MBIE's latest probe into Chinese steel subsidies drags on

Friday 30th November 2018

The Ministry of Business, Innovation and Employment still hasn't finished its investigation into Chinese subsidies on imported hollow steel sections and won't say when the investigation will be finished.

The ministry was asked to investigate by New Zealand Steel, which claims imported goods are being dumped on the local market, and that China is unfairly subsidising those firms. MBIE has to look at whether goods are dumped separately from whether they're subsidised.

Both studies were meant to be completed in October, but MBIE hasn't finished its investigation into whether Chinese subsidies are damaging the New Zealand manufacturer. A provisional measures report in July found minimal levels of subsidies.

A September High Court judgment complicated matters for the ministry. It has already looked at two separate steel products at the behest of NZ Steel and found in both cases the level of subsidy was so small as to be negligible. The local steel maker appealed the first decision, and in September and Justice Jillian Mallon ordered the ministry to reconsider NZ Steel's earlier claims that subsidised Chinese imports of galvanised steel coil damaged the domestic injury.

"The investigation into the alleged subsidisation of hollow steel sections from China is on-going and we are unable to indicate when a final decision is likely," MBIE's trade and international manager Jim Robinson said in an emailed statement. "MBIE is ensuring that its process in the hollow steel sections investigation reflects High Court decisions."

NZ Steel, a wholly-owned subsidiary of Australia's BlueScope Steel, is the country's largest steelmaker. It considers that steel manufactured in China is subsidised by the government there and that imports of it cause material damage to the domestic industry.

Chinese steel exports have been a bone of contention around the world. US and European producers accused the Asian nation's subsidies and overproduction of undercutting their local industries.

MBIE this month finished its investigation into whether Chinese and Malaysian hollow steel sections were being dumped on the local market to the detriment of the local market. It concluded the imported goods were being dumped by one of four Chinese producers looked at, but not at a big enough level to injure the local industry.

Similarly, it found Malaysian products were also being dumped, but decided the investigation should be terminated because the volumes coming from the South-East Asian nation were so small.

The dumping report shows NZ Steel sets its prices of hollow steel sections based on maintaining market share. That means it responds to price offers and import flows, but it charges a premium to reflect the benefits of local supply and that it can provide short lead times, greater flexibility, local currency pricing, and good product quality and service.

While MBIE agreed NZ Steel's margins were squeezed and that it lost market share, it couldn't blame one Chinese producer.

(BusinessDesk)

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