China, Russia alloy import faces EU tax

The European Union (EU) imposed tariffs as high as 35.5 per cent on ferroalloy from five countries including China and Russia to shield EU producers such as Ferroatlantica SL from imports representing half the market.

The duties on ferro-silicon, used in steel making, are to counter sales in the EU below domestic prices or below production costs, a practice known as dumping. The trade protection, which also targets Egypt, Kazakhstan and the Former Yugoslav Republic of Macedonia, is for six months and may be prolonged for five years.

"The imposition of measures will restore fair competition," the European Commission, the 27-nation EU's trade authority in Brussels, said today in the Official Journal. "There was a substantial increase in volume and market share of the imports." The anti-dumping duties take effect tomorrow.

China, Russia, Egypt, Kazakhstan and Macedonia more than tripled their combined share of the EU ferro-silicon market to 51.2 per cent in the 12 months through September 2006 compared with 2003, expanding sales to about ¤ 260 million ($353 million) and undermining the position and profitability of the bloc's producers, according to the commission.

EU ferro-silicon manufacturers faced a decline in their share of the home market to 17.7 per cent from 28.7 per cent in the same period, the regulator said.

In addition to Spain's Ferroatlantica, EU producers include France's Ferropem, Sweden's Vargon Alloys, Poland's Huta Laziska, Slovakia's OFZ and Slovenia's TDR Metalurgija.

The EU industry "was not able to increase its sales prices up to the necessary level to cover its full costs", the commission said. "The dumped imports had a significant negative impact."

The duties are as high as 35.5 per cent for China, as much as 25.5 per cent for Russia, up to 20.4 per cent for Egypt, 33.9 per cent for Kazakhstan and 5.4 per cent for Macedonia. The Bratsk Ferroalloy Plant of Russia's ICT Group faces an 18.8 per cent levy and Macedonia's Silmak Dooel Export Import is being exempted in return for a minimum-price pledge.

Steel companies such as ThyssenKrupp AG can cope with higher costs for ferro-silicon, according to the commission, which said users opposed levies "for fear of losing a cheap source of supply, which would harm their competitiveness".

"The effect of any possible measures on the profitability of the steel industry would be extremely limited," the regulator said. "Users would have no difficulties whatsoever in bearing the costs of the measures. Moreover, steel producers will, in any case, have the possibility to pass on the effect of any price increase."

Ferro-silicon represents a maximum 0.7 per cent of the total production costs of steelmakers, the commission said. The impact of the trade protection on users will be further limited by the availability of supplies from exporters that aren't subject to duties, the regulator said.

Other countries that ship ferro-silicon to the EU include Norway, Iceland, Brazil and Venezuela, according to the commission, which said Norway's share of the EU market was 10 per cent and Iceland's 9 per cent in the 12 months through last September.

The EU is offering relief to the steel industry in a separate dumping case involving another ferroalloy called ferro molybdenum. Since last October, the EU has suspended a 22.5 per cent anti-dumping duty on the product from China because imports fell, prices rose and European ferro-molybdenum producers such as Belgium's Sadaci NV profited.

The levies on ferro-silicon mark a victory for an association of European ferroalloy producers called Euroalliages, which filed an October 2006 dumping complaint that prompted the commission to open a probe the following month.

Under EU procedures, the commission can impose provisional anti-dumping duties for six months and the bloc's national governments "" acting on a commission proposal "" can turn those measures into "definitive" five-year levies at the same or different rates.