Danish Steel companies are being pressured hard by Chinese counterparts

Photo: Henning Bagger

The Chinese steel companies are, with their cheaper prices for materials and large government support well on their way to out-competing the Danish steel companies – which are now looking to the Danish government for help, JydskeVestkysten writes.

One Danish company is feeling the pressure and that is steel producer Valmont SM, which is headquartered in Rødekro, Denmark. The last few years have taken a heavy toll on the company. The operating profit for 2019 and 2020 has totaled DKK 4 million, but it has far from being able to cover depreciation and interest, and the total loss after tax is, therefore, DKK 76 million for the company.

According to director Jens Holk Nielsen, the results are highly unsatisfactory, but still not surprising when the competitive situation is taken into account. “We are under heavy pressure from the Chinese companies, which benefit from massive state support for, among other things, the production of wind turbine towers,” he explains.

In 2016, a 70 percent tariff was imposed in the EU on the price-dumped unprocessed Chinese steel, but that was just the beginning of a new problem. “The result is that the Chinese companies now export finished products to the EU, and they are not subject to customs duties, Jens Holk Nielsen says.

The import duty on raw materials was introduced as a safeguard to protect European steel rolling mills and with good reason. China has tenfold its capacity in steelmaking over the last 20 years and today sits on 55 percent of the world market. Half of this is state-owned.

Jens Holk Nielsen explains that last year Valmont SM had to invest in restructuring in the company and an arbitration case. Those expenses ran up to DKK 33 million. “But it is money we only have to pay once, so it is not what is most worrying,” he states. Several similar companies have had to turn the key in recent years due to competition from the Chinese market.

Although the steel giant generally does not lack orders and also has adapted the business, Jens Holk Nielsen do not believe that the problems can be solved from within. “We can not get more efficiency out of it, and therefore we have joined forces with Danish Welcon and several foreign tower manufacturers to raise a complaint in the EU. At the same time we are attempting to capture the politicians’ attention and create an understanding of our situation. They seem to have that understanding, but there is a lack of action,” he explains.

And that can ultimately have consequences for employees. That is why, according to the director, the EU needs to intervene. The proportion of materials in wind turbine towers is so large, that the price of materials is of crucial importance. “It is clear that we can not stand to continue losing money. Right now we are a financially solid company, but we have to take this seriously because if this continues, it will ultimately affect jobs. Both with us and with similar companies,” says Jens Holk Nielsen. There are currently 600 employees at Valmont SM.

Right now, the case is running in the EU system, where Jens Holk Nielsen expects a decision to be made by the end of the year.

According to Karina Lorentzen (SF), who is chair of the rural committee, there is also no doubt that the problem calls for action. “It can be a race against time. There was a similar challenge with solar cells, where China eventually completely took over the market, and of course, we do not want that to happen here. We need to maintain these jobs in Denmark. What they are asking for is, after all, just fair competition, she says.

That is why she has sent a question to the Minister of Trade and Industry. “We ask him to explain his position on the issue, just as we ask if the Ministry is doing anything in this regard,” Karina Lorentzen says. She adds that she also intends to discuss the issue with the EU rapporteur within the party.

About Mette Larsen

ScandAsia Journalist • Scandinavian Publishing Co., Ltd. • Thailand

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