Market Review & Prospect
from Association Presidents
Interview with EFDA President Dr. Volker Lederer
Q: It has been more than 6 months since the EU terminated the antidumping measure against certain iron and steel fasteners from China. Did you observe any significant change in the EU market after the termination? And, are the local suppliers, distributors, or importers in the EU also influenced by the termination?
A: The abrupt removal of duties on 28 February 2016 left the European fastener industry - including both manufacturers and importers - in an uncertain situation. EFDA had objected to the imposition of duties in 2009 and to subsequent measures, the latest being the extension of duties for another five years in March 2015. Our sector has unfairly suffered from the inappropriate high anti-dumping duties of 74 percent, which have distorted the fastener market radically and unnecessarily. In fact, imports of products from China almost disappeared on the Union market after the imposition of the duties. The Chinese market share in the EU decreased from 26 % before the original measures were imposed to 0.5 %, and imports from China decreased by more than 98 %. It had been hard for European fastener importers to cope with the measures in force and our sector has worked hard to adapt to the distortion on the fastener market.
Of course, the complete removal of duties has opened a new market for EU importers of iron and steel fasteners. Companies check if and which products they buy from producers in the People’s Republic of China. It’s about prices and quality. My personal impression is that the really big run, which some expected, has not happened. EU importers continue to have business relations with suppliers in other countries, including Taiwan, from which they have sourced. They will also need to bear in mind that the EU sooner or later might come up with a new antidumping duty on iron and steel fasteners from China.
Q: The EU has begun to impose import licensing for fasteners since April 29 (which some in the industry worry that it may become another way of restricting goods imported from other non-EU countries). Do you observe any influence from this policy that has been put on local EU importers? And, does this policy also cause impact on other countries’ suppliers the EU importers are currently cooperating with?
A: Import licensing for certain iron and steel products, including fasteners, is a new experience for EU fastener importers.Without a license, goods may not be imported into the EU. The obligation to present a surveillance document at the customs applies to imports into the EU from all third countries except Iceland, Norway and Liechtenstein. It is not restricted to imports from the People’s Republic of China. Of course, we know that the Chinese steel prices are the reason for this decision taken by the EU.
The whole licensing procedure is very bureaucratic and also costly for importers. Some companies charge freight forwarders, others do the administration by themselves.
The surveillance measures are intended to help the European steel sector to overcome the challenges fueled by global steel overcapacity and the resulting dramatic increase of unfairly priced steel imports, says the European Commission. They are supposed to assist the European Commission to better monitor market developments and. moreover, to send a strong political message to third countries. The system should be as simple as possible as it only serves statistical purposes.
However, due to legal uncertainties with regard to some provisions in the regulation and the very short time frames given to the national authorities and importers by the European Commission to implement the law, European fastener distributors have been facing serious difficulties to apply the provisions of the regulation. National authorities, too, complained with the Com mission that they had not had enough time to get prepared as the new regulation had to be applied on 3 June 2016. More than three months later, problems with the licensing in most EU member states have decreased. However, import licensing remains a severe bureaucratic measure in our companies’ day-to-day business.
Q: 2017, with the emergence of many positive factors (e.g., the upcoming Fastener Fair Stuttgart, the antidumping measure against Chinese and Taiwanese stainless steel fasteners, which is scheduled to expire on Jan. 08, 2017, etc.), will be an important year for the global fastener industry. What scenario do you think the European fastener market will be in the new year and will there be any new measure, regulation, or development you think will appear?
A: I think that 2017 will be an interesting year for European fastener distributors, especially with regard to trade defense policy. We expect the anti-dumping duties on imports of stainless steel fasteners from the People’s Republic of China. Taiwan and the Philippines to definitely expire on 8 January 2017. The duties can be maintained if European manufacturers submit a request for review until three months before the expiry date and provide evidence that dumping and injury for the domestic industry would recur without the current measures. From what we heard, however, it is unlikely that manufacturers will submit such a request.
If the duties on imports of stainless steel fasteners expired next January, our industry would be without any antidumping measures on fastener imports for the first time after many years. This would be quite an unusual situation for our companies. However, after the complete removal of duties on iron and steel fasteners from China at the beginning of this year, it is very likely that European manufacturers will lodge a new anti-dumping complaint and that the European Commission might initiate a new investigation resulting in duties. These days the impact of Chinese steel on the EU market is a hot topic with great influence on EU trade defense policy. In fact, the European Commission announced in its Communication on steel from March 2016 that it would use trade instruments to the fullest extent when it comes to steel products. All in all, it is clear to me that 2017 will be an important year for our industry.
Q:“Industry 4.0” has been a very hot issue for the industry recently. How do you think the European market (or even the global fastener market) will be under the framework of Industry 4.0? What is the current application of Industry 4.0 in the European fastener industry (especially Germany)?
A: Industry 4.0 creates what has been called a “smart factory”. Within the modular structured smart factories, cyber-physical systems monitor physical processes, create a virtual copy of the physical world and make decentralized decisions. Over the Internet of Things, cyber-physical systems communicate and cooperate with each other and with humans in real time, and via the Internet of Services, both internal and cross-organizational services are offered and used by participants of the value chain.
“Industry 4.0” is therefore a keyword in European business these days. Another keyword in this context which takes on greater significance is “digitalization”. It is obvious that digitalization will change the procedures in the industry. We as fastener distributors have to understand the requirements of our customers and we have to find strategies to deal with these requirements.
Fastener distribution today is an increasingly sophisticated and systemized industry, investing strategically in technology and skills to meet the ever more stringent demands of European industrial consumers, wherever in the world they decide to produce and supply their product. Fastener distribution provides the crucial, reliable link between cost efficient global manufacturing sources and worldwide industrial consumers. It underpins the efficiency and ultimate profitability of an extraordinary spectrum of European industries.
It is inevitable for European fastener distributors to implement Industry 4.0 in their strategy. The Internet based communication is one of the preconditions to satisfy the growing requirements of industrial customers.
Q: After UK has voted to leave the EU, will there be any change in the fastener supply and demand in the EU et? And, will there be any change in the cooperating way between the EU fastener industry and its UK suppliers/ clients?
A: The vote in the UK referendum in June has thrown up many questions about what will happen both in Great Britain and other EU member states. For the moment uncertainty prevails since nobody knows what is going to come. This will impact consumer confidence.
What we know is that negotiations between the UK and the EU. once initiated, can lake many years until a solution is found. One option could be that the UK continues to have access to the EU single market in goods and services without being an EU member. The problem for the British government is that the access to the single market covers free movement of people. This would be extremely difficult to sell to the UK electorate, given the prominent role which immigration played in the referendum campaign.
For many reasons it is not possible to foresee what will be the political and economic consequences of the Brexit referendum. What is for sure is that a UK without access to the EU single market would definitely have negative effects on business.
Q: Do you think that the European fastener market in 2017 will show further growth? Which product category or application do you think is the most promising and the most potential?
A: I am convinced that the European fastener market in 2017 will further grow. Producers and distributors have invested a lot of money and time in developing their abilities in the production and logistic field. They became more and more competitive and professional in recent years. As a result, they will participate and benefit from the global growing economy.
Automotive and aerospace fasteners will definitely play a major role in this process. European car producers and many automotive suppliers are globally successful and need professional and efficient partners in the fastener industry. The high development state of the European fastener industry in terms of quality, efficiency and service is therefore a big advantage for the industrial end users.
Q: In 2017, does EFDA have any plan or schedule to assist its members in facing new challenges or facilitate interchange among members and interaction with other associations?
A: EFDA will continue to provide its members with up-to-date information on EU legislation on trade defense and related matters. As I mentioned before, we need to be prepared whenever there will be a new antidumping investigation or other measures. Our association will be present at the Stuttgart Fastener Fair in March 2017 and serve as a platform for exchange between member associations and companies in a range of EFDA meetings. In 2017 as in the past years, one of EFDA’s priorities will be to maintain its network with our partner associations in and outside the EU, especially TFTA and TIFI in Taiwan, NFDA in the US and EIFI in Europe.
