Last week the Competition Commission announced it would be conducting a market inquiry into the steel industry and published a draft terms of reference for comment. This is important because the steel industry is packed choc-a-bloc with trade policies which distort the normal behaviour of the steel market. We have one primary steel producer who benefits from import duties of 10%. Because almost everything contains at least some steel, they predictably can’t produce everything they have duty protection on and so an enormous number of temporary rebates have been created to provide duty relief for importers who can’t source the product locally. These are not always easy to access and ultimately they depend on that sole producer to confirm they can’t supply. This can be a bit of a tussle, which means the rebates have relatively low levels of utilisation, making them often quite ineffective.
The scrap steel sector has its prices forced down through the Preferential Price System and export duties, to the benefit of a small number of mini-mills and foundries. At the expense of the manufacturers who generate the scrap. This, it turns out, is very good for scrap metal consumers, not so great for manufacturers and really bad for recyclers.
If you are in the steel industry, its important to provide information to the Competition Commission so they can properly set up their final terms of reference.
