African Manufacturers Urge Safeguards As Global Steel Glut Threatens To Flood Markets

The Pan-African Manufacturers Association (PAMA) has highlighted an opportunity for Africa to navigate potential challenges posed by recent tightening of trade protections in the European Union and the United Kingdom.

These changes may lead to an influx of surplus steel imports into African markets, which could be managed strategically to bolster local industries.

In its June report, PAMA noted that global overcapacity in steel production has the potential to shift towards less-protected markets, particularly as the EU strengthens its steel safeguards and the UK implements cuts to tariff-free steel import quotas, raising duties on excess imports.

It noted that such policy adjustments aim to support domestic steel producers against low-priced imports resulting from ongoing overcapacity in international markets.

PAMA pointed out that while global steelmaking capacity is expected to exceed 720 million tonnes by 2027, Africa possesses unique opportunities due to its relatively open markets and increasing infrastructure demands.

Although cheaper imports might initially lower costs in sectors such as construction and manufacturing, PAMA emphasized the importance of a balanced approach to safeguard the interests of local producers and the broader economy.

The Association warned that continuous low-priced steel imports could hinder the growth of domestic industries, discourage investment in modernization, and impede the development of regionally competitive steel value chains.

“Steel is a crucial resource for infrastructure, energy, mining, transport, and capital goods, making a robust domestic steel sector vital for the continent’s industrialization and supply-chain resilience,” it added.

According to the report, with the EU and UK’s moves reflecting a significant shift in global industrial policy towards protective measures, Africa has a unique opportunity through the African Continental Free Trade Area (AfCFTA). By fostering intra-African trade and creating a larger integrated market, AfCFTA could enhance regional steel production capabilities and promote competitive practices.

PAMA stated that “proactive trade monitoring and the timely application of World Trade Organization-consistent trade remedies are essential for ensuring that African markets do not become residual destinations for surplus global production. By adapting to changes in global trade policy, African manufacturers can maintain their competitive edge, akin to how shifts in exchange rates, energy costs, or commodity prices impact the market.

“In navigating these challenges, Africa can position itself not just as a participant in the global steel market but as a leader in fostering sustainable industrial growth.”