News Room - Steel Industry

China stepped up its defence of its steel industry on Friday after a new probe into possible dumping added fuel to a growing international trade spat over the country's steel exports. 

Ministry of Commerce spokesman Shen Danyang said China, which produces almost half the world's steel, opposes any measures against its steel exports. The European Commission on Thursday confirmed a fresh investigation into possible dumping of cold-rolled steel coil exports from China and Russia. 

Without specifically addressing the European Union, Mr Shen said Chinese steel exports have been rising sharply because of "higher demand in the global market," and said that "Chinese steel products have strong export competitiveness." 

"Under such circumstances, I feel that it's quite normal for Chinese steel exports to these countries to be rising, and it's quite justifiable," he said. 

The US, Australia and South Korea, have also signaled that they are lining up support for trade action to roll back Chinese steel exports, which rose by 50.5 per cent last year to a record 93.8 million metric tons and have continued at a high level this year, according to General Administration of Customs data. 

At home, Beijing has been pushing its steel industry to slash obsolete productive capacity to cut environmental pollution and to improve the kind of steel products it makes. The government has opened its steel sector to foreign investment, a move that has seen few takers so far. 

As steel prices have slumped, China has also taken measures to try to limit exports, cancelling an export tax rebate on a certain type of popular steel alloy in January. However, that measure was almost immediately circumvented by steelmakers who began to export similar products using a different type of alloy. 

The tenor of Mr Shen's comments suggests China is pulling back from the more conciliatory approach it had adopted last year to manage global trade complaints, analysts say. Though state officials have consistently said they believe Chinese steel exports are globally competitive, last year they said they understood the friction caused by these exports, and had sought to discuss the issue with local steel mills to try to hold down exports. 

Those discussions appear to have borne little fruit. 

Between September last year and January this year, the volume of China's outbound steel shipments each month shattered the preceding month's record. In the first four months of 2015, steel exports were 32.7 per cent higher than a year earlier, according to Chinese customs data. 

When the European Steel Association in late March lodged complaints with the European Union on its antidumping concerns, Mr Shen said that the EU should focus on strengthening economic exchange and cooperation, given Europe's tenuous economy recovery, rather than "resort to trade remedy measures." 

Brussels also appears to be adopting a tougher stance, analysts say. 

"While the European Union has a track record of responding slowly to industry requests for a more defensive and protectionist policy, the European Commission appears to be slowly shifting tactics," investment bank Jefferies International Ltd. said in a note. "After announcing stainless antidumping duties in March, the European Commission launched an antidumping investigation against Chinese rebar in April. ... This appears to be the beginning of a trend." 

Some steelmakers in importing countries say China unfairly subsidizes its industry by using cheap labor, tax rebates or preferential loans, resulting in outsize exports that swamp global markets. Dumping, or selling abroad below the cost of production to gain market share, is illegal under World Trade Organisation law and is punishable with tariffs. 

On Friday, Mr Shen said his ministry hopes China's trading partners can resolve their concerns with the country through "dialogue and co-operation."