China faces increased steel protectionism

2016-08-05 08:59Global Times Editor: Li Yan

Anti-dumping cases won't have significant impact: experts

China's steel sector faced intensifying anti-dumping moves on Thursday from overseas countries and organizations. But those moves won't affect China's steel exports in general, experts told the Global Times on Thursday.

The European Commission, the executive body of the EU, announced on Thursday it would put anti-dumping duties on China's cold-rolled steel plates, according to a statement published by the Ministry of Commerce (MOFCOM) on its official website.

The EU decided to impose a duty between 19.7 percent and 22.1 percent on China's cold-rolled steel, the MOFCOM statement noted.

Cold-rolled steel is usually used to manufacture cars and appliances.

The MOFCOM said such protective measures would impact market supplies and weaken the EU's downstream manufacturing competitiveness.

According to a report from the Guardian in May, the EU used to impose provisional tariffs of 16 percent on China for cold-rolled steel.

On Tuesday, India also announced that there exists a dumping of exported hot-rolled steel from China, which has hurt the domestic steel industry in India, the MOFCOM noted on Thursday.

Ma Zhongpu, a senior steel analyst, told the Global Times on Thursday that as China's steel products are cheap, it's normal that overseas buyers would still prefer to buy from domestic sellers.

"The 'anti-dumping' measures of some overseas governments are nothing but protectionism," Ma noted.

There have been 24 legal cases launched by countries like Brazil and Mexico on anti-dumping issues against China's steel sector in the first six months of 2016, according to a statement by the China Iron and Steel Association (CISA) on Monday.

Exporting for a reason

Xu Yongbo, a former steel analyst for leading bulk commodity e-commerce platform, told the Global Times on Thursday that trade protectionism is becoming increasingly evident in many parts of the world, as domestic Chinese steel companies strive to explore the overseas market.

According to Xu, since 2012, domestic steel companies have made a lot of efforts to establish overseas sales channels to combat the sluggish steel sector at home.

"In some cases, enterprises would lower the price of an order if it was for an overseas customer instead of a domestic client, in order to seize overseas markets," Xu noted.

China's steel exports maintained its growing trend in the first half of the year.

According to the CISA data, China exported 57.12 million tons of steel in the first half of 2016, up 9 percent year-on-year.

Ma said that theoretically speaking, China should not expand domestic steel industry merely for the sake of exports, as it is an industry that consumes a lot of local resources including water and electricity.

However, confronted with a severe domestic supply glut and increasing demand from certain countries, the government should allow a proper amount of steel exports, he noted.

According to Xu, China mainly exports steel to Europe, the U.S. and Southeast Asia, while Africa is the newest point of growth for domestic steel exports.

Little impact

The CISA noted that the anti-dumping measures might place difficulties on China's steel exports in the second half of the year.

Ma nevertheless noted that in general the anti-dumping measures wouldn't impact China's steel exports too much, as China is not overly reliant on any single overseas market for steel exports.

"Besides, the international steel market is always changing, and China will find new markets for cooperation in steel sector, such as those along the 'One Belt, One Road' route," he noted.

Xu said that steel exports have, in part, helped domestic steel enterprises achieve better business records in 2016.

According to the CISA, business for domestic steel enterprises has improved in general this year, and its members saw their profits increase by 427 percent year-on-year to 12.58 billion yuan ($1.90 billion) in the meantime.

Ma nevertheless noted that domestic steel enterprises have not gotten past the "low ebb" of domestic demand.

"The fact that steel prices have risen in the first half of this year is a result of domestic steel traders' recent efforts to cut steel production and to destock. But the problem of supply glut has not been entirely solved yet. If domestic traders increase output based on the recent price rise, the market would still deteriorate," Ma said.


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