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Euro Steel Can’t Compete With Chinese Negative Profit Sales

Euro Steel Can’t Compete With Chinese Negative Profit Sales

The European Steel Association has said in a statement that Europe’s steel manufacturers will be “blown away” if the E.U. recognizes China as a fully-fledged market economy.

New York, NY, USA, July 15, 2016 — With China’s ability to sell steel for negative profit due to their vast excess, it is claimed they would flood the market and make competition impossible. The ESA feels China’s products will have much easier access to the euro zone market.

The issue has given the “leave” camp further ammunition with the British EU membership vote looming. Their opponents on the “remain” side say that China will never be granted special international trading status as they don’t meet the criteria, and there was a much better chance of the situation staying this way if Britain remains in the financial bloc.

Following the TataSteel sale in March, thousands of jobs are at risk in Wales, especially at their Port Talbot facility where as much as four thousand staff could be laid off.

Due to China’s authorities meddling in the market and deflating prices in order to give their production companies the ability to sell cheap steel, the E.U commission has so far not recognized the country as a market economy. This gives them the chance to impose higher taxes on imports coming into the continent.

This may change, however, as the commission have voiced plans to consider the nation as a market economy, and thus is would face significantly lower tariffs.

Karl Tachelet, spokesman for the ESA said, “It’s clear if new regulations come in we will simply be blown away by a Chinese storm. It is highly doubtful we would survive.”

Other observers admit the figures don’t look good for Europe’s steel producers. Stuart Poulson, Head of Corporate trading at Nikko-Desjardins Asset Management commented in an email to investors on Thursday, “Let’s have a look at Chinese stockpiles at the moment; we are looking at about 450 million tonnes. What is Europe’s total steel demand, about 150 million tonnes? That is not great news for the ESA.”

Poulsen was quick to add, “This may just be a lot of hot air. I highly doubt that the euro zone officials will allow China to be seen as a bona fide market economy. I’m not the only one who believes China have failed to meet the criteria and have little hope of doing so by the end of 2016.”

Arin Takashi
Nikko-Desjardins Asset Management
Tokyo, Japan

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