International Steel Mills

China Ministry Calls for EU Cooperation to Solve Overcapacity

Written by Sandy Williams

China’s Ministry of Commerce is calling for European Union cooperation to address the world’s iron and steel overcapacity. Current “trade protectionism” will only have a further negative impact on the industry said Commerce spokesperson Shen Danyang in response to new antidumping measures from the EU.

At news conference last week, Shen said overcapacity in the steel sector is a global problem that can only be solved through dialogue and cooperation.

“The Chinese government and iron and steel companies have been working to accelerate structural adjustment and keep overtly high production capacity down. The increase in the output has been taken under control. The competition mechanism has eliminated some smelters,” said Shen.

“Blaming China for the slumping iron and steel market in Europe is unfair,” said Xu Liying, a researcher at Lange Steel Information Research Center in an article for China Daily.

“In recent years, the EU has frequently imposed anti-dumping and anti-subsidy measures against iron and steel imports from China and other exporters,” said Xu. “These measures have produced few results in bringing down the import volume, which has shown that the problem lies not in imports but in the iron and steel industry in Europe itself.

“China saw a wave of shutdowns last year in small- and medium-sized iron and steel smelters. However, it is State-owned enterprises that can really impact the total output. The central government has called on them to replace outdated capacity with advanced technologies. But it will take time for these measures to have an impact.”

China crude steel output decreased 2.3 percent to 803.8 million tonnes in 2015, according to the World Steel Association, but its share of world crude steel production inched up last year by 0.2 percent to 49.5 percent.

China’s overcapacity, and resulting increase in steel exports, has led to 37 antidumping and subsidizing investigations worldwide in 2015, according to the China and Iron Steel Association. Last week, thousands of steelworkers marched in Brussels to protest “unfairly traded” Chinese steel exports and to oppose market economy status for China.

“Currently, China is considered not to be a market economy. Consequently, when there are EU investigations into alleged dumping in the EU of products made in China, the production costs for the goods are calculated by reference to producers in third party countries such as Turkey or India, rather than China itself. Third party producers may well have higher production costs than manufacturers in China, making it more likely that dumping of Chinese goods in the EU can be demonstrated,” said competition law expert Guy Lougher of Pinsent Masons.

“Changing the designation of China from a non-market economy to a market economy is likely to mean that it will be harder for the Commission to demonstrate that Chinese products are being dumped in the EU. In that case, it would be harder to impose anti-dumping duties on Chinese imports,” said Lougher.

The European Union launched a new investigation on February 12 into imports of seamless pipes, heavy plates and hot rolled flat steel from China. New provisional antidumping duties were announced on cold-rolled flat steel imports from China and Russia.

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