Anti-dumping duties on Chinese steel bars are moving closer to reality, raising concerns about higher input costs at small and mid-sized forging companies that use the material as a raw input. Import curbs designed to shield domestic steelmakers are turning into a burden for the downstream manufacturers that buy from them.
The Trade Commission under the Ministry of Trade, Industry and Energy found injury to domestic industry in a preliminary ruling on Chinese steel bars, the forging industry said on the 19th. The commission then recommended that the Ministry of Finance and Economy impose provisional anti-dumping duties of up to 27.96%. A final decision is expected around late November. Steel bars are steel processed into rod form and are used in forging operations that produce parts for automobiles, farm machinery and construction equipment.
The case stems from an anti-dumping petition filed in February by SeAH Besteel and SeAH Changwon Integrated Special Steel. The steelmakers argue that the damage has grown as low-priced Chinese steel bars flowed in. Most steel bars imported into South Korea come from China, according to the industry. "Imports of low-priced Chinese steel bars have risen over the past few years, and that has made things harder for domestic companies," a steel industry official said. "In some cases the price gap between Chinese and Korean products widens to more than 30%, so measures are needed to protect domestic industry."
Steelmakers are extending their push for import curbs to other products. Iljin Steel filed for an anti-dumping investigation into Chinese seamless steel pipes in August, and the probe opened on the 8th of this month.
Forging companies object. They say Korean and Chinese steel bars differ in grade and quality and cannot readily substitute for each other. The customer base is also partly split, because automakers including Hyundai Motor (005380.KS) restrict the use of Chinese materials. The forging industry expects duties to raise costs only for domestic forging companies. Their actual competitors are Chinese forging companies that use domestically produced steel bars without facing duties. If duties are imposed, Korean forging companies say they will inevitably lose out on price.
The Korea Forging Industry Cooperative asked the trade ministry, the Ministry of SMEs and Startups and other agencies for relief measures on Sept. 29, following earlier requests in June and July. Its central demand is that steel bars either not produced in South Korea or not readily substitutable because of grade and quality be excluded from the duties. "Supplementary steps such as exempting some products from the duties are needed to minimize the damage to small and mid-sized manufacturers from measures to protect the steel industry," a forging industry official said.