EU member states called on Monday that the EU's trade protection weapons should be "full fire" to protect the European steel industry from the impact of Chinese steel "dumping".
According to the British "Financial Times", the downturn in the European steel industry is the main reason behind this action by EU member states. The size of the European steel industry workforce has shrunk by a fifth since 2009, and steel demand is 25 percent below levels before the 2008 financial crisis.
China's domestic overcapacity has become Europe's handle. Steel executives say China is using excess capacity at domestic steel mills to "dump" products in European markets at prices below production costs.
In addition, they worry that the European Commission may recognize China's market economy status next year, so that many weapons used by the EU to impose tariffs on Chinese steel exports will be directly ineffective. China joined the World Trade Organization (WTO) in 2001, and according to the agreement, China will automatically obtain market economy status in 2016.
However, whether the United States and Europe agree with this result is still unknown. Once they agree with China's market economy status, it will be difficult to implement retaliatory tariffs against China. The voices of opposition in Europe come from traditional manufacturing industries, such as steel, clothing and bicycles.
From a global perspective, the entire steel industry is already facing the dilemma of overcapacity. The excess capacity is about 645 million tons, and analysts estimate that China will contribute about 300 million tons.
Wall Street has previously mentioned that the annual global steel output is 1.6 billion tons, and China accounts for nearly half of it. Exports in the first seven months of this year already matched output in steel producer Japan. Reuters expects China to export a record 100 million tonnes of steel this year to help absorb excess capacity estimated to be as high as 300 million tonnes as domestic economic growth decelerates.
In the environment of weak global demand and domestic overcapacity, China's steel export volume has surged this year, which was accused by overseas counterparts of dumping. In October, the export volume dropped by 20% month-on-month. This may indicate that China's steel export tide has begun to end.
Last month, India's Tata Steel, a Fortune 500 company, blamed 1,200 job cuts at its UK operations directly on massive imports of cheap products, especially steel from China.
A survey released by the U.S. Department of Commerce last week also showed that tariffs of up to 236% may be imposed on some corrosion-resistant steel exports from China to the United States. According to the U.S. steel industry, steelmakers in five countries and regions including China and India benefit from a wide range of subsidies, while U.S. manufacturers do not enjoy such subsidies. China has 48 different subsidy programs.