May 10, 2014 6:30 am JST

Nations rush to shield steel industries from foreign competition

TOKYO -- Countries across the globe moved in ever larger numbers in fiscal 2013 to restrict steel imports and protect their own producers, amid a global glut of the metal spurred by slowing Chinese demand.

     Under international trade rules, a country may respond to import surges threatening an industry with so-called safeguard measures, including capping imports and raising tariffs, on a temporary basis. An investigation is required before taking action.

     According to the Japan Iron and Steel Federation, five countries together made 11 notifications of investigations in fiscal 2013, roughly double the previous fiscal year's figure and the highest since data became available in 1999.

     Four of the notifications came in the first three months of this year. In January and February, Indonesia launched investigations on hot-rolled bars and rods as well as alloy steel. Thailand revealed in January it would investigate imported hot-rolled steel.

     Many parts of Asia are susceptible to an influx of imports from countries like China and South Korea that have continued to boost output in recent years.

     The previous record number of notifications was marked in 2002, with eight cases spread across seven countries. The U.S., Europe and China moved to institute safeguard measures at the time, to much international criticism.

     The number began to rise again after the Lehman shock and came to five cases from five nations in fiscal 2012.

     Efforts to ward off dumping, a kind of predatory pricing that may flood a market with cheap imports from a specific country, have dipped after a recent jump. The number of newly initiated anti-dumping investigations leapt from 16 in fiscal 2011 to 27 in fiscal 2012, but then fell to 21 in fiscal 2013.

     The Japanese industry ministry suggests there may be a shift from anti-dumping tariffs to safeguard measures, as the latter entails simpler investigative procedures.

     Since fiscal 2012, 60% of anti-dumping investigations have been aimed at Chinese-made goods, while 20% have targeted products from Japan.

     Should there be an increase in safeguard measures, which don't target goods from a specific country, warns an official from a major Japanese steelmaker, Japanese-made steel could be caught in the crossfire.

     China faces a severe capacity glut. The country produces just over 700 million tons of crude steel a year, but potential output is estimated at nearly 1 billion tons.

     Japan, the world's No. 2 crude steel producer, churns out 100 million tons.

     Market prices in Shanghai for core steel products like hot-rolled coil and rebar have fallen more than 40% since 2008.