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US hits China and others with more steep steel duties

The U.S. Department of Commerce has imposed more duties on corrosion-resistant steel imports from China and elsewhere in an effort to protect its industry from a glut of steel imports from around the world.

On Wednesday, the department's International Trade Administration, which has conducted an investigation into the "dumping" of steel products into U.S. markets, said it had found the "dumping of imports of corrosive-resistant steel (CORE) products from China, India, Italy, Korea and Taiwan" by various steel producers that it named within those countries.

As a result, the department said that Chinese corrosion-resistant steel would be subject to a final anti-dumping duty of 210 percent and anti-subsidy duty of between 39 percent and up to 241 percent.

Anti-dumping and anti-subsidy tariffs of between 1 and 92 percent will apply to imports from various producers in South Korea, Italy, India and Taiwan (although it was exempted from anti-subsidy duty).

The U.S. said on Wednesday that in 2015, imports of CORE from China, India, Italy, Korea, and Taiwan were valued at an estimated $500.3 million, $219.6 million, $110 million, $509.1 million, and $534.4 million, respectively.

A worker cuts steel billets at an iron and steel enterprise in Ganyu County.
ChinaFotoPress | Getty Images News | Getty Images
A worker cuts steel billets at an iron and steel enterprise in Ganyu County.

China's low-cost metal producers have been widely cited as the main culprit for a glut in global steel production that has pushed down prices. Last week, the U.S. slapped tariffs of more than 500 percent on Chinese cold-rolled steel, which is used mainly in car production and appliances.

As well as the other aforementioned countries, China has been accused by the U.S. and leading figures in the steel industry of "dumping" that cheap steel on to global markets due to a slowdown in domestic demand and a bid to gain global market share at any cost.

Beijing has denied any wrongdoing and has said that its costs are lower than other producers and that it abides by World Trade organization rules. It has also pointed to the fact that it is aiming to reduce China's steel production capacity by 100 million to 150 million tons by 2020. It has yet to scrap controversial tax rebates for all its steel exports, however.

China's Commerce Ministry said yesterday that it was extremely dissatisfied at what it called the "irrational" move by the United States, which it said would harm cooperation between the two countries, Reuters reported. "China will take all necessary steps to strive for fair treatment and to protect the companies' rights," it said, without elaborating, according to the news agency.

Worrying about China

The European Union, a region in which car production is a key pillar of industry and which is reliant on Chinese steel, has so far been wary of imposing duty on Chinese steel imports. The latest move by the U.S. could prove a bone of contention at the Group of Seven (G-7) meeting taking place in Ise-Shima in Japan over the next few days, however.

Jason Kaplan, head of Commodities Analysis at IHS told CNBC on Thursday that global powers did not have much sway over China.

"In my opinion it's going to be very difficult (to get China to cut production). China is just making too much steel and until it cuts back, there is nothing we can do. No trade barrier is going to stop it. They will always find new routes," he told CNCB Europe's "Squawk Box."

"They should've tackled (steel) output years ago. The pollution from steel production is significant, the overcapacity is significant and they're losing money every time they produce steel. But unfortunately, it employs so many people and it's just not possible to cut it back and have these people roaming the streets."

Steen Jakobsen, chief economist at Saxo Bank, added that "you have to be increasingly nervous about China" and its leaning towards short-term gain – as evidenced by its unapologetic steel production -- rather than long-term outlook.

"They're going more and more for really short-term solutions….China is pretty much backing down on every step towards opening up the economy."

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