At least according to a European Union official familiar with the Union’s steel sector plans, says Reuters.
The E.U. is certainly ramping up the pressure. This year, alone, the European Commission has 37 anti-dumping and anti-subsidy measures in place for steel products, 15 of them concerning China, slapping anti-dumping duties on products such as rebar, cold-rolled carbon steel and cold-rolled stainless steel, ranging between 18.4 and 25.3% for imports from China.
Everybody Gets on the Tariff Bandwagon
The E.U. is scheduled to rule on plate and hot-rolled coil from China in November, and while rates haven’t been at the same level as the U.S. where up to 520% duties are have been applied, they are estimated by the industry to need to be in the 30-40% range in order to be effective.
Yet despite the unprecedented level of action, carbon steel imports in the year to May rose 21% with China now representing 27% of total E.U. imports, while stainless steel imports rose 17% over the period, E.U. data shows, even though demand remained almost flat.
China is not alone in being singled out for action. The E.U. and the U.S. have been taking action against other Asian exporters as well, but with Chinese exports climbing to 112.4 million metric tons in 2015, the first time it has reached 100 mmt, according to them, China’s exports dwarf any other country.
Not that China isn’t trying to do something about it. In many ways we are seeing a race between Beijing desperately trying to cajole or pressure its regional governments to close coal and steel capacity, and rising market protectionist measures being applied by much of the rest of the world.
Global Overcapacity, Local Problem
Local governments fear capacity cuts will hurt growth and lead to job losses, while rising steel prices have encouraged steel producers to actually increase production rather than curtail it. Bejing has set a target of slashing steel capacity by 45 mmt and coal capacity by 250 mmt this year, but with an estimated 300 mmt of excess capacity, even that falls far short of balancing the market.
In practice, steel capacity cuts in the first seven months of the year are said to have amounted to just 47% of the annual target, while coal capacity reductions accounted for 38% of the goal, said Zhao Chenxin of the National Development and Reform Commission (NDRC).
The article suggests Beijing is trying a different approach now, reducing the provision of financing steel and coal companies’ debt as a way to use economic pressure to rationalize capacity. Whether local governments and local banks will play ball remains to be seen. Efforts so far have had limited impact.