Hold Your Horses! Says EU To Chinese Steel Manufacturers
15 February 2016
China was officially asked to cut back its burgeoning over production of steel by the European Union Trade Commissioner, Cecilia Malmstroem as it is compelling European steel manufacturers to lower their price scale.
This sort of inundation of steel has never been seen before and can have pernicious effects on employment throughout the industry across the globe.
On 5th February, Luxembourg based ArcelorMittal claimed that a gigantic loss of $8 billion during the year 2015 was a direct corollary of China’s over-production.
Malmstroem appealed, “In the wake of a worrying trend, I urge you to take all appropriate measures to curb the steel overcapacity and other causes aggravating the situation,” in the letter she sent to Gao Hucheng, China’s commerce minister on 29th of January.
The letter also mentioned that the rate of total steel exports from China has risen by 50% in 2015 and this is a compelling issue since it’s destabilizing the EU specifically along with the global market. As a result, China will now be subject to investigation by EU regarding the alleged excessive price-dumping
China accounts for a half of the world’s crude steel production while consuming a large part in the run up to Beijing Olympics but as the once booming Chinese economy slowly screeched into the tunnel of recession, it could no longer absorb a huge portion of domestic steel. China declared on 4th February to cut steel production by 150 million tonnes over the next five years, but compared to the country’s overproduction of 340m tons per year, the announced cut is mere peanuts.
China has been pursuing the status of ‘market economy’ at the World Trade Organization. This most coveted status would render it difficult for WTO members to impose anti-dumping duties on China.
Even EU cannot do anything about it, let alone putting any curbs. Right now the EU has dozens of anti-dumping measures in place against China- many of those pertaining to the steel industry.
EU has already undertaken an impact study on the potential effects of China’s ensuing market economy status. The resulting figures will be obtained by the end of the year which will then be scrutinized for appropriate decision-making.
Source : newdelhitimes.com