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US Curbs Chinese Steel Dumping with Massive Import Duties

May 27, 2016 at 17:10 by Brent Lantzy

A complaint to the US Department of Commerce by major domestic steel producers concerning so-called ‘dumping’ practices by their international counterparts has resulted in hefty import duties levied upon firms in several countries including India, Italy, Korea, Taiwan, and – predominately – China.

Generating approximately 50% of the world’s steel, China’s persistent production has created a supply glut which Western producers say is flooding the market with unsustainable cheap imports.

The price rally that lifted iron ore and steel in the beginning of 2016 has caused many once-closed producers to decide to reopen in hopes that the rally would be sustained by a stabilization of the Chinese economy. BHP Billiton estimates that more than 50 million tons of steel capacity in China may have been restarted since the beginning of the year.

On Wednesday, the Commerce Department announced that corrosion-resistant steel from China would be subject to anti-dumping and anti-subsidy duties of up to 450%. This follows the imposition of punitive tariffs last week of more than 500% on Chinese cold-rolled flat steel, used primarily in home appliances and automobiles.

The EU Parliament passed a non-binding resolution last week to prevent China from attaining market economy status in the WTO at the end of the year, which, if gained, would further limit the EU’s ability to combat Chinese dumping practices.

Hebei, China’s top steel-making province, has pledged to close a total of 14.22 million tons of capacity in 2016, however this represents just over 1% of the official capacity of 1.13 billion tons. China as a whole has pledged to cut capacity by 100 million to 150 million tons over the next five years in response to slowed demand.

Shanghai steel futures have fallen around 30% from their peak in April.

Benchmark 62% fines iron ore, the main component of steel, closed up 3.4% to $51.15 per dry metric ton on Friday, according to Metal Bulletin Ltd.

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