China's Excess Metal Supply Leads to Calls for Tariffs in the United States and Europe
March 17, 2015
China produces as much steel as the rest of the world combined, but as its growth slows, the excess steel the Chinese industry does not need is flooding the world with exports.
- China's steel exports rose 63 percent to 9.2 million tons, and the exports to the United States jumped 40 percent in January from a year earlier, a rise that puts them on pace this year to beat the 82.1 million tons they exported last year.
- That number increased 59 percent from 2013 and was the most steel ever exported by any country this century.
Steel producers around the globe are seeking government protection from falling prices.
- Chief executives of leading American steel producers said they would testify later this month at a Congressional Steel Caucus hearing, a move that trade lawyers said is a prelude to launching at least one anti-dumping complaint with the International Trade Commission.
- The European Union has six investigations that could lead to tariffs, covering various products such as fasteners and steel wire.
- Korea's Hyundai Steel and Dongkuk Steel filed a proposal for an anti-dumping duty of 18 percent to 33 percent on Chinese steel.
- Australia's Anti-Dumping Commission is investigating about a dozen cases of alleged dumping of low-priced steel products from Asia countries, including China.
- In India, some steelmakers are seeking trade measures including higher duties.
Many Chinese steelmakers are government-owned or closely linked to local governments, which given their important role as employers and providers of tax revenue, the mills are unlikely to close or cut production even if running losses. Also, China's steelmakers benefit from relatively low-cost labor and inputs, and major state-owned steel makers continue to have their loans rolled over or refinanced. Besides, they could get a boost from foreign investors. The weakening renminbi was also a factor in encouraging exports.
Source: Biman Mukherji, John W. Miller and Chuin-Wei Yap, "Why Chinese Steel Exports Are Stirring Protests," Wall Street Journal, March 15, 2015.
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