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Juncker: China steel dumping needs to be tackled

The Chinesesteel industry should be punished with "other measures" if it is foundto have been dumping on the Europeanmarket at unfair prices, president of the European Commission, Jean-ClaudeJuncker, said April 13.

Addressinga session of the European Parliament in Strasbourg, Juncker said the EU's tradebody must counter "unfair trading practices" to support the "critical"steel sector, which employs 360,000 workers across the continent.

"Wehave to tackle the question of global steel overproduction. … We are now investigatingsteel products from China to determine if they were dumped on the market, and wewill take other measures if necessary," he said.

His commentscame amid what some pundits are dubbing a crisis in the European steel sector, whichhas been hit hard by sluggish European growth and an estimated 700 million-tonneglobal supply glut.

China,whose steel exports surged last year to approximately 110 million tonnes, aftera collapse in local demand, has been blamed for flooding world markets.

Britishmills are particularly vulnerable. With the pound increasing in value last year,and energy costs and business and carbon taxes that are generally higher than Europeanpeers, many steel products made in the U.K. struggled to find markets.

Thai-ownedSSI closed its Redcarsteel plant as a result, while Tata Steel Europe, a subsidiary of India's laid off of workers at its Scunthorpesite last year.

Tata Steel decision sparks British"Steel Crisis"

InMarch, the Indian-controlled group announcedplans to sell its entire British steel business.

The decisionthreatened over 4,000 jobs at the company's Port Talbot site, sparking a politicalcrisis in Whitehall, and prompting business secretary Sajid Javid to cut short atrip to Australia.

Britishmedia meanwhile reported that Tata Steel's decision to sell its U.K. business wasinfluenced by the U.K. government's move to block a proposal in Brussels that wouldhave ditched the so-called lesser duty rule.

The rule,under which trade authorities impose lower duties on dumped products, was designedto encourage free trade, but steelworkers say it has left them vulnerable.

Javiddefended the decision, saying ditching the rule would have meant higher prices ona range of products for British consumers, such as shoes and other consumer items.

Instead,he said the closure of the Tata Steel plant at Port Talbot could be avoided if theU.K. government offered to co-investwith a private-sector buyer.

TataSteel has already reached an agreementto sell its U.K. long products division, including the Scunthorpe plant, to GreybullCapital on April 11. It wants to find buyers for the remaining assets by May 28.According to a recent report, the company mayclose the business if it is unable to find buyers.

Potential buyers troubled by highcosts

LibertyHouse, the investment group controlled by Indian-born businessman Sanjeev Gupta,said he may buy some of Tata's British assets; another potential buyer is Germany'sThyssenKrupp AG.

But Gupta,who is also rescuing twoof Tata's struggling steel mills in Scotland, has expressed doubts about the viabilityof blast furnaces and crude steel production in the country.

He isnegotiating to acquire Tata's remaining blast furnace mills, including Port Talbot,with a view to eventually converting them to electric arc furnace operations. Withelectricity costs comprising such a high proportion of total costs for electricarc furnaces, Liberty has been trying to secure a deal that would cut its energybill.

Steelmills in the U.K. pay the highest rates for electricity in the 28-member EU. Accordingto figures from the U.K. Department of Energy and Climate Change, extra-large industrialusers in the U.K. paid 9.53 pence per kilowatt hour, compared to the 28-member medianof 5.06 pence per kilowatt hour.

Overallenergy costs account for between 20% and 40% of the costs of a blast furnace mill,according to British Steel, a lobby group for the U.K. industry.

It alsonoted that governments of other European countries, including France, Italy andSpain, have moved quicker to help offset the cost of high energy and climate-changecosts, compared to the U.K. government.

Thisprice differential for electricity was even higher when carbon taxes, energy taxesand renewable levies were taken into account, according to the lobby group.

Withthe dearth of mining in the U.K., British crude steel producers also import ironore and coking coal, although these are generally shipped at global market rates.