Producers are taking a big hit and there is little chance of exporting the surplus.
Falling prices and a global oversupply could trigger import tariffs to protect local producers.
The government may be looking to implement export taxes on iron ore and steel products, it announced in a post Cabinet briefing.
ArcelorMittal South Africa's recent bad performance mirrors that of its parent, which has also announced dismal interim results.
A drop in demand, an 84% slump in profit and rising costs do not bode well for producer ArcelorMittal, writes Lynley Donnelly.
The debacle over the award of lapsed mining rights in the Sishen iron ore mine could be used by government to force Amsa to cut in steel prices.
Government is watching closely the standoff between Kumba and ArcelorMittal and its effect on steel prices, Lynley Donnelly reports.
ArcelorMittal SA on Wednesday warned that if steel prices slid further it may be forced to look at shutting down facilities.
ArcelorMittal SA has said it will cut prices for a third month running while expecting fourth-quarter earnings to fall.
Informal operators working from their garages and bakkies may see an increase in their numbers as marginal formal workshops scale down.