Steel Industry Anticipates Profitability Improvement Amid Up to 38% Anti-Dumping Tariffs on Chinese Heavy Plates

"A Measure Proving the Necessity of Protecting Domestic Industry"
Greater Room for Negotiation with Demand Companies That Used Chinese Products
Continued Influx of Chinese Steel Plates... Calls for Provisional Duties Grow

The government’s preliminary ruling that a provisional anti-dumping duty of up to 38% should be imposed on Chinese steel plates was welcomed by the steel industry as a "measure that proves the necessity of protecting the domestic industry." Steelmakers have experienced ups and downs amid the global economic downturn, sluggish demand in downstream industries, and the onslaught of low-priced Chinese products, leading to massive production cuts. However, expectations are growing that this measure will serve as a starting point for improving profitability.

A steel industry official said in a phone interview with this publication immediately after the Ministry of Trade, Industry and Energy’s Trade Commission decided on the 20th to recommend imposing a provisional anti-dumping duty of 27.91% to 38.02% on Chinese steel plates to the Minister of Economy and Finance, "The actual damage to the domestic steel market has been confirmed," adding, "There is now a possibility that demand companies, which had been using Chinese products because of their low prices, will switch back to domestic products and place orders again."

Steel plates thicker than 6mm, known as steel plates, are used for more than half of the domestic distribution volume in shipbuilding, with the remainder mainly used as construction materials for bridges and plants. Due to the oversupply of Chinese steel plates flooding the domestic market with low-priced products, steel plate prices fell, forcing the domestic industry to face a crossroads. Some steelmakers, facing continued profitability deterioration, even reduced production by shutting down steel plate factories.

According to the Korea Iron & Steel Association, domestic demand for steel plates was 7.8 million tons last year, of which Chinese steel plates accounted for 1.38 million tons (including stainless steel plates). The Chinese onslaught has shown an increasing trend every year, rising 60.5% from 810,000 tons in 2022 to 1.3 million tons in 2023. In particular, Chinese steel plates were about 30% cheaper than domestic ones, making them highly sought after by the domestic construction and shipbuilding industries.

The steel industry is appealing for the necessity of imposing provisional duties. Since former U.S. President Donald Trump imposed a 25% tariff on steel, the volume of Chinese products, which face restricted export routes to the U.S., could flood the Korean market at even lower prices. A steel industry official said, "With global protectionism strengthening by country, the inflow of steel plate products into Korea, which lacks protective measures, is expected to increase for the time being," adding, "Provisional imposition is absolutely necessary."

Korea’s anti-dumping duty system involves the Ministry of Trade, Industry and Energy’s Trade Commission conducting investigations and making recommendations, with the Ministry of Economy and Finance executing the measures. Anti-dumping duties are imposed as additional tariffs on imported goods when foreign companies export products at prices lower than their domestic sales prices, protecting the domestic industry. The Ministry of Economy and Finance will decide whether to accept the Trade Commission’s recommendation within a month.

The steel industry has emphasized not only the imposition of duties but also the importance of the tariff rate. They argued that imposing a 10% tariff when there is about a 30% price difference would be meaningless. The industry hopes that the Ministry of Economy and Finance will decide to impose the maximum 38% tariff recommended by the Trade Commission. Another industry official said, "If it is decided at the maximum 38%, it can be interpreted as a very strong measure," adding, "It is expected that steel plate prices can be reasonably adjusted, and the bargaining power with demand companies that used Chinese products will also increase."

However, the shipbuilding industry, which recently entered a 'supercycle,' has expressed concerns about this measure. Last year, Chinese shipyards held a 71% share of global orders, far ahead of Korea, and there are concerns that the Korean shipbuilding industry, which is trying to make a comeback, could be hampered again. A shipbuilding industry official said, "Steel plates account for 20% of shipbuilding manufacturing costs and are directly linked to profitability," adding, "Anti-dumping duties are expected to lead to a mid- to long-term increase in steel plate prices, which will result in a decline in cost competitiveness for domestic shipbuilders who have to compete with China."

This content was produced with the assistance of AI translation services.