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The challenge of steel production in China

According to Daxue Consulting’s March 2017 study about steel production in China, the economic slowdown in the country has caused a steady decrease in the consumption of steel. The Chinese government has found a temporary solution to the 400 million additional tons of steel present in the country: shipping it abroad.

Part of this excess steel has been sent to Europe, and according to the European Union, it has been sold at unusually low prices, putting European producers in a difficult spot as they cannot compete with such prices. As 45% of first producers in the steel sector are Chinese, the EU has been considering implementing anti-dumping duties on Chinese steel to protect its own jobs in the steel industry.

Restrictions on Chinese steel in EU

On May 12, 2017, the European Commission finally announced, after careful investigation and consideration, that Chinese seamless steel pipes had indeed been sold in Europe at unfair prices. Furthermore, the Commission has published definitive anti-dumping duties on Chinese steel imports aimed at ending the flow of cheap metal from the country. Now, those exports will be taxed with an extra duty ranging from 29.2% to 54.9%. The Commission’s announcement demonstrates that the EU “is using the available toolbox of trade defense instruments” appropriately. According to their spokesman, Margaritis Schinas, there are “an unprecedented number of trade defense measures […] targeting unfair imports of steel products” which aim to limit the entrance of steel resulting from Chinese over capacity.

Anti-Dumping Duties on Chinese Steel: The Chinese reaction

CNN Money reports, however, that an official in China’s Ministry of Commerce believes that the EU didn’t operate impartially and fairly, and “had taken an unfair approach to its investigation”. Regardless, and in order to limit overproduction, the Chinese government has already pledged to bring down its production of steel by 150 million tons by the year 2020.

Between 1978 and 2014, China saw its production evolve from 32 million tons to 823 million, becoming the world’s first steel producer.

Photo credits: Ant Rozetsky

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