The China Post carried a story last week headlined “China slaps anti-dumping penalties on steel imports from U.S., Russia.”
The story: “China said Thursday it will impose penalties on steel imported from the United States and Russia, claiming the countries were allowing it to be sold at a cut price.”
“The (Chinese) domestic grain-oriented electrical steel industry suffered material damages” due to the dumping, the statement said following an investigation. Dumping occurs when a foreign company sells a product in another market at less than normal value. ”
The analysis: Normally I would make some witty comment here, but my favorite steel analyst, Michelle Applebaum of Michelle Applebaum Research Inc. (MARI) beat me to it in an email dispatched Thursday December 10th. Here’s what she had to say:
“Last night Beijing announced that there’d been a preliminary decision affirming dumping and subsidies from American steel exports.
“While the tonnage involved in this trade suit – 75,000t, or less than a tenth of a percentage point of the Chinese market – is truly trivial, this decision is anything-but. (emphasis Miles’)
“In our view, this trade case reflects an effort by Beijing to stem a surging tide of Western complaints about China’s high cost and subsidized steel industry’s exports, which have been sizable at times over the last half-dozen years in virtually every region of the globe.
“The West has taken a 3-pronged approach in dealing with this problem, and the effort is fairly unified. First, the US and Europe have filed official complaints with the WTO regarding WTO-illegal subsidies to steelmakers via controls on the export of steelmaking raw materials. Second, 8 global steel trade associations combined to issue an “advisory” last spring regarding the need for Chinese steel restructuring/rationalization and suggested a path to effect that. Finally most Western countries have placed some type of limits on Chinese steel imports, via their own individual WTO-compliant remedies.
“This seemingly trivial man-bites-dog decision is a reflection of the pressure that Beijing is feeling from the unified West. While China is clearly fighting Western pressure on exports, at the same time we see Beijing for the 10th time in as many years come out with yet another attempt at cutting production at the so-called “backwards and polluting” steel players in the provinces.
“The social issues Beijing faces are acute; while many view China as a dictatorship, we see the “democracy by civil unrest” aspect to the culture loud and clear in the mob-led reactions to Beijing’s attempts at rationalizing their high-cost steel industry.” end Michelle Applebaum quote.
From where we sit: This “Man Bites Dog” trade filing by the Chinese is as much a result of their impotence to restructure their high cost high polluting steel industry as it is about a “truly trivial tenth of a percent of market” grain oriented electrical steel issue.
Canadian Aspects: http://www.canadiansteel.ca/index.php/en/media/archives/4