China’s Steel Body Sees Red Over Tariff Measures To Stall Exports

7 April 2016

A senior official from China’s steel industry said the country would hit back at any increased tariffs on its steel exports imposed by other countries, as controversy over the effect of excess Chinese steel supply on world markets intensifies.

Indian company Tata Steel’s decision late last month to sell its U.K. steel plant because of deteriorating financial performance is the latest sign of the pressure on major steelmakers caused by a slump in prices, which many blame on increased competition from cheap steel exported by Chinese companies.

But speaking to The Wall Street Journal on the sidelines of an industry conference here, Li Xinchuang, deputy secretary-general of the China Iron and Steel Association, said China alone wasn’t responsible for an excess of global steel supply, and that higher tariffs imposed on its exports were unfair.

“Overcapacity in the steel industry is global. It is not only a situation in China,” he said. “We have both good quality and price. It is not about price alone.”

“I don’t see why we can’t export when we can offer good quality to customers…We are against the anti-dumping action and we will take measures,” he said.

China accounts for about half of the world’s steel production, totaling around 800 million metric tons last year. But domestic consumption has failed to keep up with output thanks mainly to slowing construction in the country. In turn, Chinese steelmakers have increasingly looked to sell their excess supply onto global markets. In 2015, Chinese steel exports rose 22% to 100.4 million tons.

Mr. Xinchuang said he expected both Chinese steel output and consumption to fall in the coming years. The country’s steel consumption could decrease to 595 million tons by 2020, he said, down from around 700 million tons last year.

Steelmakers in several countries have grown more vocal in recent months in complaining about Chinese exports, claiming their rivals there benefit from subsidies and tax breaks that help them keep production costs low.

The U.S. Department of Commerce last month imposed preliminary duties on imports of cold-rolled steel, used to make auto parts, appliances and shipping containers, from seven countries including China, whose steel imports were slapped with a 265.79% tariff.

India has raised import taxes on steel by 5 percentage points to 12.5% on flat products and 10% on long products last year. It also added a 20% “safeguard” duty temporarily on hot-rolled coils, an important steel product, after local producers said they had suffered damage on account of cheap imports.


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