EUROPEAN GLASS FIBRE INDUSTRY CALLS ON THE EUROPEAN COMMISSION TO INVESTIGATE UNFAIR TRADE PRACTICES OF STATE-BACKED CHINESE EXPORTERS
THE STRATEGIC AND INNOVATIVE EU GLASS FIBRE INDUSTRY IS BEING DRIVEN FROM THE EU MARKET BY UNFAIR COMPETITION FROM CHINA
Glass fibre’s unique properties assure strong demand in the medium to long-term: Glass fibre products are stronger and lighter than traditional materials like aluminium, steel and wood. Glass fibre also boasts rich product variety, good insulation, strong heat resistance and good corrosion resistance. Globally, glass fibre demand is set to post annual growth of 7% by 2017 (source: Lucintel).
Glass fibre is mostly used in composite materials which are the materials of the future: The most extensive use of glass fibre is as raw material for composite materials. Glass fibre accounts for about 90% of the reinforcements used in composite consumption globally. Glass fibre composite materials are used in an increasingly wide variety of applications: at the moment, primarily the automotive and transport sectors, the electrical/electronics industry and the construction industry. Other markets for composite materials include pipes and tanks, agricultural equipment, industrial machinery, wind-turbine blades and the sports, leisure and marine sectors.
The European glass fibre industry is a hi-tech innovative sector able to meet EU demand together with imports from the rest of the world without relying on dumped and subsidised imports from China: EU producers supply about 60% of the European market; non-EU countries excluding China supply just over 20% of the market. China has nearly 20% of the EU market, but EU producers are operating at only about 80% of their capacity due to unfair competition from China. As demand increases and if the EU addresses the unfair trade of products from China, EU producers have ample capacity to ramp up production and supply European customers together with imports from the rest of the world, with no need to rely on unfairly traded product from China.
Unfair competition from China continues to cause substantial injury to the European glass fibre industry: China now accounts for nearly 40% of all glass fibre imports into the EU, and imports from China have grown 40% since the initial Commission investigation. European industry is not losing to China because of lack of competitiveness but rather illegal dumping and subsidies. Fueled by illegal subsidies, the dumped imports are causing losses to EU producers and taking away market share. In addition, the workforce of the European glass fibre industry has contracted by over 15% since 2011.
THE CHINESE GOVERNMENT GIVES ILLEGAL SUBSIDIES TO COMPANIES WHO DUMP GLASS FIBRE AT PREDATORY PRICES IN THE EU
China is gaining global dominance in glass fibres, despite the lack of competitive advantage, through aggressive state planning, subsidies and overcapacity: Glass fibre production is capital-intensive, not labour-intensive, so China has no particular competitive advantage. Illegal subsidies to Chinese producers, such as cheap financing and energy, as well as other local advantages, are feeding the expansion of Chinese production capacity and increasing annually. Jushi, China’s largest state-owned manufacturer, has indicated it intends “to increase annual production capacity to 1.5 million tons, accounting for 25% of total global capacity and continue to export 50% of production.” Taishan Fiberglass announced in October 2013 one of the world’s biggest glass fibre furnaces, one capable of producing 80,000 Metric Tons (MT)/year.China’s overcapacity is more than total EU consumption: In 2012, Chinese production was around 3 million MT versus domestic demand of less than 1.9 million MT, while the EU market was around 900,000 MT.
China’s New Materials five year plan launched in 2012 seeks global dominance of the glass fibre sector in order to control composite materials and technologies of the future: China’s policy-makers see the opportunity to dominate a strategic industry of the future. According to ‘Research in China’, the global glass fibre market may be worth US$40 billion by 2020.
China‘s State Council announced in 2012 its “12th Five-Year Plan on National Emerging Industries of Strategic Importance” as well as a specific new materials plan including glass fibre with other composite materials. According to this plan, China will create 10 leading new materials enterprises with sales of more than 15 billion yuan (€1.85 billion), and another 20 companies with sales of more than five billion yuan (€600 million)
THE EU MUST IMPOSE EFFECTIVE MEASURES ON GLASS FIBRE IMPORTS FROM CHINA TO RESTORE FAIR COMPETITION
EU anti-dumping measures on glass fibre imposed in 2011 did not create a level playing field with unfair competition from China: Since the 2011 imposition of definitive anti-dumping duties, EU manufacturers have still suffered substantial injury from unfairly traded imports from China. Imports from China have increased by more than 15% during that period. EU producers have prevented further market share loss only at the cost of profitability. One EU producer was forced to exit the market and others have had to undergo major restructuring to remain in the market.
Chinese exporters are dumping glass fibre in Europe at prices that undercut local European manufacturers, rendering current anti-dumping duties ineffective: Chinese producers are selling at average prices under €900 per MT while European industry and producers from other countries are selling at prices over €1,100 per MT. The heavy underselling, despite the application of the anti-dumping duty of 13.8%, the conventional customs duty of 7%, and other customs handling and importation costs, is particularly alarming as it reflects the aggressiveness with which Chinese exporting producers penetrate the EU market, and demonstrates the ample room Chinese exporting producers have to drop prices even further if the duties are not increased to a level that removes the injury.
Effective anti-dumping and anti-subsidy measures will not result in a shortage of glass fibre: EU manufacturers have surplus capacity and reasonable stock levels that allow them to supply the market at short notice should imports from China drop at all as a result of anti-dumping measures. Furthermore, the EU could increase fairly traded imports from a large number of third countries which are already present on the EU market.
Effective anti-dumping and anti-subsidy measures on glass fibre from China would not have a material effect on costs for users and downstream industries: Glass fibre accounts for only a small percentage of final customer prices. For instance, glass fibre accounts for less than 1% of the cost of a wind turbine and less than 0.1% of the price of an average car. Prior to the imposition of duties, some downstream users claimed that it would not be possible to pass on duties to customers. However, the prices of resins, which along with glass fibres form the two main raw materials of composite production, have more than doubled since 1982 while glass fibre prices have not increased.
European downstream industries need a local innovative and viable glass fibre industry: Competition with Chinese companies in the downstream sectors from wind turbines to boat building is becoming more aggressive, but relying on unfairly traded Chinese glass fibre imports would be a foolish strategy. European user industries would depend on Chinese state controlled glass fibre supply while also competing with Chinese companies in an obviously vulnerable situation.
The EU must impose effective anti-dumping and anti-subsidy measures to restore fair competition and keep glass fibre manufacturing in Europe: If the EU does not act, a strategic sector, hundreds of millions of euros in investment, and factories along with thousands of jobs will disappear from Europe.
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