Tag: China

EU announces up to 38% import tariffs on China-made battery electric cars

The EU will slap import tariffs of up to 38.1% on battery electric cars made in China, after the European Commission’s anti-probe investigation confirms “unfair subsidisation.”

In a statement on Wednesday, the EC announced provisional countervailing duties that will be introduced from 4 July, if discussions with Chinese authorities don’t lead to an “effective solution.” The duties would be collected if and when definitive duties are imposed.

For now, carmakers and EU countries have been informed of different tariffs based on the EC’s calculations. These will be available for review, but member states can’t interfere with amounts. They will eventually be required to vote on the proposal. However, “measures can be imposed even if the qualified majority is not reached, provided the votes against do not reach a simple majority.”

The average weighted tariff for BEV producers in China cooperating with the probe is 21%. Those that didn’t cooperate, like China state-owned carmaker SAIC, would be subject to a 38.1% duty, the EC says.

Other disclosed individual sample duties include 17.4% for BYD and 20% for Geely, the latter is the parent company for a number of European brands including Volvo Cars, Polestar and Lotus.

“Following a substantiated request, one BEV producer in China – Tesla – may receive an individually calculated duty rate at the definitive stage,” the EC says, without elaborating.

Definitive measures are to be imposed by 12 October.

Reacting to the long-awaited announcement, European automotive trade body ACEA says that “free and fair trade is essential in creating a globally competitive European automotive industry.” It adds that healthy competition drives innovation and choice for consumers, while emphasising that what the European auto sector needs “above all else is a robust industrial strategy for electromobility.”

“The tariffs are welcome but Europe needs a strong industrial policy to speed up electrification and localise manufacturing.” adds Julia Poliscanova, senior director for vehicles and emobility supply chains at T&E. “Just introducing tariffs while scrapping the 2035 deadline for polluting cars would slow down the transition and be self-defeating.”

The campaign group said in March that one in four BEVs sold in Europe this year could be imported from China, led by European carmakers with production in Asia. The trend is set to reverse in the period up to 2027.

On 11 June, China’s foreign ministry spokesman Jian Lin said Beijing urges the EU to terminate the investigation as soon as possible to avoid damaging China-EU economic and trade cooperation, as well as the stability of supply chains. “If the EU insists on its own way, China will never sit idly by and will take all necessary measures to resolutely safeguard its legitimate rights and interests,” Lin added.

Currently, BEVs imported from China are subject to a 10% duty in the EU. European BEVs face a 15% import tariff in China.

Biden administration confirms China 25% steel tariff

The Biden administration confirms it will increase the tariff rate on certain China-origin steel and aluminium products under Section 301 from 0-7.5% to 25% in 2024. This follows an in-depth review by the United States Trade Representative.

The move is part of tariff action against multiple Chinese products, designed to encourage China to “eliminate its unfair trade practices regarding technology transfer, intellectual property, and innovation”, a White House statement says.

Besides steel and aluminium, the tariff rate on Chinese semiconductors will increase to 50% by 2025, on electric vehicles under Section 301 to 100% in 2024, on lithium-ion EV batteries to 25% in 2024, and on solar cells (whether or not assembled into modules) to 50% from 2024. Ship-to-shore cranes and medical products are also impacted.

“China’s forced technology transfers and intellectual property theft have contributed to its control of 70, 80, and even 90% of global production for the critical inputs necessary for our technologies, infrastructure, energy, and health care – creating unacceptable risks to America’s supply chains and economic security,” notes the White House statement seen by Kallanish.

“Furthermore, these same non-market policies and practices contribute to China’s growing overcapacity and export surges that threaten to significantly harm American workers, businesses, and communities,” it adds.

“We will continue to work with our partners around the world to strengthen cooperation to address shared concerns about China’s unfair practices – rather than undermining our alliances or applying indiscriminate 10% tariffs that raise prices on all imports from all countries, regardless whether they are engaged in unfair trade,” the note concludes.

Some of the impetus to review trade agreements with China came from Chinese customs data that showed a 30.7% year-on-year increase in steel exports during the first quarter.

The review has received support from US steel industry leaders. Last month, American Iron and Steel Institute president Kevin Dempsey said that while direct Chinese steel shipments have not grown to the US to this extent, Chinese steel exports to third country markets are often further processed into downstream manufactured products that are supplied to the US.


High production weighs on Chinese steel market; market eyeing steel output cuts

China’s crude steel production remained high in July and is likely to inch higher in August, weighing on the steel market amid lackluster steel demand. However, some market sources say they believe China will gradually carry out steel production cuts over the next few months for annual steel output controls, thus limiting further room for downside movement in steel prices.

High production

China’s crude steel output in July was 11.5% higher year on year at 90.8 million mt, although daily output retreated 3.6% from June to 2.929 million mt, National Bureau of Statistics data showed Aug. 15.

China’s pig iron output in July rose 10.2% year on year to 77.6 million mt, while daily output fell 2.4% month on month to 2.503 million mt.

Over January-July, China’s crude steel and pig iron output increased by 2.5% and 3.5% year on year, respectively, to 626.51 million mt and 528.92 million mt.

Moreover, after steel output controls to reduce air pollution at Tangshan city, China’s biggest steelmaking hub, were lifted at the start of August, China’s pig iron and steel production this month is likely to increase again from July levels, some market sources said.

China Iron & Steel Association on Aug. 14 estimated China’s daily crude steel and pig iron output for Aug. 1-10 at 2.953 million mt and 2.533 million mt, respectively, up 0.8% and 1.1% from July’s average, and 9.1% and 10% higher year on year.

Finished steel inventories at mills and spot markets monitored by the China Steel Industry Association reached 25.69 million mt as of Aug. 10, up 7.5% from the end of July, but still 6% lower year on year.

In tandem with rebounding steel output and rising inventories, Chinese domestic rebar prices fell by Yuan 165/mt ($22.6/mt) from Aug. 1 to Yuan 3,691/mt on Aug. 14, S&P Global Commodity Insights data showed.

Steel output cuts

It remains unclear when Chinese mills will implement output cuts in order to keep the country’s annual crude steel within 2022 levels, which is partly the reason behind currently weak market.

But some mill sources in northern and eastern China told S&P Global that some major mills in these two regions have been or will be ordered verbally to cut their production later this year.

According to market sources, as of mid-August, China’s biggest steelmaker Baowu Group, as well as some major mills in Shandong province, have received verbal orders to keep their 2023 crude steel output within 2022 levels.

Meanwhile, market chatter suggested that Hebei and Jiangsu provinces, China’s leading and second-largest steelmaking hubs, respectively, will soon verbally inform major local mills to cut output.

Some sources said mills will only receive verbal orders to cut output directly from the local government, instead of formal announcements, and therefore it is difficult to foresee how much crude steel output in China will be reduced in the next few months.

“I think China’s steel production will slow down over September-December, which will almost certainly support the steel market by then …but sluggish steel demand may limit the upside room for steel prices,” one mill source said.

Bleak steel demand

The floor space of China’s new home construction starts, the most crucial steel demand driver, in July fell 30.2% month on month and 26.5% year on year, according to NBS data.

Over the first seven months of 2023, new home starts fell 24.5% year on year, and 52.1% from the same period of 2021.

The floor space of new home sales, a major channel to fund new projects, in July fell 46.1% month on month and 23.9% year on year. New home sales over January-July were down 6.5% year on year and 34.5% lower than in the same period of 2021.

As property sales still show no signs of bottoming out, some steel market sources predicted that new home starts and property-related steel demand would continue to decline in the foreseeable future.

China’s infrastructure investment in Jujly increased by 4.6% year on year, slowing from a 6.4% year-on-year increase in June. Infrastructure investment over January-July rose 6.8% year on year.

Some market sources said they expect China to step up policy support to the infrastructure sector for the remainder of 2023, but this is still unlikely to fully offset the falling steel demand in property-related sectors.

Author Jing Zhang, Market Specialist – Metals

Ukraine issues AD duties on China-origin coated steel

Ukraine has imposed final anti-dumping measures on imported rolled carbon steel with coatings originating from China. The duties are set to take effect on 12 August, Kallanish notes.

The decision followed an investigation initiated by the Ukraine’s Interdepartmental Commission on International Trade in response to a complaint from local producer Modul-Ukraine.

The measures are aimed at addressing the issue of dumped imports from China, protecting Modul-Ukraine and Heavy Metal. The two producers collectively account for over 50% of the nation’s overall production of similar goods.

A definitive anti-dumping duty imposed on China-origin flat rolled products of carbon steel, clad with galvanic or other coating, classified in product subheadings 7210 70, 7210 90 and 7212 40. The duty  has been applied for a period of five years.

The final anti-dumping rates were assigned: Zhejiang Huada New Materials Co, 42.53%; Shandong Hwafone New Materials Co, 30.76%; Shandong Iron & Steel Group Jiangsu Trading Co (for export of goods from Shandong Hwafone New Materials Co), 30.76%; Shandong Huijing Color Steel Co, 48.14%; Ebic Supply Chain Management Co (for export of goods from Shandong Huijing Color Steel Co), 48.14%; Welfull Group Co, 40.53%; Shandong Lantian New Material Technology Co, 41.36%; Shandong Castle International Trade Co (for export of goods from Shandong Lantian New Material Technology Co), 41.36%; Fareast Steel International Limited, 38.70%; Qingdao Honesteel Metal Co, 38.70%; Qingdao Jobofone International Trade Co, 38.70%; Shandong Boxing Huaye Industry and Trade Co, 38.70%. Other producers and exporters of goods originating from China will receive a rate of 48.14%.

Elina Virchenko UAE

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