Joint statement by steel bodies questions China’s market status

By Paul Ploumis (ScrapMonster Author)

November 09, 2015 01:38:54 AM

SPOKANE (Scrap Monster): The joint statement issued by nine steel associations has raised serious concerns over Chinese attempts to gain market economy status by December 2016. The associations include the American Iron and Steel Institute (AISI), the Steel Manufacturers Association (SMA), the Canadian Steel Producers Association (CSPA), Mexico’s Canacero, Latin America’s Alacero, Europe’s Eurofer, Instituto Aço Brasil (the Brazil Steel Institute) , the Specialty Steel Industry of North American (SSINA) and the Committee on Pipe and Tube Imports (CPTI).

Representatives of the global steel industry has disagreed with the Chinese claims that it should be automatically accorded treatment as if it were a market economy by December next, which marks the 15thyear of China’s entry into the World Trade Organization (WTO). The steel bodies believe that premature recognition of China as a market economy would have serious social and economic impacts. The joint letter also called for governments across the globe to assess the impact of such a decision on industries around the world.

“Given the continuing significant role of the Chinese government in many key aspects of the Chinese economy, and especially in its state-owned and controlled steel sector, there can be no question that China remains very much a non-market economy today”, the joint letter noted.

According to the steel groups, China is the main contributor to the global steel industry’s overcapacity crisis. The country’s overcapacity ranges from 336-425 million metric tonnes. At the same time, OECD Steel Committee estimates suggest global excess steel capacity in excess of 700 million metric tons. This essentially means that China contributes to more than half of the excess production. Also, declining domestic steel demand and devalued local currency have resulted in increased exports of steel products out of the country. The dumping of cheap products from China has badly impacted domestic steel sector growth in many countries worldwide.