The National Association of Automobile Manufacturers of South Africa fears the increase in the price of steel could reduce the competitiveness of vehicle exporters.

The National Association of Automobile Manufacturers of South Africa said that the increase in the price of steel could reduce the competitiveness of vehicle exporters.

According to , the price of steel increased by 14,3 per cent this year. Naamsa executive director Nico Vermeulen told the newspaper there was a “degree of disappointment” that the figure was much higher than the inflation rate. It said the high increase would have a knock-on inflationary effect. He said it would make it harder for SA exporters as they were facing tough international market conditions.

The figure had been reduced to 14,3 per cent from the initial 19,7 per cent proposed by Iscor after negotiations with Naamsa. This price will be fixed for the rest of the year.

The price of steel is worked out according to the import-parity pricing system. This means prices are in line with global pricing, which means local component manufacturers pay more for a ton of steel than Iscor’s customers overseas.

Vermeulen said Naamsa was negotiating for a steel-pricing mechanism to ensure stability in the steel price over longer periods for vehicle manufacturers. Iscor said that the new price mechanism could be either fixed in dollar terms for a three-year period or rand terms for 12 months.

Original article from Car