Chinese steel dumping threatens sector recovery in Europe, US
AFP NewsBy Antonio Rodriguez | AFP News – 41 minutes ago
European and US steel producers are only slowly emerging from a 2008 sector meltdown, but already they are faced with a new challenge: Chinese dumping.
Chinese steel is overabundant since a sharp slowdown in the Asian giant's economy has sapped domestic demand, and is shipping to world markets at cut-down prices.
"China now sells its excess steel to the EU market at prices that do not even cover its costs for raw materials and material transformation," Charles de Lusignan, communications manager at steel lobbyist Eurofer, told AFP.
Experts on both sides of the Atlantic say China, which alone produces half of the world's steel, is sitting on an overproduction of 340 million tonnes, which is twice the amount the European Union produces in a year.
According to Eurofer numbers, Chinese steel exports to the EU doubled in 2014 from the previous year to reach 4.5 million tonnes, and are expected to come in at twice that again this year.
ArcelorMittal, the world's biggest integrated steel and mining company, pointed the finger at China when its share price fell to historic lows in the autumn.
"The overcapacity situation (in China) has led to a significant increase in exports to the world's markets," said Aditya Mittal, the company's CEO, singling out the company's core markets of Europe and the United States.
US producers say they too are feeling the pain.
"The American steel industry is in a dire situation, with record imports surging in and facilities across the country being idled," said Thomas J. Gibson, head of the American Iron and Steel Institute, an association of US producers.
Steelmakers in the EU and the US have turned to their governments and the World Trade Organization to stop the Chinese steel assault.
Some are listening. French Economy Minister Emmanuel Macron warned a month ago that Europe would not accept the "Chinese dumping".
- European levies -
European ministers in charge of steel have acknowledged "the gravity of the situation" but producers want immediate action.
They have started lobbying the WTO to resist China's push to win the coveted "market economy" status, which would make it easier for China's companies to defend themselves in anti-dumping cases.
If China wins market economy status, some 400,000 to 600,000 are at risk in the US steel industry, according to a recent report by North American steel producers.
The EU, meanwhile, has started challenging China, slapping anti-dumping taxes on stainless steel imports from China last March.
And in May, the EU opened an investigation into the import of a number of steel products from China and Russia.
The steel crisis came up in talks between Chinese President Xi Jinping and British Prime Minister David Cameron in October.
Cameron's spokeswoman said he had "made clear there were challenges" but would not say whether he had used the phrase "dumping" during the discussion.
There are hopes that China will cut production, relieving some of the downward pressure on prices.
"We have reduced more than 700 million tonnes of production capacity and you can just imagine our task to find jobs for those workers," Xi told a joint news conference in October with Cameron through a translator.
And a top executive of industry giant Baosteel Group said that month that China's steel production could eventually shrink by 20 percent.
"If we extrapolate the previous experience in Europe, the United States, Japan, their steel sectors have all gone through painful restructuring in the past, with steel output all contracting by about 20 percent," Bloomberg News quoted Baosteel chairman Xu Lejiang as saying.
"China will eventually get there as well, regardless how long it takes," Xu told reporters at a forum in Shanghai.