November 20, 2008

South African Steel body sees no obvious signs of cartel

The Southern African Institute of Steel Construction, whose members include steel producing companies such as Highveld Steel and Vanadium, Scaw Metals and ArcelorMittal South Africa, stated that it certainly did not know of any collusion in the industry and did not notice any signs of it.

Mr Hennie de Clercq executive director of SAISC said that “Any illegal action there might have been would have been limited to products not used in structures. Although the price of steel has without doubt increased dramatically in the past six month this is entirely in line with international trends.”

He added that in many instances, South African steel was cheaper than in most other countries.

Mr De Clercq said that "While we abhor price increases, we acknowledge that there are strong forces that push up the international and local price of steel. There was an international shortage of steel and all inputs, from iron ore and coking coal to transport, which have increased steeply. This was in line with what steel producers stated when raising prices.”

The statement from the institute followed an announcement by the Competition Commission that it had received an application for corporate leniency from a steel company, which alleged the existence of a cartel among competitors in the steel sector. Scaw Metals, in which Anglo American holds a 74% stake, later divulged that it was the company which had sought and been granted conditional leniency.

The company’s application followed the raids on June 19th 2008 of Cape Town Iron and Steel Works, Highveld Steel and Vanadium Corporation, and the South African Iron and Steel Institute. The commission initially estimated that the prices of reinforcing bar, wire rod, sections, roofing bolts and fencing products including droppers have been inflated by at least 20%.