China threatens to match new US steel tariffs

China has threatened to deepen its ongoing trade war with the United States by implementing similar trade measures on the latter’s products after the Office of the US Trade Representative proposed an additional 25% duty on a list of Chinese goods.

These include semi-finished steel as well as steel products included hot-rolled flats, coated flats, hot-rolled bar and coil, section, angles, wire rod, stainless steel ingots, stainless hot-rolled flats, stainless cold-rolled steel, stainless steel bar and rod, pipe and tubing. Steel nuts and springs are also included in the list.

“The US Trade Representative has determined that the acts, policies and practices of China related to technology transfer, intellectual property and innovation covered in the investigation are unreasonable or discriminatory and burden or restrict US commerce,” the office said on Tuesday April 3.

The recommendations came after a probe under Section 301 of the US Trade Act, which gives the Trade Representative broad authority to investigate and take appropriate and feasible action to eliminate unfair trade practices including “an act, policy, or practice of a foreign country that is unreasonable or discriminatory and burdens or restricts” US commerce.

The Trade Representative said the Chinese government had used opaque and discretionary administrative processes, joint venture requirements, foreign equity limitations and other mechanism to intervene in US companies’ operations in China.

In response, the Ministry of Commerce said that the US’ new trade measures were unilateral and centered on protectionism.

“China strongly condemns these measures and opposes them. This goes against 40 years of mutually beneficial trade relations between China and the US,” its statement read.

Beijing also plans to bring these measures to the attention of the World Trade Organization’s dispute settlement body.

“China is prepared to implement the same degree of trade measures against the US. We are confident and capable of defending ourselves against these measures,” the ministry said.

Steel prices in Asia have not experienced any immediate change in light of these developments, though China’s ferrous futures largely trended upward in the morning of Wednesday, after dropping on Tuesday night.

Domestic rebar prices in east China were at 3,650-3,700 yuan ($580-588) per tonne on Wednesday morning, unchanged from Tuesday.

Domestic HRC prices in the same region were at 3,880-3,900 yuan per tonne, up 20-30 yuan per tonne from a day earlier.

“There is limited impact from the new announcement by China’s Ministry of Commerce about potential new trade measures against the US. After all, the import volumes of US-origin steel into China have always been small,” a Chinese trader told Metal Bulletin on Wednesday morning.

China exported 1.18 million tonnes of steel to the US in 2017, out of a total of 75.24 million tonnes in in exports that year. These export volumes are also considered a very small proportion of China’s total finished steel production of 1.05 billion tonnes.

In China’s export segment, some sellers withdrew their offers ahead of the Qing Ming Festival, or tomb-sweeping day, on April 5-6 while others kept their offers stable. Rebar was heard offered at $540-575 per tonne fob on Wednesday while those for HRC were heard around $590 per tonne fob, the same as Tuesday.

"The Chinese steel market is impacted more by domestic supply and demand rather than such external influences," another Chinese trader said.

Sign up here for our free web seminar to learn how Metal Bulletin’s fob China hot-rolled coil and rebar indices can help protect your production and trading margins. Asia steel editor Paul Lim will present on “Increasing trading margins and reducing spot price risks in volatile global markets” on April 10 even as the Asian steel markets has an uncertain outlook and remains heavily exposed to price volatility.

Gladdy Chu

Jessica Zong

jessica.zong@fastmarkets.com

Paul Lim

paul.lim@fastmarkets.com

Published

Gladdy Chu

Jessica Zong

Paul Lim

April 04, 2018

08:20 GMT

Singapore