US Department of Commerce Imposes Countervailing Duties on Korean Steel... "Low Electricity Prices Are Subsidies"

The U.S. Department of Commerce has decided to impose countervailing duties on Hyundai Steel and Dongkuk Steel. This is due to the fact that Korea's low electricity prices effectively act as subsidies for the steel industry.

According to the Ministry of Trade, Industry and Energy on the 5th, the U.S. Department of Commerce recently announced a final determination that Hyundai Steel and Dongkuk Steel should be subject to a 1.1% countervailing duty on their exports of hot-rolled steel plates (thick steel plates with a thickness of 6mm or more). This confirms the preliminary determination made in February that a 1.1% countervailing duty should be imposed on hot-rolled steel plates intended for export to the U.S.

Countervailing duties are tariffs imposed by an importing country on products when the exporting country provides subsidies or incentives to certain export industries, thereby increasing the price competitiveness of those products. The tariff amount corresponds to the subsidy amount.

Prior to this final determination, the U.S. Department of Commerce reportedly conducted an investigation last month focusing on whether Korea Electric Power Corporation’s industrial electricity rates properly reflect costs.

Previously, in 2020, the U.S. government decided not to impose countervailing duties on galvanized steel sheets exported by Hyundai Steel, but this time a different judgment was made. Despite the sharp rise in fuel costs due to the increase in international oil prices, the relatively smaller increase in Korea’s electricity rates compared to other countries was cited as a concern, leading to the imposition of countervailing duties this time.

An official from the Ministry of Trade, Industry and Energy said, "U.S. steel companies have consistently raised concerns that Korea’s very low electricity prices act as subsidies," adding, "We are discussing response measures to this determination, including possible lawsuits at the U.S. International Trade Commission (ITC) involving Hyundai Steel and others."

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