The European Commission has opted to maintain antidumping duties on imports of ferrosilicon into the European Union from China and Russia following a market review, the EC said Thursday.
In February last year, the EC initiated an expiry review of the antidumping duties previously in place on imports of ferrosilicon from China and Russia following a request from European producer group Euroalliages.
The duties, which were due to expire on March 1, 2013, ranged from 15.6-31.2% in the case of China and 17.8-22.7% for Russia.
In extending the duties, the EC has maintained the previous rates: for China, 15.6% for Erdos Xijin Kuangye Co. Ltd., 29% for Lanzhou Good Land Ferroalloy Factory Co. Ltd. and 31.2% for all other companies. In the case of Russia, the duty rate for Bratsk Ferroalloy Plant is set at 17.8%, with all other companies at 22.7%.
During the review investigation period of January 1-December 31, 2012, consumption of ferrosilicon in the European Union decreased by 10% from the previous year, the EC noted Thursday.
"This, at the same time, is a reduction of more than 25% compared with pre-crisis level of 2007," it said in a notice in the EU Official Journal.
"The fall in the consumption of the product concerned is driven by declining steel production in the Union and a further decline in the next years can be expected," the EC said.
COMPETITIVE ENVIRONMENT
Given that this will be "challenging" for the EU industry, which will be confronted with a highly competitive environment, "it is thus considered that the presence of low-priced dumped imports from the PRC and Russia cannot be tolerated. It will exercise a downward pressure on the prices in the market and will distort competition and as a consequence will cause substantial material injury to the Union producers," the EC said.
China is by far the world's largest ferrosilicon-producing country. The production capacity was estimated to be 10-11 million mt/year during the review investigation period, the EC noted, adding that during the period in question, China's industry operated at an estimated 50% of its production capacity.
"This means there is a current spare capacity of around 5.5 million mt per annum which represents almost seven times the total Union consumption," the EC said, adding that it appears that capacity in the PRC is still expanding as larger and more efficient furnaces are built.
"There is no evidence to suggest that the level of consumption on the Chinese domestic market or third country markets would significantly increase and thus absorb increased production in case the spare capacity of the Chinese producers were to be used," the EC said.
After the imposition of definitive antidumping duties in February 2008, imports from China decreased steadily and became marginal, representing less than 1% of EU consumption during 2012.
"After a peak of imports of around 330,400 mt in 2007, imports decreased to less than 2,500 mt in 2012. However, the EU market for FeSi remains attractive for Chinese exports, based on the observed price levels," the EC said.
SPARE CAPACITY
"The available spare capacity in the PRC and the relatively attractive price level in the Union market lead to the conclusion that there is a risk of an increase in Chinese exports of the product concerned should the measures in force be allowed to lapse," it added. "It can be concluded that the PRC exporters are likely to increase their exports to the Union at dumped prices should the antidumping measures be repealed."
Russia is the world's second-largest ferrosilicon producer, with output capacity of around 900,000 mt, the EC said.
"Actual production during the RIP was estimated to be in the region of 633,000 mt (basis FeSi 75) with spare capacity available up to 267,000 mt. Using a conservative approach and taking into consideration the production capacity used for the production of the other ferroalloys, the spare capacity for FeSi is at least 120,000 mt," it added.
"Despite the existence of the current measures, the EU market is still attractive to Russian exports," the EC said, adding: "It can be concluded that imports from Russia are still being dumped and that there is a strong likelihood of a continuation of dumping."
Ferrosilicon production within the European Union reached 224,540 mt in 2012, having increased by 178% between 2009 -- when output bottomed at 81,147 mt -- and 2011, according to EC figures.
But, "notwithstanding a significant recovery after 2009, it should be recalled that the Union industry's production still did not reach the starting level of the original investigation (year 2003), during which production was reported above 270,000 mt," the EC noted.
