China's cheap steel incurs increasing anti-dumping probes

While China is continuous breaking record in steel exports, it also encounters increasing trade frictions from different countries. Steel exports like

China's Hebei Iron and Steel Group Co (HBIS) signed an agreement on Nov 18 to raise its stake in Swiss-based Duferco International Trading Holding (DITH) to 51%, in a move aimed at boosting the state-owned conglomerate's ability to sell steel overseas. Statistics showed that DITH now sells some 22 mln tonnes of steel and raw material to over 120 countries per year.

According to an officer with HBIS, the company finds a shortcut to transfer its steel capacity and products abroad in bulky quantities by controlling DITH’s sales network and reduce competition within China.

Apart from large steel makers like HBIS, many medium and small sized steel companies have also increased steel exports to combat downward marketing trend within China owing to excessive capacity.

During the first three quarters, China’s steel exports spiraled up by 39.3% to 65.34 mln tonnes. “The sharp increase in steel exports this year can be attributed to China’s competitive steel prices. Domestic steel prices continue to fall because of weak downstream demand, bloated production and heavy stocks,” Xu Xianghchun, chief editor with Mysteel, revealed.

Meanwhile, the economy of Europe and the US gradually recovers. “The development of infrastructure in new emerging countries continues to accelerate, driving up demand for steel products, “Xu Xiangchun added. As a result, China’s steel makers are surely spurred to march forward into the international market.

Latest Custom statistics showed that China’s steel exports rocketed by 68.6% y-o-y to a record high of 8.55 mln tonnes in October. Over the first ten months, the accumulated steel exports increased considerable by 42.2% to 73.89 mln tonnes.

Temporary expedient Over the first three quarters, China’s import price of steel products averaged 1246 USD/tonne, a gain of 37 USD/tonne, while export price dropped 74 USD/tonne to 783 USD/tonne, marking an expanded price gap of 463 USD/tonne.

Though advantageous steel price temporarily alleviate the tension of China’s steel makers, it has still incurred some troubles in cross-border trading.

Between April and September this year, China’s exported alloy steel to India more than doubled compared to a year earlier. JSW Co.,Ltd and other Indian steel makers appealed to their government to conduct higher duties on imported steel.Under huge pressure, Indian government is considering raising steel import duty and will soon make a decision on that.

Several anti-dumping investigations have been inflicted on China’s steel makers, including some large ones, since September this year.

In the face of increasing trade frictions, Chi Jingdong, vice general secretary of China Iron and Steel Association, said recently, “The rise in China’s steel exports benefits from favorable government policies, including tax rebate on some products. But China does not plan to further promote steel exports in the coming year, so the amount is expected to be less than this year.”

Apparently, China cannot rely on exports to digest capacity glut in the long term because current steel exports only account for only a slim proportion of 10% of the total. Therefore, China still needs to change its product mix and produce more high value-added products to drag the whole steel industry out of plight.

-Edited by www.Mysteel.net