Provisional anti-dumping duties have been imposed on some stainless steel products from the three Asian stainless steel producing countries — China, Indonesia and Taiwan — after eight months of monitoring and deliberation by E.U. officials, Reuters reports.
The duties on hot-rolled stainless steel sheets and coils include a rate of 17% on shipments from two Indonesian subsidiaries of Chinese stainless steel maker Tsingshan Holding Group, whose rapid expansion and low production costs in the southeast Asian country have left E.U. producers fretting over market share, the report states.
But unlike America’s blanket 25% levy on steel products, the E.U.’s response to the threat is more nuanced.
In addition to Tsingshan, its rival Shanxi Taigang Stainless Steel Co Ltd and three affiliates were hit with the highest rate of 18.9%, while other mainland China firms saw rates of 14.5% and 17.4%. The Taiwan duties were lower, ranging from 6% to 7.5% and collectively are hoped to “restore fair trading conditions” and allow domestic producers to recover, the E.U. announcement states.
Following the U.S.’s 25% duty on steel products, imports into Europe surged as Asian producers looked for a new home for excess production. Imports from China, Indonesia, and Taiwan into the E.U. increased by 66% over the investigation period between July 1, 2018, and June 30, 2019, according to Reuters. As a result, those imports accounted for more than 30% of free-market consumption, according to European Commission research.
The Commission even put a figure on the margin by which imports from different countries were undercutting the market, saying prices of these imports “undercut the (EU) industry’s prices,” at margins of 4.1% for Taiwan, 9.3% for China and 10.7% for Indonesia.
Needless to say, Asian producers disagree.
Yahoo Finance quotes China’s Iron and Steel Association (CISA), which said the provisional anti-dumping duties the E.U. has imposed on some of China’s stainless steel products are excessive.
CISA points out, “Hot rolled stainless steel products are included in the EU’s steel safeguard measures, which had given China quotas for imports,” but that the new duties constitute “over-protection.”
But the findings raise the question if Chinese imports are subject to a quota, they should be limited — in which case, why are Chinese manufacturers still undercutting the market by over 9%?
European consumers are unlikely to pay the same price for Asian product that they would for domestic European material. Even putting quality to one side, the longer delivery from Asia poses a risk to consumers in terms of pricing and demand. Risks require some form of compensation, usually in the form of a lower price, added to which consumers do not have decades of trust in foreign brands that they have for European producers, so they will demand a discount.
Human nature being what it is, they then use the resulting lower prices to pressure European producers to lower their prices to compete. The result is a vicious spiral of weakening support for prices, even when volumes are restricted by a quota.
The E.U.’s application for anti-dumping duties will not force foreign suppliers out of the market, but it will make life much harder for them to offer steep discounts once duties are added to the delivered price.
That in and of itself may reduce their percentage share of the European market and, hence, support prices in the future.