The Return of Protectionism In Steel
The EU has started to reintroduce tariffs into the Steel industry in the last few weeks following allegations of dumping from foreign competitors. Steel wire already saw the imposition of a heavy 24% duty in May, whilst an investigation is now under way on imports of Stainless Steel from China and Taiwan.
These developments mark the return of tensions that had been calmed 5 years ago, when the EU decided against imposing trade sanctions on China. They were, at the time, responding to allegations of dumping in the cold-rolled flat steel products industry from Eurofer. This Brussels-based representative body for the European steel industry now claim that China and Taiwan are operating at a 20% dumping margin in the 14% of the market they control.
The EU market, worth US$8 billion, remains the world’s largest, despite a 2.7% fall in consumption reported in the year 2013. Meanwhile, the Chinese market is projected to grow over 25% in the next decade. The question that remains is whether the upcoming years will be characterised by worsening or improving relations in EU-China steel trade.
Objectively, consumers in both nations would benefit from a return to the WTO standards of fair trade. The Chinese steel industry, constantly consolidating and improving its product range and quality, have a potentially large role to play in dampening EU inflation. Likewise, China can benefit from the technological innovation and expertise of European firms.
Sources: Eurofer, World Steel Dynamics, Bloomberg.
Lloyd P.//SMC Editor