China, the world's biggest steel consumer, said it will impose anti-dumping duties of up to 25 per cent on specialised steel imports from Russia and the United States, stepping up a trade row with Washington.
China's announcement yesterday it would slap punitive tariffs on a type of electrical steel used in transformers is likely to hurt exports from leading US producers AK Steel and ATI Allegheny Ludlum.
The move follows US steel industry trade cases against China that led Beijing to accuse Washington of protectionism.
"This shows clearly that trade-remedy cases are a two-way street as are their disruptive effects," said Daniel Price, a senior partner at Sidley Austin who was a White House adviser on trade issues for former President George W. Bush.
China's Commerce Ministry, announcing the decision, said this was the first time that China had conducted an anti-subsidy investigation against imported products, although it has previously launched many anti-dumping investigations.
US and Russian exporters will from today, need to pay cash deposits equal to a percentage of the steel import value, but the ministry did not specify the amount, adding that it was a preliminary ruling.
It found that US dumping margins on the steel product were 10.7 per cent to 25 per cent and that the subsidy rate was 11.7 per cent to 12.0 per cent.
The dumping margin on the Russian version of the steel product was 4.6 per cent to 25 per cent, the ministry added in a statement on its website (www.mofocom.gov.cn).
Last month the US Commerce Department levelled preliminary anti-dumping duties ranging up to 99 per cent on $2.63 billion in Chinese-made oil well pipes in the biggest US trade action to date against China.
Russia also has tariffs in place against Chinese steel, including a 28.1 per cent tariff on some steel pipes. The product in question, grain-oriented electrical steel, is high-value and is used in transformers, motors and power generators. It makes up only a tiny proportion of total steel production in Russia, the world's No. 4 steel-producing country. Novolipetsk Steel, or NLMK, is the only major producer in Russia of this particular product, also known as transformer steel.
In an emailed statement, the company denied it was dumping steel and said it was already paying a preliminary tariff of 4.6 per cent on transformer steel exports while the Chinese investigation continues.
"NLMK intends to present its commentary on the current decision by (China's) Ministry of Commerce, in as much as we think the company's tariff rate should be set at zero...," the statement said.
The company added that through end-September it produced 98,000 tonnes of transformer steel, and exported roughly 83,000 tonnes, sending 13 per cent of this amount to China.
Renaissance Capital analyst Boris Krasnojenov said NLMK currently controlled between 15 per cent and 20 per cent of the global market.
He expects NLMK to produce 200,000 tonnes of this steel next year, and said it could export 80,000 tonnes to China.
"The negative impact on NLMK's full-year 2010 cash flow may be estimated at $20 million to $25 million," Mr Krasnojenov wrote in an email.