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Anti subsidy tariffs applied to stainless steel fasteners from India

By Fastener + Fixing , 2012-02-21 12:00:00

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The European Union has applied anti subsidy countervailing duties (CVD) ranging from 3.2 to 16.5 percent on imports of certain stainless steel fasteners from India. The status of the parallel anti dumping investigation appears, however, much less conclusive.

The European Commission initiated parallel anti dumping and anti subsidy investigations in May 2011 on stainless steel fasteners originating from India and falling within the CN codes 7318 12 10, 7318 14 10, 7318 15 30, 7318 15 51, 7318 15 61 and 7318 15 70.

On 11 February 2012 EU regulation 115/2012 was published in the Official Journal applying provisional CVDs from the following day. The tariffs will apply for four months by the end of which the Commission will need to announce its definitive decision in the anti subsidy case. The highest tariff of 16.5 percent is applied to all exporters from India, with the exception of Agarwal Fasteners (11.7%), Raajratna Ventures (13%), Viraj Proflles (3.2%), and co-operating non-sampled companies Kundan Industries and Lakshmi Precision Screws (13.6%).

In what appears to have been a complex investigation the Commission considered a diverse range of subsidy mechanisms operating at both national and state levels. The varying subsidies applicable to the different companies determined the subsidy margins and hence specific CVD percentages.  

The anti subsidy investigation found volumes of imports of the cited products had grown 65% between 2008 and the investigated period (IP) - between April 2010 and March 2012 - during which 24073 tonnes were imported from India. Indian stainless fasteners by then held a EU market share of 18.3%, compared with 12.1% in 2008. In the same period, production by EU manufacturers decreased by a quarter to an output in the IP of 51800 tonnes. The market share of the total Union industry fell to 36.6% by the IP from 46.5% in 2008. During the same period employment in EU producers fell by 24%. Between 2008 and the IP, by constrast, EU consumption of stainless steel fasteners increased by 9%. 

As a result of its calculations the Commission concluded that the EU industry had suffered material injury. The investigation considered the effect of imports from other countries. While significant growth in imports from the Philippines was noted the investigation concluded that imports from other countries did not break the causal link between injury and the impact of subsidised imports from India.

Anti dumping duties in question
The Commission has not made a formal announcement on the status of the parallel anti dumping investigation. However, Fastener + Fixing Magazine has discovered that the Commission wrote to interested parties at the end of January explaining that it had not found sufficiently persuasive evidence of dumping and was, therefore, minded to terminate the anti dumping investigation without applying duties. 

The investigation is understood specifically not to have found any evidence of dumping on the part of Viraj Profiles Limited, which accounted for 87 percent of exports of the cited products to the European Union during the IP. The investigation did find evidence of dumping on the part of other Indian exporters. However, in the light of the small proportion of imports involved, even smaller EU market share, and significantly higher price levels compared with the majority exporter, it could not establish a causal relationship between the dumping and the material injury to the EU industry. India is recognised as a market economy so the calculation of dumping margins will have been by comparison with domestic sales price levels, where volumes were sufficient for the purpose. 

In order to apply anti dumping tariffs the investigation needs to establish the existence of material injury and of dumping - and to establish a causal link between the two. In the absence of that causal link and the fact the major exporter was not found to be dumping the Commission is understood to consider anti dumping measures unnecessary and to be minded to terminate the investigation.
The Commission has informed the complainant (the European Industrial Fastener Institute) and other interested parties of its findings and sought their comments. 

Nothing is ever certain until the EU formally publishes its decisions in the Official Journal but given what appears to have been released to interested parties, including presumably Indian exporters and authorities, a significant change of position would appear to require thorough justification if it was not to attract legal scrutiny.

Significant blow to EU stainless steel manufacturers
If the EU does confirm termination of the anti dumping investigation it is likely to represent a very significant blow to European stainless steel producers. Both investigations appear to have clearly identified substantial material injury to EU producers as a result of the escalating tonnage and low prices of imports from India. It has been clear for some time that the availability of large volumes of significantly lower cost stainless steel fasteners from India had enabled major import wholesalers to compete aggressively against European producers to an extent not previously seen.

In the absence of anti dumping tariffs the CVDs applied, if anything, would accentuate the price advantage of the biggest Indian exporter compared with other companies in the same country, and are unlikely to make a significant difference to relative pricing against European or other world sources, including China and Taiwan on which continued anti dumping duties were confirmed last year.

 

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