Here are the EU companies that (not) toast for EU duties on fiber optic cables from China
The European Union has imposed duties on fiber optic cables from China in response to the dumping policy. What the effects will be for companies such as Prysmian, Nexans, Deutsche Telekom and Comercial Electro-Industrial.
The European Union has imposed duties of up to 44 percent on fiber optic cables from China.
THE MOTIVATIONS
The tariffs, which came at the end of an investigation opened last year, will serve to balance what Brussels considers unfair commercial practices adopted by Chinese companies that export components for 5G networks. According to the EU authorities, dumping – or the sale abroad of products at prices lower than those set for the internal market: a policy generally implemented with the support of the state – risked throwing European companies out of the common market.
COMPANIES AFFECTED
The duties will enter into force the day after the publication of the relevant document in the official journal of the European Union. The 44 percent rates will apply to those companies that Brussels considers controlled by the Chinese state: namely FiberHome Telecommunication Technologies and Nanjing Wasin Fujikura Optical Communication.
WHO CELEBRATES …
The investigation that led to the duties stems from a complaint presented by EuropaCable, the association (based in Brussels) that represents European telecommunications cable manufacturers: companies such as Prysmian (Italian), Nexans (French) are part of it. and Leoni (German).
The European cable industry was already alarmed by the 150% increase in European imports of fiber optic cables from China between 2016 and 2019. Beijing's share of this European market, which is worth around $ 1 billion a year, is 15 percent.
… AND WHO NOT
The tariffs were opposed by Deutsche Telekom, the main telecommunications company in Germany, and the Spanish Comercial Electro-Industrial.
CABLES, COSTS AND ALTERNATIVES
In contextualizing the duties, the European Commission anticipated that it will be "inevitable" that the anti-dumping measures will have "cost impacts" for companies purchasing cables from China. But he added that the tariffs are justified by the "unfair behavior" of those suppliers, and that cables make up only a minority of the total costs of launching telecommunications networks: less than 5 percent, when it comes to 5G networks.
Brussels also said that there are many alternatives, both European and foreign, to Chinese cables.
THE CONSEQUENCES FOR PRYSMIAN
According to the investment bank Equita Sim, the introduction of European tariffs up to 44 percent is positive for Prysmian and will have an "impact on competition" and "increases visibility on the medium-term target, five years, of the company which a growth for the Telecom division to around 300 million EBITDA from the 228 million expected this year ”.
The positive opinion is shared by the financial group Bestinver Securities, which speaks of “less pressure on prices and a potential benefit for margins. Greater visibility on the medium-term objective of the company which foresees the growth of the Telecom division ”.
Banca Akros, on the other hand, compared the European move to the market context in the United States (where duties of 25 percent are applied to imports of optical fiber from China): the Commission's decision, therefore, "can have important and potentially positive consequences for Prysmian's optical fiber sales in Europe: in fact, the North American market, protected from Chinese imports, has decidedly better margins than the European one ”.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/unione-europea-dazi-cavi-fibra-ottica-cina/ on Thu, 18 Nov 2021 11:01:03 +0000.