Fact Check: is China Dumping Steel?
Ian Greenwood, Ray Hudson, 19 Jun 17
       

Sparks fly: workers produce steel at a small plant in Shenyang, northeast China. EPA/MARK


We are continuing to act, when necessary, against unfair trading conditions in the steel sector, and against foreign dumping.


European Union Trade Commissioner Cecilia Malmstroem speaks after the EU introduced new duties on steel products from China on Friday, June 9.

China’s hold over the international steel market is pretty clear. It produces half the world’s steel and in 2015, finished imports from China to the EU were up 140% on 2013. Imports now account for a quarter of the EU market, and at the same time, prices for a range of major EU product classes have collapsed.

This trend, replicated to differing degrees worldwide, has led to accusations in the US and elsewhere that China is selling its steel at a loss, or more accurately in this case, keeping costs artificially low so that other producers cannot compete, in a practice widely known as “dumping”.

In the EU, tariffs have dented Chinese imports but it’s a bit like plugging one leak only to find another. Chinese imports are replaced by products from places like Iran, Russia and Ukraine. Imports from Iran have increased almost tenfold since 2012. The EU has numerous trade defence measures on other nations, and not just on a range of Chinese steel products.

In the UK, imports are also on the up. According to UK trade association UK Steel, imports accounted for 60% of UK demand in 2015, up from 57% in 2012. Chinese steel imports accounted for 11% of 2015 UK steel demand, up from 2% in 2011. UK imports from the EU remain twice as high as from the rest of the world, but no one can escape downward pricing pressure from such a huge player.

The World Trade Organisation defines dumping as state interference in the market: protection leading to subsidised exports at prices below real market costs. Specifically, dumping occurs when a country’s average export price over time is less than a reasonable price for the same product when sold at home. This characterisation of dumping is based on market prices rather than production costs – UK Steel contends this is unrepresentative.

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