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17. March 2008

EU Hits China With 5-Year Duty on Coke

The European Union imposed a five- year tariff on imports from China of coke used by stone-wool maker Rockwool International A/S and foundries, protecting higher-cost EU producers for the second time this decade.

The duty, based on a minimum EU import price, punishes Chinese exporters for selling in Europe below cost, a practice known as dumping.

The difference between the price floor of 197 euros ($311) a metric ton and any lower import price, the levy follows EU protection between 2000 and 2004 for producers in nations including Spain and Italy.

In 2004, the EU scrapped a duty of 32.60 euros a ton on the product because a shortage from China led to price increases that helped European producers and hurt manufacturers of stone wool, which is used for insulation, and foundries, which make metal castings for

everything from manholes to car-engine components. European coke producers are now threatened again and the new levy will protect investments and jobs, the EU said.

The aim is to create a "safety net,'' the 27-nation EU said in a decision today in Brussels. The duty, which covers coke of coal in pieces with a diameter of more than 80 millimeters, or Coke 80+, replaces a provisional levy introduced six months ago and will take effect after being published in the Official Journal within days. The EU steel industry uses smaller-sized coke that isn't covered by the tariff.

Market Share

Chinese exporters of Coke 80+ expanded their share of the EU market to 28 percent in the 12 months through September 2006 from 24 percent in 2003, the bloc said. European producers including Spain's Industrial Quimica del Nalon SA, Italy's Italiana Coke SpA and the Czech Republic's OKD, OKK AS suffered "material injury'' as a result, according to the EU.

The European coke industry faced a "steep decline'' in sales prices, a fall in market share and unprofitability at the end of this period, the EU said. The European industry's share of the home market was 51.3 percent in the 12 months through September 2006 compared with 53.8 percent in 2005, 60.3 percent in 2004 -- a peak resulting from the shortage of Chinese coke -- and 51.2 percent in 2003, the bloc said.

In a concession to Rockwool and foundries, the EU made the five-year duty on Coke 80+ lower than the provisional measure, which was based on a price floor of 227 euros a ton. The EU will refund the difference to any importers that paid a provisional levy.

Production Costs

Rockwool and foundries, which use coke in their ovens, face a maximum production-cost increase of about 1 percent as a result of the trade protection, the EU said.

The duty will have a "very limited effect'' on users, the bloc said. Foundries represent roughly 80 percent of the EU's consumption of Coke 80+.

Denmark-based Rockwool is the world's biggest maker of stone-wool insulation material. In the 12 months through September 2006, the company accounted for about 13 percent of total EU consumption of Coke 80+ and 18 percent of imports from China, the bloc said.

Rockwool, which has 15 plants in the EU employing about 6,600 people, uses Chinese Coke 80+ at sites in three member states that have 2,400 workers, according to the EU.

Under EU practices, the European Commission, the bloc's regulatory arm, can introduce provisional anti-dumping duties for six months and national governments -- acting on a commission proposal -- can impose ``definitive'' five-year levies at the same or different rates.

The measures on Coke 80+ from China result from a November 2006 dumping complaint by EU producers and a commission inquiry that began the following month.

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