Steel surplus issue requires global efforts

(Global Times)
Updated: 2016-04-13 10:46
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Joint Belt and Road projects would address dumping claims: expert

http://en.chinamining.com.cn/News/2016-04-13/1460515630d76060.html

Despite pressure for China to significantly reduce overcapacity in the steel sector, the government's hands are tied due to unemployment concerns, experts said Tuesday, while stressing that the global steel overcapacity issue demands a more concerted effort and is not for China to bear alone.

The comment comes after German steelworkers flooded the streets on Monday (local time), seeking greater job protection amid uncertainty over the future of Thyssen Krupp's steel business.

About 45,000 German workers joined rallies across the country, media reports said.

The German steelworkers staged protests after UK foreign minister Philip Hammond on Saturday called on China to step up efforts to reduce its steel overcapacity during a visit to Beijing last week.

"The utilization rate of the capacity in the domestic steel industry stood at 67%, which is quite low and that of the global market's is about 70%," Wang Guoqing, research director at the Beijing Lange Steel Information Research Center, told the Global Times on Tuesday.

Although foreign steel companies will be hit to some extent by the relatively cheaper price of China's steel products, it is "not right to let China take full responsibility," Wu Chenhui, an independent industry analyst, told the Global Times Tuesday.

China aims to cut 100 to 150 million tons of crude steel in the next five years starting from 2016, the State Council, China's cabinet, said in February.

With the decline in heavy industries, steelmaking has suffered over the past decades worldwide while some countries, especially China, have ramped up production, trying to sell surplus steel in global markets at prices other producers cannot match.

Many countries think China has been dumping excess and cheap steel products in overseas markets.

"For instance, in the first quarter of 2016, there were 12 anti-dumping cases, and anti-subsidy and anti-circumvention measures on China's steel exports, mainly in the EU, Canada, the US, Australia, India, Vietnam and Thailand," Wang said, "But there may have been some misunderstanding."

The price of China's steel exports is indeed lower than the price in foreign countries thanks to China's large domestic steel industry and comparatively lower costs, Wang said, "but the price of steel exports is actually higher than the cost or price in the domestic market."

Moreover, China has begun to export some mid-to-high end steel products based on global demand instead of crude steel, according to experts.

"China primarily imports finished steel products, such as car accessories, but the volume is quite small at about 10 million tons annually," Wang noted.

If China violates WTO rules steel exports, foreign countries can raise the matter with the world body. China should brave difficulties to let the world acknowledge its market economy status, according to Wu.

Cooperation as solution

Analysts said they believe infrastructure projects in countries and regions along the One Belt and One Road are a good cooperative way for China to address the issue.

"The domestic steel industry should upgrade as China undergoes socioeconomic restructuring to improve product quality, technology and management," Wang noted. "Focusing on environmentally friendly production is the target in the near future," she said.

China's crude steel output reached 803.8 million tons in 2015 or 50.3 percent of global production, data released by the World Steel Association in January showed.

The growing controversy surrounding China's steel sector comes as the Chinese government seeks to secure EU recognition of its "market economy" status by the end of the year.

China is ready to work together with the international community to reduce surplus capacity in the steel industry through international cooperation, Chinese foreign ministry spokesperson Lu Kang told a briefing on Monday.