Shanghai. August 30. INTERFAX-CHINA - The European Union will impose anti-dumping duty rates as high as 35.5 percent on ferrosilicon originating from five countries, including China, according to a report published in the European Commission's official journal on Aug. 28.
Industry insiders commented that the anti-dumping measures targeting Chinese ferrosilicon, will seriously affect ferrosilicon exports to the EU, and lead to domestic oversupply problems and a subsequent slump in prices.
The EC has set anti-dumping duty rates on ferrosilicon exports at 35.5 percent for China, 25.5 percent for Russia, 20.4 percent for Egypt, 33.9 percent for Kazakhstan and 5.4 percent for the former Yugoslav Republic of Macedonia. The anti-dumping duties are scheduled to come into effect on Sept. 1.
According to EU regulations, the commission has the right to impose provisional anti-dumping duties for a maximum period of six months before arriving at a final decision, which if made, has a minimum duration of five years.
The EC claims that ferrosilicon import volumes from the five respective countries increased significantly from 134,081 tons in 2003 to 452,108 tons in the first nine months of 2006, representing an increase in the share of the EU ferrosilicon market from 15.4 percent to 51.2 percent during the period. At the same time, EU ferrosilicon manufacturers suffered a decline in their share of the home market from 28.7 percent to 17.7 percent.
Moreover, the average price of the imported ferrosilicon in question undercut the price from home market producers by between 3.7 percent and 11 percent during the dumping and injury investigation period from October 2005 to September 2006, according to the report.
However, two Chinese companies, namely Inner Mongolia Erdos Xijin Kuang Co. Ltd., as well as the Lanzhou Good Land Ferroalloy Factory have received anti-dumping duty rates of only 2.8 percent and 33.7 percent respectively, compared to the common rate of 35.5 percent, charged to all the other Chinese ferrosilicon companies.
"With the exception of Erdos Xijin, all the other ferrosilicon companies in China will substantially decrease ferrosilicon exports to Europe. Although Europe's demand for quality ferrosilicon is not particularly high, freight costs from China to Europe are higher than to other countries. This means that the volume of Chinese ferrosilicon exports to Europe is traditionally lower than to Southeast Asia, India and the United States," Beijing Umetal analyst, Wang Xin, said.
According to Wang, Chinese ferrosilicon exporters will now compete to increase their market shares in Southeast Asia and the United States, in order to offset their decreased shares in the European market.
"The EC policy will exacerbate domestic oversupply problems and further depress ferrosilicon prices. As it is, current ferrosilicon prices are fast approaching the cost line," said a senior sales department official, surnamed He, from Qinghai Wutong Ferroalloy Co. Ltd., a private Chinese ferroalloy producer with an annual capacity of 80,000 tons of ferrosilicon.
"Although Europe is one of the world's major ferrosilicon consuming regions, due to its considerable steel production capacity, we have decided to quit the market in reaction to the new anti-dumping duty policy," He said. The company halted ferrosilicon exports to Europe in April this year, despite planning to export a total of between 30,000 tons and 40,000 tons of ferrosilicon to Europe by the end of this year.
Speculation on the policy has led to a significant fall in Chinese ferrosilicon exports to the EU, with export volumes in July falling 9.3 percent from the same period last year, He said.
The current FOB price of ferrosilicon (75 percent silicon content) in Chinese ports lies between $930 per ton and $940 per ton, and few contracts have been signed recently, according to Wang from Beijing Umetal.
China's ferrosilicon sector is facing various challenges at present, including increased power prices and restrictive government policies to rein in overcapacity and increase export taxes. China is currently both the world's largest ferrosilicon producer and exporter, exporting 973,712 tons of ferrosilicon in the first seven months of this year, up 36.86 percent from the same period last year, while July exports alone reached 128,366 tons, down 9.3 percent from June.
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