Fair trade and protectionism

Transcription

1 Fair trade and protectionism - Weak Chinese steel prices and the global implications Peter Brennan, Associate Editor June 2, Platts, McGraw Hill Financial. All rights reserved.

2 1. Overview Protectionism ramping up Europe Usually free trade Chinese exports Iron ore price Chinese steel prices Impact of the exchange rate Conclusion 2

3 Potential dumping cases Source: UBS 3

4 Potential dumping cases Cases on the increase or a continuation of a trend? Source: UBS 4

5 Cases where dumping duties were imposed

6 Cases where dumping duties were imposed Source: UBS 6

7 1. European trade cases Spate of activity from the European Commission: Between 2013 and 2014 imports from China for flat products increased by 80% while longs increased by 138% Electrical grain oriented steel applied Rebar imports from China investigated CRC imports from China and Russia investigated Quatro plate? 7

8 EC response to import pressure EC launches dumping investigation into imports of CRC Friday, 15 May 2015 The European Commission has opened an anti-dumping investigation into imports of cold rolled coils from China and Russia. Its notice in the EU official journal said the product subject to investigation is flat-rolled products of iron or nonalloy steel, of all widths, not clad, plated or coated and not further worked than cold-rolled (cold-reduced). Excluded are electrical sheet, blackplate and high-speed steel. The investigation follows a complaint lodged by Eurofer on April 1on behalf of EU producers. The notice said the complaint contains prima facie evidence of significant margins of dumping, and of increased volumes of imports. The primary exporters from Russia are NLMK, Severstal and MMK. The European market is very important for us but we don t increase our [coils] shipments there because of the risk of antidumping action. We have seen examples of that in other markets and don t want the same in Europe, a source close to MMK said. NLMK said this investigation does bear on our shipments to the EU but we believe there is no dumping of our sales there. Severstal sells coils and other products in Europe at market prices, it told Platts. The company s spokeswoman said that Severstal s CRC shipments to the EU slightly decreased last year and this year they remain stable. The EU market is an important market for Severstal and the company is eager to take part in the investigation to prove it does not sell at dumping prices. Overall Russian CRC exports to the EU totalled 724,000 mt in 2014, comparable to 727,000 mt supplied in 2013, Platts learnt from one market source. Whereas imports of hot rolled coil into the European market have not been attractive enough to merit significant volumes, CRC has been far more competitive with bookings increasing recently on the weakening dollar. One Benelux trader told Platts he was booking from China now but would not be buying any more CRC from China after September in response to the trade case. Two Chinese traders contacted by Platts Thursday expressed concern at the AD case, because Europe is one of their main export destinations for CRC. However, they hadn t had any plan for reaction so far, as it was still at the investigation stage. This latest EU investigation follows hard on the heels of the announcement of provisional anti-dumping duties on grainoriented electrical sheet and an investigation into imports of Chinese rebar. 8

9 Chinese exports The biggest shift in the steel trade landscape Chinese exports grew by 50.5% y-o-y to 93.78m mt in 2014 Continuing to increase in 2015 Blip later in Q1 related to trader nervousness at the end of 2014 relating to speculation over removal of boron VAT rebates Growth accelerating again y-o-y in Q2 9

10 2015 exports Total (million mt) M-o-m change Y-o-y change January % +52% February % +62.5% March % +13.9% April % +13% Jan-Apr % Source: China Customs 10

11 Domestic Chinese markets Source: Platts SBB Analyser 11

12 Iron ore freefall Source: Platts SBB Analyser 12

13 Iron Ore: Supply-Side 13

14 Iron ore and scrap recovery? 14

15 European price stability in

16 German Steel Sentiment Survey May April March Prices Inventories Production Survey of mills, stockholders, traders and end users Participants answer up, down or stable A results of 50.0 marks stability Prices expected to decrease in November Source: Platts 16

17 Contact Details: Peter Brennan THANK YOU! 2015 Platts, McGraw Hill Financial. All rights reserved.