Overprotection in US Steel sector makes the local industry uncompetitive, says Chinese Ministry

SEATTLE (Scrap Monster): The Chinese Commerce Ministry has expressed deep concerns about protectionism in the US steel sector. According to a statement posted on the website, the Ministry noted that the US steel sector has been in a state of overprotection. It also noted this overprotection has made the sector uncompetitive. The Ministry also urged the US to ensure strict adherence to WTO rules.

Duties on imports

The US had recently slapped punitive duties on imports of corrosion-resistant steel of up to 450% on cheap steel imports from countries including China, India, Italy, Korea and Taiwan. The statistics released by the United States International Trade Commission (ITC) indicates that the country’s total consumption of corrosion-resistant steel totaled $17.1 billion last year. Out of this, imports accounted for over one-fifth. The import glut has hurt the country’s domestic steel industry, it noted.

The country had earlier imposed tariffs on imports of cold-rolled steel from China and Japan. The imports from China were imposed duties of 522%, whereas those from Japan were imposed anti-dumping duties of 71.35%. The imposition of duties was further to complaint filed by major US steel producers including United States Steel, AK Steel Corp, ArcelorMittal USA, Nucor Corp and steel Dynamics Inc. The affected Chinese companies include Angang Group Hong Kong Holdings Ltd, Benxi Iron and Steel (Group) Special Steel Co Ltd and Qian’an Golden Point Trading Co Ltd. The major Japanese producers affected by the duties include Nippon Steel & Sumitomo Metal Corp and JFE Steel Corp.

Apart from the US, the European Union and India has also enacted anti-dumping duties on steel products imports from China.

Various domestic steel producers including the US Steel have welcomed the decision to impose duties on imports, saying that the step is to be considered as an encouraging step toward a level-playing field. Meantime, China has stated that the trade actions are a violation of the principles of World Trade Organization (WTO) rules and have led to creation of improper barriers to steel trade. It alleged that the lack of competitiveness in the US steel industry is the result of overprotection measures.

Chinese steel exports

The steel mills in China have increased production despite the government’s efforts to cut overcapacity and limit exports. The Chinese steel exports during the initial five-month period of the year totaled 46.3 million tons, rising significantly by over 6% when compared with the exports of 43.5 million tons during the corresponding five-month period last year. The exports to the US accounted for only 0.6% of the total exports by the country. The data from the Chinese Customs indicates that South Korea and Vietnam were the top importers of Chinese steel.

Planned production cuts

According to the Chinese National Development and Reform Commission, the country is on track to achieve a production capacity cut of 45 million tonnes by 2016. Earlier in February this year, the country had announced its decision to close 100 million to 150 million tonnes of steel capacity within three to five years.