China, the world's top steel importer, has slapped hefty import duties on high-grade metal used by the booming auto and shipbuilding sectors, protecting Chinese players as they ramp up capacity to plug a domestic shortfall.
Shares in overseas steel makers such as Taiwan's China Steel dipped on the news, while domestic steel firms cheered the move. Shares in top Chinese maker Baosteel edged up, despite the wider market falling one percent by the close.
China implemented the tariffs after it concluded that there was dumping of cold-rolled steel by Russia, South Korea, Ukraine, Kazakhstan and Taiwan.
But South Korea's POSCO, the world's fourth-largest steel maker, will be exempted as Chinese authorities concluded it was not selling its cold-rolled products below market prices, industry sources say.
China replaced the United States as the world's largest steel importer in 2002. Analysts said the duties would not lead to any reduction in China's total imports of cold-rolled steel, which reached 9-10 million tonnes last year and are forecast steady in 2004.
While the move was expected to affect about a third of China's cold-rolled imports, the country could turn to other sources such as Japan and POSCO to make up any shortfall, industry sources said.
The move follows a 20-month US battle to protect its domestic steel industry by imposing blanket import tariffs. Washington last month removed its safeguard tariffs of up to 30 percent, prompting China to scrap its retaliatory tariff-rate quotas in late-December.
The latest Chinese import duties have been calculated on a country-by-country basis and apply only to cold-rolled steel products.
China had slapped tariffs of up to 55 percent on cold-rolled steel imports from affected countries, effective immediately, it said. They would last until about September 2008.
Key steel producer South Korea was largely unfazed by China's move as its top firm POSCO, which a company source said exports about 800,000 tonnes of cold-rolled steel to China, was spared and the measures had been expected since the issue arose in September.
"I don't expect it to cause substantial damage to the Korean cold-rolled steel industry since the largest exporter, POSCO, was exempted from the measure," said Park Chan Ki, deputy director of the capital goods trade team at South Korea's Ministry of Commerce, Industry and Energy. "Other steel makers have been preparing to offset the impact."
The tariffs would have little impact on Taiwan steel makers as most of their exports to China were re-exported and exempt from the tax, industry officials said.
"More than 90 percent of our cold-rolled steel products sent to China are for re-export, so they are not subject to the anti-dumping duties," said Chen Tze-haw, vice president of China Steel Corp, Taiwan's largest steel maker.
Beneficiaries in the Chinese steel industry include Baoshan Iron and Steel Co Ltd, Angang New Steel Co Ltd and Wuhan Steel.