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China steel exporters “shocked” by Thai AD on GI

The Thai government’s imposition of 35.67% anti-dumping duties targeting China-origin hot-dipped galvanized (HDG) coils and sheets, announced on August 3, is being seen as an additional dampener on Chinese steel exports. Though for now, Chinese steel producers and traders are more focused on their home market.

“It seems that most Chinese mills are not keen on exporting,” a Hong Kong-based steel trader told Mysteel Global this week, though Bangkok’s decision effectively closes the door to China’s over one million tonnes of exports.

A notice on August 3 from the China Trade Remedies Information, a website under China’s Ministry of Commerce on releasing related trade friction cases shared the products under the 28 HS codes will be imposed the duties, though HDGs with the thickness above 2.3mm, those used in auto and parts manufacturing, and those used for electrical and electronic devices will be exempted from the duties.

“This came as a shock to us. Many of our Thai clients are now reselling these products to other countries (to avoid having to pay new duties),” a major steel exporter based in East China’s Zhejiang province said.

An official with a Chinese steel mill based in Northeast China’s Liaoning province also admitted that the imposition of the duties is a blow to business.

“Chinese steel exports have been lacking price competitiveness, and only now exports of processed products such as cold-rolled coils, GI, color-coated sheets, tubes and pipes have been possible, but such products seem to be with the growing hardship to sell abroad too,” she said, adding that Thailand is the largest or sometimes second largest destination for her company’s galvanized steel exports.

In 2019, China’s HDG exports to Thailand reached 1.1 million tonnes, according to China’s General Administration of Customs data, or accounting for 12.4% of China’s total HDG exports or 2% of the country’s total steel exports.

However, an industry source based in Thailand pointed out that the domestic producers had been trying to obtain AD duties for a long time, and the Thai government reportedly began an investigation into the Chinese exports in February this year.

“It (the claim) was rejected at the beginning, so the manufacturers had tried to turn this around ... here it is finally,” he told Mysteel Global on Wednesday.

Thailand has been importing “quite a lot of (HDG) from China as compared to domestic demand, and it has replaced the use of hot rolled carbon steel in some applications that it is not supposed to be used,” the source said.

The petitioner in the case was POSCO Coated Steel Thailand (PTCS), operator of a 450,000 tonnes/year plant in eastern Thailand’s Rayong province making HDG and galvannealed coils for outer and inner body panels for automobiles, for washing machines, and for roofs and light structural beams in construction.

What prompted PTCS to launch its suit is not known but as automotive and appliance grades were exempted, it seems its target was galvanized coils used for construction – a major consumer of steel in Thailand and one suffering badly from the COVID-19 jolt to the economy.

Thailand’s domestic steel industry has been suffering from abnormally low capacity utilization, and as for 2019, the utilization rate both for long and flat steel averaged only 39% of the total because of high imports, Wirote Rotewatanachai, president of the Iron and Steel Institute of Thailand, shared in early July, and the pandemic will see Thailand’s construction and automobile industries – the two most important steel-using sectors – decline on year this year, he noted.

For the first quarter of 2020, the country’s construction sector declined 9.7% on year, and its national economy is expected to decline 5-6% on year, as reported.

According to the China Trade Remedies Information, the 28 HS codes that are targeted are 7210.4912.021, 7210.4912.022, 7210.4912.023, 7210.4912.024, 7210.4912.031, 7210.4912.032, 7210.4912.033, 7210.4912.034, 7210.4912.090, 7210.4913.021, 7210.4913.031, 7210.4913.090, 7210.4919.021, 7210.4919.031, 7210.4919.090, 7210.4991.000, 7210.4999.000, 7212.3011.021, 7212.3011.031, 7212.3011.090, 7212.3012.021, 7212.3012.031, 7212.3012.090, 7212.3013.011, 7212.3013.090, 7212.3019.011, 7212.3019.090, 7225.9290.090.

Written by Olivia Zhang, zhangwd@mysteel.com and Hongmei Li, li.hongmei@mysteel.com

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