Chinese companies suffocate national wind tower production

  • ECO News
  • 9 July 2018

Chinese are suffocating the Portuguese wind power producers – claims for the use of impractical prices are raising concerns regarding the need of applying anti-dumping measures.

European and Portuguese wind towers producers have been battling against China’s overwhelmingly low prices. They do not consider the reaction of asking the EU for more rigid anti-dumping measures as a protectionist one – it is rather undeniable for them how the prices practiced by Chinese distributors in the sector are not giving any room for healthy competition – and we witnessed that in the last few years with the considerable 20% decrease in business volume for the Portuguese metalworking industry.

Certainly, they are not able to keep up with the prices their competitors are practicing – and they consider this to be absolutely unfair competition.

Oddly the current crisis was worsened exactly because of anti-dumping measures created by the EU on the imports of steel sheets from China, which resulted in prices rising as EU steel sheets prices were much higher – therein, the metalworking industry ended up losing this part of the game – while the steel sheet EU distributors instead increased their production and revenue.

“The problem is that over 50% of the final price of each wind power tower corresponds to the price of the steel sheet – as such, the Chinese, whom unfortunately now are competing with the final product, can offer alarmingly low prices when compared to ours” said Carlos Costa, Martifer’s COO, to ECO.

Steel sheets prices increased by 40%; production costs have increased while demand has decreased. European producers have been forced to accept orders far below their costs of production, as the European Wind Tower Association (EWTA) claims.

EWTA has been lobbying for fairer taxes in Brussels – their aim being that the 40% anti-dumping tax previously applied to the steel sheets is replicated now to the final product – so that the towers for wind turbines being sold by Chinese companies practice prices that are reasonable within the context of the EU’s market.

EWTA claims companies registered around 18-20% losses in product demand

“Companies point out around 18-20% losses in product demand. Their current situation is only not dire because they have been investing their resources and skills in other sectors and activities that give them revenue”, said Gonçalo Lobo Xavier, EWTA’s CEO.

How is it that the Chinese are able to offer far more competitive proposals than, say,  a German company located 60 kilometers away from the place where the wind towers will be installed? This is the current status in the EU regarding wind power structures and the EWTA together with metalworking industry companies consider this a pressing issue that must be solved rather quickly.

“Martifer was delivering 400 wind towers per year, in 2010. Currently, our numbers decreased to around 80 per year.”

COO of Martifer tried to give us a clear panorama of how catastrophic this has been for his company:  “One of our product lines has stalled – and we have already laid-off many valuable workers in the process. We used to produce 400 wind towers a year, and now we only produce 80 a year. So far only the smaller projects stay here – all the big deals are given to the Chinese. Thing is, we want those big projects as well.”

Interests collide, and EWTA together with Portuguese companies consider anti-dumping measures are urgently necessary

“The prices the Chinese are offering are very competitive, and the more they get contracts for bigger projects, the worst it gets – their competitiveness increases, and their prices can be cut if they have more demand, as the transportation costs are reduced when they’re able to fill cargo boats with these wind towers” explains Adelino Costa Matos, CEO of Silva Matos. His company’s solution has been to turn to the Latin American market, as in this market they are still able to compete with the Chinese prices, and as well their strategy has been to add value to the process and provide higher quality in order to compete with the Chinese.

EWTA reminded the importance of EU’s target of increasing renewable energy production by 32% until 2030, which will translate to a rise in investment in the energy sector for wind towers. They also warn EU legislators that if nothing is done to discourage the Chinese companies from practicing these prices at EU level, member states will continue to witness disastrous losses in the metalworking industry instead of profiting from the 32% goal.