of weak economic growth, overcapacity, stiff competition and floundering construction sector.

The International Trade Administration Commission (Itac), the SA body that investigates and sets tariffs on imported products, imposed antidumping duties on Portland cement from Pakistan with effect from May 15 2015. The antidumping duties, which ranged from 14.29% to 77.15%, followed Itac’s investigation after an application by a number of local cement producing companies.

Mohammad Rafiq Memon, chairman of the Pakistan-SA Business Forum, has called for the intervention of the Pakistan authorities. “Before the antidumping duty, annual cement exports to South Africa were worth $700m, but has subsequently dropped to $100m,” he says.

Memon says SA should revisit the decision to impose the anti-dumping duties in the interest of fair trade. “This affects the bilateral relations between South Africa and Pakistan. There must be a balance. South Africa exports goods to Pakistan. Both countries should be happy with the trade relations.”

He says Pakistan’s ministry of commerce should send a delegation to SA to negotiate the reversal of the duty.

In 2015, Pakistan took SA to the World Trade Organisation (WTO), claiming that the antidumping duties were inconsistent with WTO provisions because, among others, SA failed to clearly define the scope of the products under investigation.  The WTO deals with the global rules of trade between nations and its main function is to ensure smooth, predictable and free trade.

Memon says the Pakistan-SA Business Forum plans to establish a trade centre in SA by the end of December 2019, at which Pakistani manufacturers and exporters will display samples of their products and services. He says instead of seeking protection against imports local producers should focus on improving quality and standards.

Since the imposition of the duties on Pakistan cement, Vietnam has taken over as the largest exporter to SA, with 30,000 to 50,000 tons imported into the country each month, according to construction market intelligence firm Industry Insight.

Industry Insight says SA’s imports of cement decreased 47% year on year in February, following the 61.2% increase in the previous month.

About 42,000 tons of cement were imported during February, mainly from Vietnam. “Nothing was reported from China, since June 2018. The decline reported in February, resulted in an overall decline of 10.5% for the first two months of the year, compared to the same period during 2018,” Industry Insight says.

While the Pakistani producers want the SA government to review the antidumping duty, their local counterparts PPC, AfriSam, Lafarge, Sephaku and Natal Portland Cement, through representative body The Concrete Institute, wants Itac to impose a total ban on imports for a limited period.

According to the institute, following the imposition of anti-dumping duties on cement from Pakistan, the floodgates opened for imports from Chinese producers. Imports from China increased steadily in 2016 and 2017, and in 2018 imports from Vietnam started taking over, totalling more than 1-million tons  of cement imported into SA in 2018. The Chinese, and now Vietnamese, imports have replaced Pakistani products.

The Concrete Institute’s MD, Bryan Perrie, in February said the imports were hurting the viability of the local industry. He said some local companies have considered mothballing some of their plants and retrenching employees. The companies have also put on hold expansion plans.