From the US to India, regulators around the world are pushing harder than ever to shield local steel industries from foreign competition.
Nations imposed 85 new duties and other taxes on steel imports in the first half of the year, according to the Russian Steel Association, which counted preliminary and permanent measures. That is 49 percent more than a year earlier.
The trade frictions are the result of a saturated steel market and record exports from China. The cheap imports make it harder for US and European steelmakers to make money, leading to job losses and pressuring politicians to defend their local industry.
“The world is turning into a global trading war in steel because demand is weak, while the industry is in overcapacity crisis,” said Kirill Chuyko, a strategist at BCS Global Markets, Moscow’s largest brokerage.
Russia is targeted by tariffs because it is the lowest cost producer and the weak ruble is seen as an “unbeatable advantage,” he said.
Data from China yesterday showed that mills were still churning out supplies. Output for last month was higher than the same month a year earlier, and nationwide production was down just 0.5 percent annually during the first seven months of the year. The country accounts for about half of worldwide output.
The WTO last month said that it has seen a “significant increase” in trade-restrictive measures generally, calling it “the last thing the global economy needs,” in an online statement.
Complainants have accused exporters of selling steel below cost, a practice known as dumping, to push competitors out of business and grab market share.
Earlier this month, Chinese and Russian producers of non-stainless cold rolled steels were hit by the EU with five-year tariffs as high as 36.1 percent after the EU found that imports from the two countries unfairly undercut manufacturers.
The US has also imposed duties on certain hot-rolled steel flat products from seven countries including Australia, Brazil and Japan.
There is some evidence that the tariffs are working, according to ArcelorMittal SA, the top producer in Europe and the US.
It said last month that steel prices recovered in those regions after trade measures were implemented and the company reported its best quarterly profit since 2014.
“The US steel companies have clearly been in a very sweet spot with tariffs,” said Alon Olsha, an analyst at Macquarie Group Ltd in London. “The tariffs in Europe pale in comparison, but there’s a lot of positive sentiment around the impact these tariffs could have.”
Chinese producers will not be hurt by more tariffs in developed countries because the majority of exports are going to Asian countries and they are seeking new business in Africa and the Middle East, said Kevin Bai (白愷), a Beijing-based analyst at consultants CRU Group.
For Russian producers, low production costs mean they are able to make money despite tariffs because they can reroute shipments to more distant markets, Chuyko said.
However, the duties pose a risk in the long term, according to Fitch Ratings Ltd senior director Peter Archbold.
If steelmaking costs increase, which could happen if the ruble strengthens and energy costs rise, then Russian producers might need to idle some production capacity that serves export markets, Chuyko said.
