This is rather going to add to the chaos and anger surrounding Tata Steel's troubles at Port Talbot: China has decided to add anti-dumping duties to European Union exports of steel to that country. Which, when the rest of the steel world is crying out for anti-dumping duties to be imposed upon Chinese steel exports, is rather adding insult to injury. Or at least that will be how it is seen by many.
Unfortunately, this is how trade wars start: a little bit of tit for tat treatment soon descends into an orgy of recriminations and counteractions thus diminishing the wealth of us all. Do not, ever, start thinking like the protectionists want us to think, that it is our exports which make us rich, imports being something that make us poorer. It is entirely the other way around. This is easily proven too: if the absence of imports made us all richer then Cuba, suffering from that 50 year embargo, would be a very rich place indeed, wouldn’t it?
The news from China:
China has thrown down the gauntlet in an escalating trade war over the global steel glut, imposing punitive tariffs of 46pc on hi-tech steel produced in Britain and the rest of the European Union.
The astonishing move came as the Prime Minister, David Cameron, confronted the Chinese leader Xi Jinping at a meeting in Washington, pleading for action to slow the flood of Chinese steel exports reaching Europe.
There is a morbid amusement to be had from this of course. For China currently produces some half of all the world’s steel, doesn’t need to use that much of it herself and is thus flooding the global market with very cheap steel indeed. The announcement itself is here and who knows, their English page might load for you. However, this isn’t quite what it seems. China is detailing one rather small part of that total steel market:
China has imposed anti-dumping duties on steel from the European Union, Japan and South Korea.
The Ministry of Commerce said on its website Friday that imports of a grade of flat-rolled steel will be charged duties ranging from 14.5 percent to 46.3 percent.
It’s a very specific grade of that certain type of steel too:
And China has itself just imposed anti-dumping duties on “under-priced” steel from the EU, Japan and South Korea, claiming domestic producers had suffered “substantial damage” from under-cutting.
The ministry of commerce said imports of grain-oriented flat-rolled steel, a type also made in Tata’s Port Talbot works in the UK, will be charged duties ranging from 14.5 to 46.3 per cent.
This has a specific use in the electrical industry, used to make transformers and the like. It’s also near nothing to do with the problems at Port Talbot, nor even the gross overcapacity of the global steel industry. That overcapacity is in just the general production of steel and iron. This is a very specific specialist product and has near nothing to do with the overcapacity in blast furnaces and so on which is the basic problem. An analogy would be that sure, we’ve got lots of food around, so much that some majority of humans are “too fat” according to the Lancet. But we’ve still a shortage of vanilla to make ice cream from. It’s entirely possible for a general market to be in oversupply while specific parts of it face very different problems.
Source: Business Standard