European Commission’s (EC) surveillance system for certain imports of aluminium and steel products ran its course on May 15. At present, it is unclear if other safeguard measures are likely to come in its place. The surveillance regulation came in place in April 2018.
Under article 10 of the European Union’s regulation, EC introduced surveillance on these products which threatened the domestic market.
EC observed that imports of aluminium products rose by 28pc to 9.1mn mt in 2017, from 7.1mn mt in 2013. The commission stated since early 2000, global markets saw a significant oversupply of primary aluminium from China with a rise in smelting capacity.
Over half of the world’s supply of primary aluminium products comes from the Asian country. Amid a glut of primary aluminium from China, only 16 smelters could remain functional in 2017 from 26 in 2008.
The EC had observed that China exports very little primary aluminium directly due to export taxes. But, global prices of aluminium are lowering as it is a globally traded commodity amid low transport costs. Prices of downstream semi-finished and finished products are also dropping as China exports these products to other markets.
Besides the EU, the US had also launched an investigation to understand the impact of aluminium imports on national security under section 232 of the United States Trade Expansion Act of 1962. Subsequently, the US president announced 10pc additional import duty on a broad range of aluminium products.
Steel
European Commission ruled that 10pc of total Chinese steel exports land make it to their member countries. These account for over 30pc of total European Union imports amid a modest rise in domestic demand.
Imports of iron and steel into the region rose by 32pc in 2015 to 55mn mt from 41.8mn mt in 2012. On the other hand, steel exports from the European Union dropped to 50.7mn mt in 2015 from 62.3mn mt in 2012.
EC said that these products were subject to prior union surveillance until 2012.
China produced 8,227mn mt of crude steel in 2014, about half of the global total. The country’s steel capacity is excess by 350mn mt.