EU threatens wider tariffs on Indian graphite firms

The European Union threatened to widen tariffs on graphite electrodes from India, saying Indian exporters including HEG Ltd and Graphite India Ltd. may be dodging the duties by assembling components in the EU.

The EU is investigating whether Indian exporters of graphite electrodes for electric furnaces, used by steelmakers including Germany's ThyssenKrupp AG, are shipping artificial graphite rods to Europe and converting them into the product covered by the tariffs. The levies are as high as 15.7 percent.

In 2004, the EU imposed the five-year tariffs to counter Indian government aid to exporters and shield European producers including SGL Carbon AG, the world's largest maker of carbon and graphite products, from cheaper imports.

The European Carbon and Graphite Association said Indian exporters are circumventing the duties and demanded a probe in a Jan. 15 complaint to the EU.

The request points to ``a significant change in the pattern of trade involving exports from India,'' the European Commission, the 27-nation EU's regulatory arm in Brussels, said today in the Official Journal. ``This change in the pattern of trade appears to stem from a simple conversion operation.''

Indian manufacturers supply 20 million euros ($26 million) of Europe's 400 million-euro market for the product, the European Carbon and Graphite Association said in 2003 when the EU began an inquiry into whether to impose duties on imports from India.

Nobody at the association in a position to provide more recent information was immediately available today. As part of its investigation, which will last as long as nine months, the commission will require the registration of artificial graphite rods from India.

This will allow the EU to impose the anti-subsidy duties on this product retroactively should the commission conclude that circumvention has occurred.

The EU anti-subsidy duty on HEG, India's biggest graphite-electrodes producer, is 7 per cent and the levy on Graphite India is 15.7 per cent. The measures are also known as `countervailing'' duties.