KARACHI: South Africa has imposed provisional anti-dumping duties of 14.29 per cent to 77.15pc on Portland Cement, originating in or imported from Pakistan from May 15 for a period of six months.

Lucky Cement is subjected to pay 14.29pc duty, followed by Bestway 77.15pc, DG Khan 68.87pc, Attock Pakistan 63.53pc, and other cement makers 62.69pc.

This follows an investigation initiated by the International Trade Administration Commission of South Africa (ITAC) on Aug 22, 2014, after a number of local cement producing companies submitted an application on behalf of the South African Customs Union (SACU).

A number of companies, including Afrisam, Lafarge Industries South Africa, NPC Cimpor and PPC, approached the ITAC and established a prima facie case that convinced the commission to initiate an investigation on the basis of dumping, material injury, threat of material injury and causality.

However, the application was opposed by Pakistani cement producers, such as Lucky, Bestway, D.G Khan and Attock. During the investigation, the interested parties had an opportunity to make comments and submit the information they deemed crucial for the investigation.

All comments submitted within the specified periods of time were considered by the commission in making its preliminary determination.

The commission found that the industry is suffering material injury through a decline in sales volume and output as well as profits and cash flow.

The industry also experienced price undercutting and price suppression.

The commission further found that a threat of material injury exists given that Pakistan has increased its production capacity; Pakistan’s exports to its traditional markets are declining and imports from Pakistan into South Africa increased by over 600pc between 2010 and 2013.

The commission made a preliminary determination that Portland Cement originating in or imported from Pakistan was dumped into the market.

In order to prevent further injury to the industry while the investigation is under way, the commission has requested the SARS (South African Revenue Service) to impose the provisional measures on imported Portland cement originating from Pakistan for a period of six months.

Mohammad Ali Amin of KASB Securities said that on a standalone basis this development is negative for the sector overall, as exports to South Africa would now decrease on a cumulative basis. However, total cement dispatches growth would not be significantly affected as local demand growth is strong, and exports constitute a relatively small proportion of total cement sales (21pc in 10MFY15), resulting in a diluted impact on total off-take.

Lucky Cement responsible for about 40-45pc (600k tonnes) of Pakistan total exports to South Africa, is by far the major stakeholder in this issue.

A relatively low duty of only 14.29pc bodes well for the company, and gives it the chance to play the situation to its advantage by trying to capture the room in this export market which will now be created as the other competing players will be driven out owing to heavy duty imposition.

He highlighted a muted impact on DG Khan Cement due to their low contribution to SA exports. Maple Leaf Cement has been a rather irregular export to South Africa, with exports discontinued for the past 1-1.5 years.

Attock Cement Pakistan is a major player with total exports of 0.25-0.3m tonnes (about 39-40pc of ACPL’s exports). Higher duty incidence will raise question mark on ACPL’s ability to continue its presence in South Africa, he said.

Sadiq Samin at Sherman Securities was of the view that out of total 220,000 tonnes of cement exports in March 2015 by sea, the share of South Africa was 43,000 tonnes.

So far, local companies exported an average of 330,000 tonnes of cement in FY15 on a monthly basis by sea while monthly exports to South Africa were around 110,000 tonnes.

Exporters had started selling cement to other countries in the African continent which would slightly offset South African exports, he said.

Published in Dawn, May 16th, 2015

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