Increasingly cheap Chinese steel concern for Europe

Increasingly unfair competition from cheap Chinese exports is a concern for European steel companies, Europe's steel industry body Eurofer said, after Chinese steel producers cut export prices. Chinese steel makers cut prices in response to Beijing's move to weaken the yuan, industry sources have said, providing an indication of how Beijing's devaluation will help companies in the world's second-biggest economy boost sales.
"There may be very real competitiveness impacts for European steel firms facing Chinese steel imports, which will now be even cheaper today," Eurofer said in an emailed statement. It added that Europe was not shielded well enough against being swamped with Chinese overcapacity, exacerbated by the country's slowing economy. "(China) now has an installed capacity of 1.1 billion tonnes, of which 340 million tonnes is excess capacity. This overcapacity alone is more than double the EU's steel demand."
Eurofer, whose members include top global steelmaker ArcelorMittal, ThyssenKrupp and Voestalpine , estimates that Chinese exports to the EU rose 49 percent year-on-year over the first five months of 2015. "China currently sells its excess steel to the EU market at prices that do not fully cover its costs for raw materials or for material transformation," Eurofer said. "The overnight devaluations of the Chinese currency merely add to the unfair competition faced by the European steel industry. "
Global steel prices are at their lowest level in about a decade, according to an index compiled by consultants CRU. China's sales to overseas markets reached 62.13 million tonnes in the year to July, already two-thirds of last year's record 94 million tonnes. The EU has this year taken some measures to protect domestic steelmakers, including its imposition in March of anti-dumping duties on imports of cold-rolled flat stainless steel from China and Taiwan.
Some European companies, meanwhile, pointed to mitigating effects of the rising export pressure from China. The chief financial officer of ThyssenKrupp said Chinese producers' ability to drag world steel prices down further in light of the yuan devaluation would be limited by the necessity of buying raw materials in dollars, and high transport costs.