The French minister of economy tried, with limited success, to rally support from MEPs in Strasbourg for a rescue operation for the European steel industry, EurActiv France reports.
During a visit to Strasbourg, accompanied by Elzbieta Bienkowska, the European Commissioner for the Internal Market and Industry, Emmanuel Macron once again called on MEPs to take action against Chinese dumping, which is threatening the survival of the European steel sector.
“Europe is built on steel,” Macron told the press after Monday’s meeting. “Today, there are some countries that do not abide by the rules of globalisation,” he added, in a dig at China, whose state-subsidised strategy of overproduction and dumping is causing turmoil on the European market.
Cheap steel for social harmony in China?
“The Chinese industry is selling at a loss! This is clearly a dumping situation,” said Charles de Lusignan, from the European steel association Eurofer. For weeks, this association has been demanding a stronger European response to the wave of cheap Chinese products arriving on European shores.
Production costs in China’s steel factories are higher than the price at which they sell steel to Europe, once costly domestic land transport is taken into account. This can be a major cost factor, since many of China’s blast furnaces are a long way from the sea.
According to representatives of the European industry, China’s decision to prop up its domestic steel industry with subsidies is motivated more by social than economic factors: the blast furnaces employ large numbers of low-qualified workers that would have difficulty integrating and finding work in the big cities.
The collapse of the global steel price is a serious threat to the last remnants of the European steel industry. While prices have started to rise after hitting an all-time low in January, the chances of Europe’s blast furnaces returning to profit this year are slim.
With a sale price of around €300 per tonne of coiled hot rolled steel, the main reference for the price of steel, the industry is far from the threshold of profitability, which would be closer to €400, according to the European association.
The recovery of iron ore prices, the main ingredient of steel, along with coking coal, seem to indicate that the price is set to move in the right direction, but the current overabundance of supply means steel-makers have yet to feel any benefit.
Signs of action
For the French minister, the Commission’s response to the Chinese dumping has been far too slow. “Faced with such a clear case of dumping, it has taken the European Commission nine months to react. It has managed to cut this timescale down by one month, but it is still not good enough,” he said.
By comparison, the United States’ response to Chinese steel dumping was much faster: within five months, they had established anti-dumping tariffs of up to 300%.
“We have to keep the Commission under pressure to make it act faster. Eight months is not good enough. I need to see decisions made by this summer,” the minister added.
Britain’s double game
He also criticised the attitude of many member states, which oppose any change to the unfair competition rules.
“On the question of tariffs, it is the responsibility of the member states,” Macron said.
Behind the scenes, the French government has reproached the United Kingdom for its refusal to play straight on the issue. The UK sent a letter to the European Commission last winter, warning them to act on the price of steel.
Yet in the European Council of Ministers, the United Kingdom did not join France in calling for the urgent establishment of customs barriers to Chinese imports.
Even Tata Steel’s sale of its British and European assets to the investment fund Greybull Capital has failed to move the British government on the issue. “They will take some convincing,” the minister said.
“We have to protect ourselves from economic shocks, and we should do it as a group of 28,” he added.
Lack of European unity
Europe has been particularly disunited over the issue, with only a handful of countries supporting the introduction of anti-dumping measures, including France and Italy.
“We need a majority of three fifths of the Council to reform these rules,” said Édouard Martin, a French Socialist MEP and the author of a report on the steel industry. “Emmanuel Macron said he will continue to put pressure on the other member states, but for now, we are still lacking about ten votes,” he said.
Background
According to the 'lesser duty rule' defined in the basic EU antidumping regulation, the EU imposes trade defence measures below the dumping margin if such lesser duty is sufficient to remove the injury to the EU industry (i.e. at the level of 'injury margin').
Eurofer stressed that China has domestic steel overcapacity of around 400 million tonnes, almost three times the total EU steel demand of 155 million tonnes. This overcapacity has arisen as a result of persistent state intervention in the Chinese economy.
The organisation also pointed out that dumped products from China have much larger environmental footprint – about 50% greater – than equivalents produced in the EU. Therefore, calling for a EU Emissions Trading System after 2020 that does not bring competitive disadvantage against global competitors.
source: http://www.euractiv.com