Korea's KTC recommends workaround deal in Japan, China HRC dumping case

"The KTC said it will make such a recommendation to the Ministry of Economy and Finance for the three Japanese and six Chinese steel exporters that made price adjustment proposals," Korea's Yonhap news agency reported, noting that companies including Japan's JFE Steel and China's Baosteel had proposed a price undertaking after the KTC had decided last September to impose preliminary anti-dumping duties, as Mysteel Global reported.

The targeted products come under the Harmonized Tariff Schedule of Korea (HSK) codes: 7208.51.1000, 7208.51.9000, 7208.52.1000, 7208.52.9000, 7225.40.9010, 7225.40.9091, and 7225.40.9099.

The case stems from the KTC's decision last March to launch a formal investigation in response to a petition lodged in December 2024 by the country's second-largest steel company, Hyundai Steel, as reported. Hyundai had claimed that its business had been "materially injured by unfair trading practices" of the two countries' low-priced HRC exports. 

On Monday, the KTC had said it will recommend that the ministry levy AD penalties of up to 33.43% for the next five years on HRC exports.

However, along with the imposition of tariffs, it had decided to accept a 'price increase promise' made by nine of the targeted mills – six from China and three from Japan – to maintain export prices above a certain level for the next five years, and to adjust prices and report on implementation on a quarterly basis. Between 2022 and 2024, the nine companies accounted for about 81% of Korea's HRC imports, the commission noted. If the promise is not kept, the AD penalties will be levied.

"If tariffs and price control measures are implemented in parallel, it is expected to have a positive impact on improving the profitability of domestic companies and securing investment capacity," Korea's Steel & Metal News observed. The duties that could be imposed on JFE coils are the highest at 33.43%; those on Baosteel could be 29.32%.

The Korean government considers the measure to achieve a market balance so as not to rapidly increase the cost burden on domestic steel end-users, SMN said. "By agreeing on a price increase method with major exporters instead of imposing tariffs in bulk, it is expected to have the effect of reducing dumping and mitigating market shocks," it noted.

The KTC predicts that if the price commitment is successfully implemented, domestic shipments will increase by more than 1 million tonnes, and the market share of domestic mills Hyundai Steel and POSCO will increase by about 8.9 percentage points.

The risk of the ADs hurting domestic users is real. JFE Steel, Japan's second-largest integrated mill, has had a long relationship with the coated sheet producer formerly known as Dongbu Steel (now KG Steel) for technology and HRC feeds supply, as reported.  Switching to using HRC from other suppliers where dumping duties raise KG's purchasing costs for JFE coils could be difficult for the Korean painted sheet maker to achieve.

The final implementation of the price-promise arrangement will be determined through relevant procedures, SMN said. At the same time, the arrangement is intended "to minimize unnecessary conflicts in trade relations with China and Japan while maintaining a mutually beneficial trade structure," it quotes a source as saying.

Avoiding friction was probably a wise course for Seoul to take. Japan Iron & Steel Federation statistics show that during the last calendar year, Japan's exports of HRC to South Korea reached 1.158 million tonnes, lower by 33% from 2024. On the other hand, South Korea's exports of HRC to Japan during the same period reached a sizeable 778,000 tonnes, lower by just 7.2% on year. Were the Japanese government to counter Korea's AD probe by launching one of its own into Korean HRC imports, it would be in neither country's interests.

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

Edited by Alyssa Ren, rentingting@mysteel.com