Steel coil importers undercut iron-rod makers

Iron-rod manufacturers in the country say they are being cheated by traders who are importing steel coils and passing them off as iron rods, paying very little duty in the process.

Imported iron rod is supposed to attract 20 percent duty, but the importers are said to be disguising their coils as raw materials -- and by so doing they pay only 5 percent duty.

“There are too many loopholes in the system, so there are people who are not manufacturers but traders who bring in these coils and from their backyard cut them into pieces and sell; and we cannot compete with them,” said George Andoh, board chairman of Sentuo Steel, a company established in February 2011 with an initial 300,000-tonne capacity.

“They bring them in as downstream material, but we know that downstream coil does not go beyond 6mm diameter, which is used for nails, wire mesh and so on. When it goes beyond 6mm diameter you know straight away that they are importing them as iron rods.”

Some of the coils are also said to be inferior mild-steel coils, making their use for the purpose of construction a potentially dangerous undertaking.

The steel manufacturers have made a formal complaint to the Trade Ministry, which is said to have a list of the companies that are importing the coil. No effective action has however been taken yet on the matter.

The industry has already been reeling under the weight of the smuggling of its major source of raw material -- ferrous metal scrap – out of the country, leaving behind low-quality scrap with a very low recovery rate.

A 2013 scrap-export ban is yet to safeguard enough scrap for the five local steel manufacturers. “Steel is one of the most strategic industries you can have in developing your economy. For nearly every construction activity you undertake, you need steel...Steel is even more important than aluminium in our economy right now,” said George Andoh.

With private infrastructure projects on the rise, the demand for steel in the country is huge. But the local manufacturers are unable to meet the demand, leading to high imports.

In the mining sector where about 200,000 steel balls are required per annum for crushing mineral ore, the local steel manufacturers are able to provide only 20,000 tonnes. Large import volumes fill the gap.

For want of raw materials, Sentuo Steel is looking to scrap old vessels abandoned on the West Coast of Africa. “We already have an old vessel that we are scrapping in Takoradi...We have about 10 old vessels ready to cut up today if we get the permission,” said George Andoh.