Hopes for Europe’s beleaguered steel sector have risen in the past week following steps taken by the European Commission to prevent the “dumping” of cheap steel imports from outside the EU on the market.
This flooding is seen as the single biggest factor behind the sector’s troubles that have led to thousands of job losses, mothballing of plants and financial losses.
Last week the Commission announced the introduction of provisional duties on Chinese (13.8-16 per cent) and Russian (19.8-26.2 per cent) cold rolled flat steel (CRC).
Russia and China together account for 55 per cent of Europe’s CRC market.
The Commission also opened new anti-dumping investigations into three categories of steel products (hot rolled flat steel, heavy plates, and seamless pipes) from China, bringing the total number of anti-dumping measures relating to the steel industry in Europe to 37, and the number of open investigations to nine.
While the industry itself has given the measures a cautious welcome — the European Steel Association Eurofer criticised “the extremely low level of duties” on Chinese steel imports, pointing to the US where up to 59 per cent could be expected — observers are optimistic about the potential impact of the decision. They are also hopeful of a more aggressive stance on dumping by the Commission, which has been slower and less forceful in taking action than the US.
Moody’s welcomed the move on CRC, pointing out that just in 2015 prices had fallen by 13 per cent in northern Europe and by 21 per cent in south.
“While we do not expect a significant recovery in CRC prices on the back of this announcement, we believe that the growth rate of imports in the region will slow down, giving domestic players more scope for price increases,” wrote analyst Hubert Allamani in a note earlier this week.
ArcelorMittal, and German industrial group ThyssenKruppe are likely to be the main beneficiaries.
Others pointed to potentially significant aspects of the Commission’s statement last week. Deutsche Bank analysts noted the decision to launch one of the three new investigations on the basis of the “threat of injury” rather than first waiting for injury to happen.
“The key question will still be though whether or not the EC will also fast track the investigation, and what the outcome will be,” they said in a report, adding that it remained “very uncertain” whether any cases would be fast tracked.
In a note to investors, analysts at Berenberg raised the possibility of the recent EC action being the first step towards “ a broader and more powerful action aiming to protect the interests of the domestic steel industry.”
“The European Commission has sent a pretty clear message to the European steel industry with the imposition of these provisional duties… the message is that the industry’s petitions have not gone unheard,” they said.
However, the European Commission’s ability to take quicker and more aggressive action remained fettered by EU rules, Eurofer cautions.
“Tone is one thing, action is what we need: at least 7,000 jobs have already been lost the past 8 months,” says Charles de Lusignan, spokesperson for Eurofer.
“We call for the lesser duty rule to be lifted. The Commission is bound by the set of rules, which lay out how to complain, how to carry out an investigation, the speed of the investigation, and the application of the lesser duty rule. So, the EU as a whole need to advance on modernising the Trade Defence regulations. There has been a dossier on the floor of the Council since 2013 to indeed ‘modernise’ the instruments, but that has been stuck as some member states remain opposed to key parts of it.”
Over 5,000 steel workers from across the Continent, gathered in Brussels on Monday to protest against the dumping of steel products on the European market, and the speed and level of European Union action against it.
Source: The Hindu Business