The European Commission has launched an anti-dumping investigation against cold rolled stainless steel product imports from China, a move detrimental to Chinese exporters, experts said on Friday.
The commission said on Thursday that the probe would cover cold-rolled stainless steel products imported from China's mainland and Taiwan, as it felt that steel products were being dumped at prices lower than the actual costs in the European Union.
Trade ties between China and the European Union worsened last year after the EU decided to investigate Chinese solar products for alleged dumping. China had retaliated by ordering a probe on polysilicon imports from the EU. Though the solar dispute was settled eventually, the new friction over stainless steel will hit both sides, experts said.
Xu Xiangchun, information director of Mysteel.com, a steel industry consultancy based in Shanghai, said the Chinese government has not announced any policies to encourage exports of steel products or provide subsidies to these companies.
"Most of the steel companies have increased exports due to weak domestic demand and falling prices," he said. "If the EC decided to impose punitive taxes on stainless steel products, it will hurt many of these companies."
However, the EC decision will not have a big influence on China's full-year steel exports as stainless steel accounts for a small portion of the total exports.
"With China's products taking a bigger share in the international market, it is natural that the industry will face increasing trade disputes as foreign companies will use trade protectionism to protect their interests," Xu said.
Chinese companies should cooperate with the investigation actively and provide evidence to show that they are not selling products at prices lower than the cost price, he said.
According to data provided by the EU statistics office, the EU imported cold-rolled stainless steel sheets from the Chinese mainland and Taiwan with a total value of 758 million euros ($1.03 billion) in 2013, a 10-fold increase from the value in 2002.
China's steel industry is facing severe overcapacity caused by shrinking demand and huge production capacities built up in the past few years. Many domestic steel producers have been trying to expand in the overseas markets to maintain operations.
According to data from the China Iron and Steel Association, China's steel products exports totaled 18.33 million metric tons in the first quarter, up 27 percent year-on-year.
Zhang Changfu, head of the association, said anti-dumping and anti-subsidy investigations into China's steel products have been increasing steadily. In 2013, China's steel sector was involved in 25 trade disputes, Zhang said.
This year, there were seven such cases from countries including the United States, South Korea and Russia by the end of April. "China's steel export situation is not optimistic at present," Zhang said. He said that China's steel exports will eventually slow in the long run.