The volume of imports of steel fasteners, previously subject to anti-dumping duties, into the European Union increased sharply in May. However, imports from many other Asian sources also rose significantly, while China's growth followed seven months of flat or even reduced delivery schedules.
Eurostat data shows that EU imports of 28 items of steel fasteners previously subject to pre-licensing from China increased month on month after a three-month decline and reached 31% in May. From April to September 2016, imports rose rapidly to peak levels and remained at one lower level for the remainder of the year. Import volumes in January reached September levels, but this growth spurt is more likely seasonal, post-Christmas, which was also facilitated by the earlier-than-usual Chinese New Year. In February, the volume of imports fell, continued its decline in March and increased slightly only in April.
Imports of similar assortments from India also increased by about 30% in May, and imports from Taiwan by 17%, according to data from other Asian sources. There was also an increase in imports from Turkey, Vietnam and Malaysia.
In May 2017, imports from China were 49% of the 2007 monthly average, the year on which previous anti-dumping measures were based. According to Eurostat, over the past 12 months, during which anti-dumping duties were not applied, imports of Chinese goods amounted to 44% of the 2007 volume.
While imports from China certainly increased following the lifting of anti-dumping measures, the expected clear escalation did not materialize. A number of factors contributed to the slower growth.
Most importers are cautious about switching to purchases from China, concerned that a new anti-dumping investigation may begin. Many carefully maintain relationships with other fastener supplying countries, which in turn make great efforts to maintain established business relationships, and some have special policies aimed at limiting exposure to China.
However, in reality the situation is more complicated. Prices for steel materials in China are extremely volatile, with the price of wire rod rising sharply in the fourth quarter of 2016 and again in the last few months. This cancels out the cost differences, especially for high-grade fasteners, with other sourcing countries, especially Taiwan, where fastener manufacturers hold more wire inventory and have scheduled supply contracts, thereby smoothing out short-term material price hikes. By comparison, many Chinese factories only buy wire when they have already received an order or have relatively little inventory due to tight cash flow. As a result, prices for European importers turn out to be much more floating, and the terms of their relevance are short, and sometimes there are outright refusals of supplies due to fear of producing at a loss. These reasons are aggravated by the strengthening of the yuan against the US dollar.
Chinese government policies aimed at reducing air pollution also directly and indirectly affect the fastener industry. The retirement of 100 million tonnes of low-grade steel, producing mainly rebar for construction, has pushed up long steel prices as more modern mills return to the rebar market at more attractive prices. More recently, government environmental inspection services have reported closures of galvanizing factories in provinces around Shanghai, causing many fastener factories to suspend or significantly reduce production for fear of attracting the attention of inspectors. All this creates a high level of uncertainty when working with Chinese fastener manufacturers.
The European Union and the European Industrial Fasteners Institute (EIFI) have been very muted about the prospects of filing a new anti-dumping complaint, although the EIFI is actively monitoring the situation and collecting materials for the case for the renewal of anti-dumping duties. On the other hand, the Commission, having undergone four dramatic changes during the WTO Dispute Settlement Council's anti-dumping case, is now approaching the Chinese fastener case cautiously, apparently wanting to have conclusive evidence of a resurgent trend of dumped imports. This makes Eurostat data from June to present particularly important.
