The International Trade Administration Commission (ITAC) of South Africa is reviewing the anti-dumping duties (ADD) imposed on cement products being exported from Pakistan this month. The duties that were imposed in 2015 went in place after an investigation that found incidence of export dumping into South Africa and subsequent injury to local producers. The review can take up to 18 months during which time the ADD - which goes up to 77 percent - will remain in place.
The country's local cement association, however, may lobby to keep the duties intact. In August of last year, upon inquiry from the ITAC, South African cement producers urged the duty continuation arguing that the removal of the duty would lead to a recurrence of dumping from major Pakistani exporters (namely Lucky, Attock, DGKC, and Bestway) as before. Import of Pakistani cement into South Africa at the time of duty placement was on a strong growth trajectory - dollar value of exports went up 4 times between 2011 and 2014. Meanwhile, South Africa was a major market for Pakistani cement constituting between 20-30 percent of all its cement exports.
According to the calculations submitted by South African producers to the ITAC, based on the price Pakistani cement was selling in the domestic market (also referred to as the normal price) against the price it was selling in South Africa (export price), the dumping margin (the amount by which the export price is lower than the normal value) was found to be 43 percent during 2019. The margin was invariably higher, about 48 percent a few years back. However, the dumping margin does not take into consideration the price domestic players are selling at, and the prices other exporters are selling at, for instance, which in the context of harm are important metrics.
Nevertheless, there is no doubt, cement producers in Pakistan sell cement and clinker abroad at a discount to the prices they offer to the domestic market. The rationale is simple: foreign markets are more competitive and in order to grab market share, prices have to be competitive with other suppliers of the same product.
If South African lobbies succeed (either by proving continued material injury or by getting a short extension to delay decision) the duty may remain intact for another year or so, which would more or less shut down the revival of that market for Pakistan. Meanwhile, though cement and clinker demand in other countries is growing, unless cement producers slide into another substantial expansion phase (which is a likely expectation), local volumes for cement may take up a bigger and bigger share in total sales (better margins to be earned here) as the domestic construction industry leaps at the chance to avail the construction amnesty program of the PM. In any case, for now, a greater market share in South Africa may not affect industry's profitability at all. The reopening of that market may just be a bonus.