EU men of steel battle it out in China dumping row

China is flooding the European Union with cheap steel amid a wave of bankruptcies in the industry at home. 

Fallout from the real estate crash has hammered the construction sector, turning it from boom to bust in the shadow of a stagnating economy. 

“China’s persistent property crisis and flagging economic growth are reshaping the country’s massive steel industry, with [a] warning last month of a crisis worse than in 2008 and 2015,” Bloomberg News reported earlier this week. 

“A slump in domestic demand has meant mills have increased exports, spurring a trade backlash from countries who say the metal is being dumped at below cost,” it said.

Meltdown:

• “Almost three-quarters of [Chinese] steelmakers suffered losses in the first half [of the year],” Bloomberg Intelligence pointed out.
• Many face “bankruptcy,” even though “a slump in domestic demand has meant rising exports,” BI said. 
• The playbook has a familiar ring and has triggered a “backlash” in the EU.

China’s steel dump is ‘subsidized and below production costs’.

Delve deeper: China is the world’s largest producer of steel. “[It] is expected to export more than 100 million tonnes of the metal this year,” the Financial Times reported on Monday. 

Between the lines: Genuino Christino, the chief financial officer at Europe’s biggest steel maker, ArcelorMittal, told the FT that the volume of exports from the world’s second-largest economy was “huge.” 

Big picture: Just like the tsunami-style surge of cheap solar panels, wind turbines, and electric vehicles, China’s steel dump is “subsidized and below production costs.”

China Factor comment: Brussels is likely to respond by wheeling out new tariffs to safeguard Europe’s steel industry before it suffers the same fate as the solar sector.