The European Union on Thursday opened a probe into allegations of unfair Indian subsidies to its stainless steel makers, amid claims that they are hitting European producers. The European Commission proceedings, announced in the bloc's official journal, will look at whether Indian manufacturers of stainless steel bars and rods, used in construction, automobiles and domestic appliances, are benefiting from market-skewing aid.
The original complaint came last month from the European Federation of Iron and Steel Industries (Eurofer), which represents the producers of a quarter of EU output of the steel rods and bars in question. "It is alleged that the producers of the product under investigation originating in India have befitted from a number of subsidies granted by the government of India and from regional subsidies," the EU's executive commission said.
That aid, according to the evidence, has resulted in "substantial adverse effects on the overall performance and the financial situation of the (European) Union industry," the official journal added. The complaints shows that the volume and prices of the subsidised Indian imports have hit European sales.
Given the great number of Indian steel producers, Brussels may choose to look at a sample to see how the system there works and the effects it has on the European industry. If the commission finds that the Indian firms have unfairly benefited from subsidies which have hit European producers it may bring in provisional anti-subsidy duties in nine months time. Another four months on, 13 months following Thursday's official notice, Brussels can impose "definitive" duties, in agreement with the 27 EU nations, which normally last for five years.
On Wednesday, Eurofer formally notified the European Commission about possible anti-competitive practices and abuse of dominant position by the main suppliers of iron ore, the key component in steel. "The prices increases of 80-100 percent demanded by iron ore producers do not reflect the realities of the steel market and cannot be justified by demand conditions for iron ore," said Eurofer director general Gordon Moffat.
Eurofer has already indicated to the European Commission its concern at the very high level of concentration on the seaborne iron ore market which is dominated by three producers - BHP Billiton, Rio Tinto and Vale - and its concerns at the proposed joint venture between BHPB and Rio Tinto.