Thailand's Ministry of Commerce is contemplating broadening current anti-dumping measures against Chinese hot-rolled coil steel, which makes up 70% of Thailand's steel consumption. In 2021, Thailand produced 4.77 million tons of steel, while consumption exceeded 17 million tons, highlighting the heavy import reliance that is strangling domestic steel producers. The US and EU have also acted against Chinese steel dumping, with the EU imposing duties from 22.1% to 86.5% on specific products to combat market undercutting and industry injury. The U.S. duties have risen as high as 266% depending on the type of steel product.
An investigation by Thailand's Ministry of Commerce could broaden anti-dumping measures against hot-rolled coil steel from China, whose surging exports have Southeast Asia on the defensive while its steel mills reel from overcapacity and low utilization.
The Thai Department of Foreign Trade could conclude its investigation by June, after receiving a petition last year from Sahaviriya Steel, G Steel and GJ Steel, Thailand's largest makers of hot-rolled coil steel. The product is used in automotive and equipment parts, bridges and water pipes.
The investigation has involved at least 17 Chinese steel manufacturers in China and was officially announced on September 15, 2023. These imports from China account for nearly 70% of Thailand's domestic steel consumption. The excessive imports and dumping from China have essentially strangled the domestic steel producers.
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Highlighting the issue is that in 2021 Thailand's steel production was approximately 4.77 million tons, while domestic consumption was significantly higher, exceeding 17 million tons. This heavy dependence on imports, primarily from China, has kept prices too low to support the development of Thailand's steel industry.
Chinese Steel Producers Often Circumvent Existing Regulations
Frustrating the process is the reality that Chinese steel producers have a handful of ways of circumventing anti-dumping tax regulations already on the books in Thailand. One such method is altering production methods or product compositions to technically make the imported steel fall outside of the scope of the regulations.
Existing anti-dumping duties targeting Chinese steel producers in Thailand range from around 4.53% to 24.73% depending on the type of steel product. Any new regulations are likely to use a combination of tools such as broadening definitions to include more steel imports, increasing measures to counter circumvention measures, and raising tariffs across the board.
U.S. & EU Also Acting to Counter Chinese Steel Dumping
This highlights a crucial point: concerns about overcapacity extend beyond just the geopolitical tensions between China and the West. It's not limited to the sectors of electric vehicles, batteries, and solar panels. Overcapacity in steel production has also been a significant issue, leading to measures by both the US and EU governments to counteract Chinese steel dumping.
In 2021, the United States and the European Union announced a new metals alliance aimed at restricting access to their markets for "dirty steel" from countries like China, which has been accused of flooding markets with cheaper, often subsidized products.
This agreement includes a "melt-and-pour" mechanism to ensure steel is clearly labeled throughout the production cycle, preventing Chinese steel from being transshipped or utilized in European steel products that enter the U.S. market.
In 2022, the European Commission imposed anti-dumping duties on certain iron or steel fasteners imported from China, with duties ranging between 22.1% and 86.5%. This followed an investigation that showed the presence of significant dumping on the market, with Chinese imports undercutting European sales prices and injuring the European fasteners industry.
The measures were renewed and expanded in 2023. Interestingly, the EU investigation found that Chinese producers were importing the main parts needed to produce stainless steel fittings from China, processing them in Malaysia, and then exporting to the EU without paying the applicable anti-dumping duties.
