China Says US Protecting Uncompetitive Steel Mills

24 June 2016

China has pushed back after the US boosted anti-dumping and anti-subsidy duties on some of its steel products, saying mills in the world's biggest economy lack competitiveness because they are over-protected.

Protectionism in the US steel sector is deeply worrying as these measures will only exacerbate friction without helping to solve the problem of shrinking global demand, China's commerce ministry said in a statement on Thursday. "China believes that the lack of competitiveness in the US steel industry is the result of over-protection," it said.

The world is awash in steel as demand drops in China, which accounts for about half of global production. To offset declining consumption, overcapacity and weakening prices at home, Chinese mills have boosted exports to record levels. That's raised trade tensions worldwide, spurring a backlash from rival producers and forcing policy makers to try to address the problem, including at May's Group-of-Seven meeting in Japan.

"China urges the US to abide by the World Trade Organisation's rules and to use trade remedy measures judiciously," the commerce ministry said after the US ruling, which came Wednesday from the International Trade Commission, a federal body.

The US has been "materially injured" by imports of the cold-rolled steel flat products from China, as well as Japan, which have been determined to be sold at less than fair value and subsidised, the ITC said in a statement. All six of the ITC's commissioners backed the move, it said.

In May, the US Department of Commerce, which conducts parallel investigations into accusations of unfair trade, recommended tariffs of as much as 522 per cent on cold-rolled steel from China to counteract dumping and illegal subsidies. The Department recommended anti-dumping duties of 71 per cent on shipments of the product from Japan, which it found had not unlawfully subsidised production of that type of steel.

A revival in steel prices in China earlier this year spurred mills to fire up capacity, prompting Axiom Capital Management to predict that the country's exports will probably stay elevated. Shipments of steel from China will remain at high levels as local demand shrinks, the country's Metallurgical Planning Institute said in April.

To tackle the problem in China, the government has announced plans to cut as much as 150 million tons of excess steel-making capacity over five years. Shinzo Abe, Japan's prime minister who hosted G-7 leaders in May, said then that China isn't doing enough to tackle oversupply in the industry.

Shares of US Steel Corp have more than doubled this year as domestic prices and mill utilisation have climbed along with tumbling imports. Imports of all steel goods from all trading partners dropped by 34 per cent this year through April, according to the most recent data available from the US Census Bureau.


Source :