Allegation of Steel Dumping

China’s government is “highly concerned” about the U.S. steel industry’s petition to the State Department and the International Trade Commission to investigate whether Chinese products were dumped in that country.
The application will have a “significant impact” on exports of Chinese steel products to the U.S., Yao Jian, a spokesman for China’s Ministry of Commerce, said in a statement posted on its Web site.
“Blindly accusing importers of dumping or giving countervailing duties without proof and seeking trade protectionism won’t solve the real problems confronting the U.S. industry,” Yao said in the statement, dated yesterday.

The U.S.’s application follows the European Union’s decision to levy anti-dumping tariffs on Chinese steel products, after anti-protectionism pledges were made at the G20 meeting earlier this year. Mills in China, the world’s biggest producer of steel, benefit from subsidies for so-called oil-country tubular goods which are sold in the U.S.
The EU announced tariffs as high as 24.2 percent on steel pipes and tubes from China on April 8 to help producers including ArcelorMittal fend off cheaper imports.
Steel is used widely in the construction, energy and engineering industries. Allegations of dumping typically rise when demand is weak, analyst Luo Wei said.

Falling Steel Demand
“Global demand for steel is very poor because of the economic downturn, so there will be more protectionism,” Luo, a Shanghai-based analyst at China International Capital Corp., said by phone today. “China is a big steel exporter, but its shipments have already fallen a lot.”
Chinese steel exports dropped 52 percent to 1.56 million tons in the first two months of the year, the Customs General Administration said in March.
The global recession may lead China to export 80 percent less steel products this year, the country’s Iron and Steel Association said March 18.

Posco, the world’s second-biggest steelmaker by market value, yesterday posted its largest profit drop in eight years after the global recession cut demand. The Pohang, South Korea- based company said net income fell 68 percent from a year earlier in the first three months of 2009.
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net.