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Provisional duty may ease China’s stainless oversupply

China’s decision to impose provisional duties on stainless billets and stainless hot-rolled flat products is expected to ease the pressure of oversupply in domestic stainless market in the coming term, a market source observed on March 25.

Last Friday China’s Ministry of Commerce (MoC) announced it would impose provisional duties in the form of warranties on stainless steel billet, hot-rolled stainless steel plate and coil imported from Indonesia, the European Union, Japan and South Korea, according to an official notice posted on its website on March 22.

Domestic importers are requested to pay a range of 18.1-103.1% deposits from March 23 if they import the concerned products from the four mentioned countries and regions, MoC’s notice showed.

“China’s stainless market has been in overcapacity, and the huge imports from the four countries and regions at very competitive prices have had a big impact on the vulnerable stainless market in China,” an official from Shanxi Taigang Stainless Steel Co (TISCO) commented.

TISCO, headquartered in Taiyuan, North China’s Shanxi province, is the country’s second largest stainless producer with 4.5 million t/y of stainless capacity. It is one of the applicants in this case, Mysteel notes.

“The imposition of deposits will increase the cost to importers and alleviate the impact of imported stainless steel on the domestic market to some extent, but it was just an interim measure before the final determination,” TISCO’s official said. The final decision will likely be announced within several months of the preliminary determination, possibly by July, Mysteel notes. Should the MoC determine that imports from a certain company were not dumped, the deposits would be repaid, although an MoC official told Mysteel that this has not happened in similar cases to date.

The exact deposit ratios for domestic importers are shown below:

Countries/Regions

Companies

Deposit Ratio

European Union

All companies

43.0%

Japan

Nippon Yakin Kogyo Co., Ltd.

18.1%

All Others

29.0%

South Korea

Posco

23.1%

All Others

103.1%

Indonesia

All companies

20.2%

The warranties that the buyers have to pay should be calculated on the basis of the taxable price assessed by the customs (the value of the imported products), the deposit ratio, and the corresponding import VAT rate, according to MoC.

In South Korea, local media ‘Business Korea’ reported Korea’s Ministry of Trade, Industry and Energy as saying that currently, Posco is the only South Korean company exporting stainless steel to China. Posco reportedly exports 160,000 tonnes of such products to China a year, it said, adding that the Korean integrated giant was planning to discuss measures such as higher export prices with the Chinese ministry in order to avoid tariffs.

Written by Nancy Zheng, zhengmm@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com