"2018 Measures Lose Effectiveness... Response Needed"
European steel companies have urged the European Union (EU) to implement new tariffs and other countermeasures, claiming that the surge in Chinese steel exports has caused European market prices to fall below production costs.
According to major foreign media on the 22nd (local time), European steel companies stated that a new comprehensive tariff system is necessary to address market distortions caused by China's overproduction and to protect the industry struggling with rising energy costs and weakened demand.
According to Chinese consulting firm MySteel, China's steel exports this year are expected to reach 100 million to 110 million tons. This is the highest level since 2016 and the third highest ever. Recently, the surge in steel exports from China, the world's largest steel producer, has heightened trade tensions, and several countries have already imposed tariffs on Chinese steel.
According to Thyssenkrupp Steel, Germany's largest steel producer, imports of flat steel products into the EU increased by 30% from January to April this year. The company explained that the increase in volume, decreased demand, and high energy costs are putting significant pressure on the European steel industry.
Genuino Cristino, Chief Financial Officer (CFO) of ArcelorMittal, Europe's largest steel producer, said that China's export volume is enormous, stating, "The steel industry has returned to the crisis situation caused by China's massive exports in 2015 and 2016," and added, "Europe used to be a net steel exporter but has now become a net importer."
German steel manufacturer Salzgitter said, "The flood of subsidized Chinese steel exports below cost threatens the sustainability and low-carbon transition of the European steel industry," and added, "The European Commission must take bold measures such as tariffs to address the root causes of overproduction in China and other countries."
When the EU introduced safeguard measures on certain steel products in 2018, direct exports of Chinese steel to Europe decreased. However, they claim that the increase in imports of cheap Chinese steel worldwide has caused a chain reaction harming European companies.
Axel Eggert, Secretary General of the European Steel Association (EUROFER), said, "Europe's existing safeguard measures have lost their effectiveness and cannot absorb the import volume. Currently, China's export prices are below production costs," adding, "Tariffs or similar measures must be introduced to help European producers."
Major countries such as the United States and Canada have taken steps to protect their domestic industries through tariffs. In July, the U.S. decided to impose a 25% tariff on Mexican steel that is not produced in North America to block Chinese steel rerouted through Mexico. India is currently negotiating to address the recent increase in steel imports.
The EU is investigating industry complaints regarding tinplate and piping exported from China.
However, the demands of the European steel industry are unlikely to be accepted. Sources said that since the EU faced trade retaliation from China once during the process of imposing tariffs on Chinese electric vehicles, it is unwilling to provoke a tariff dispute with China over steel.
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