The Chinese government is set to launch an anti-dumping probe into imported steel products from countries including South Korea, raising concern among local steel companies struggling against rising protectionist measures.
China’s Commerce Ministry said via its website Monday that it would look into stainless steel billet and hot-rolled stainless steel plates from South Korea, Japan, the European Union and Indonesia. The probe has been launched at the request of a Chinese steel company, the ministry said.
In this June 4, 2018, photo, a worker wields steel wheel rims at a factory in Hangzhou in east China`s Zhejiang province.(Chinatopix via AP)
Steel products from the three countries and the EU accounted for more than half of the Chinese market between 2014 and 2017. It may take three or four months to make preliminary reports on the probe, according to local reports that quoted a Chinese official.
It is difficult to say whether the probe comes as part of Chinese protectionist moves, as it is a customary process that has been practiced for many years, said Je Hyun-jeong, a senior researcher at the Korea International Trade Association.
“But it could add to the concerns of Korean steelmakers already facing waves of protectionism from the US and the EU,” she said. “It could create difficulties in the operations of companies that are heavily dependent on exports.”
In recent months, South Korean steelmakers have faced growing import restrictions from the United States, EU and others.
The EU slapped a 25 percent tariff on a wide range of steel products last week.
Korean steel products are exempted from the US’ new steel tariff, but they are still subject to a quota of about 2.68 million tons. In May, Canada launched an anti-dumping investigation into steel products from South Korea, China and Vietnam.
Korean steel companies are feeling the pinch from within the country, too.
They have faced challenging demands from local shipbuilders to delay a price increase of plates, citing difficulties in management and declining orders, according to industry observers.
But steel companies have been saying the situation is not favorable for them as well, pointing to the growing number of safeguard measures around the world.
“Steelmakers’ performance may look OK until the third quarter, but the winter is coming in the fourth quarter,” an industry insider said, citing growing concerns of trade issues blocking exports of Korean products.
The cost of steel production has risen and there has also been declining demand from steel consuming industries like automobiles.
The number of automobiles in production is projected to decline worldwide due to the US’ decision to slap heavy tariffs on foreign vehicles.
Meanwhile, South Korean steel giant Posco saw its second-quarter profit rise nearly 28 percent to 1.25 trillion won on Monday. Sales also grew 7.6 percent on-year with net profit surging 20.1 percent. The rally was driven by Posco’s affiliates abroad, the company said.
Its Indonesian plant, PT Krakatau Steel and its cold-mill plant Posco Maharashtra have reached record quarterly profit, the company said in a statement.
As for China’s anti-dumping probe, the company is likely to face limited impact, as the products subject to the probe account for a “very small portion” of its stainless production, an official said.
As of 2017, Posco, the fourth-largest stainless steel producer in the world, generated nearly 2 million tons of stainless steel, or 5.8 percent of total steel production.
“Of all stainless steel, the amount of products heading to China is very small and the company will seek an anti-dumping waive by consulting on the matter with the party concerned,” he said.
By Cho Chung-un (firstname.lastname@example.org