Posted on 16 Mar 2015
China’s massive steel-making engine, determined to keep humming as growth cools at home, is flooding the world with exports, spurring steel producers around the globe to seek government protection from falling prices.
From the European Union to Korea and India, China’s excess metal supply is upending trade patterns and heating up turf battles among local steelmakers.
In the U.S., the world’s second-biggest steel consumer, a fresh wave of layoffs is fueling appeals for tariffs. U.S. steel producers such as U.S. Steel Corp. and Nucor Corp. are starting to seek political support for trade action.
China’s steel exports rose 63% to 9.2 million tons in January from a year earlier, a rise that puts them on pace this year to beat the 82.1 million tons China exported last year. That number increased 59% from 2013 and was the most steel ever exported by any country this century.
China produces as much steel as the rest of the world combined—more than four times the peak U.S. production in the 1970s. But as China’s growth slows, the excess steel that Chinese industry doesn’t need is washing up overseas.
Steel use in China grew by just 1% in 2014 and growth will slow further to 0.8% in 2015, according to the World Steel Association, as the country’s real-estate sector cools. China’s mills have yet to slow in lockstep. Their output is supported by a fall in the price of iron ore, the main ingredient in making steel.
Mills’ refusal to cut back despite slower demand growth is what irks steelmakers elsewhere in the world.
The state-backed China Iron and Steel Association has in the past described efforts to roll back Chinese exports as “protectionist.” But it has also said that it recognizes the problem and has encouraged Chinese steelmakers to hold down exports.
Chief executives of leading American steel producers said Thursday they would testify later this month at a Congressional Steel Caucus hearing, a move that trade lawyers said is a prelude to launching at least one anti-dumping complaint with the International Trade Commission. “Dumping,” or selling abroad below the cost of production to gain market share, is illegal under World Trade Organization law and is punishable with tariffs.
