MBIE slaps down complaint about Chinese steel dumping

NZ Steel laid a complaint with MBIE, arguing steel imports from China were being subsidised. Photo: Getty

New Zealand will take no action regarding a complaint about Chinese steel dumping, after an investigation found little evidence of the practice.

The announcement comes after New Zealand Steel lodged a confidential application for an investigation into allegations of cut-price Chinese steel imports being dumped into the New Zealand market.

The issue first bubbled to the surface in July last year, when Stuff revealed the complaint and reported threats of “retaliatory measures” from China against Kiwi exporters.

The Government initially downplayed the issue, although then-Prime Minister John Key chastised Trade Minister Todd McClay after his minister failed to tell him officials had spent months looking into the reports of possible reprisals.

In December last year, MBIE confirmed it would look into whether cheap Chinese steel was being dumped here.

In its application asking for an investigation, NZ Steel said there had been a "sharp downward trend" in the price of certain steel imports from China, with subsidies as high as 39 per cent.

It argued the Government of China was both financing and directing the growth of the country’s steel industry, noting eight of the 10 largest Chinese steel groups were owned or controlled by the State

However, in a provisional report MBIE officials said that their analysis put the aggregate level of subsidisation at just 0.02 percent.

There was evidence of price undercutting by imports from China and that the domestic industry had experienced price depression and suppression, but there was not enough evidence that this was because of Chinese subsidies and therefore no grounds to impose any restrictions.

“In light of the very low subsidy levels provisionally established – below the de minimis threshold – it is not possible at this point to conclude that the price undercutting and any consequent impact can be attributed to imports of subsidised goods from China.”

This view is confirmed in their final report released on Friday, where MBIE reiterated that any identified subsidisation was at a minimum and recommended no action be taken.

The domestic steel industry had experienced adverse impacts on profits as a result of price effects, but this could not be proven to be because products were being subsidised.

In its report MBIE identified seven Chinese manufacturers supplying galvanised steel coil to New Zealand and sought information from all. Only one, Zong Cheng, responded.

Comment was also sought from eight export companies, but only half responded. Six out of seven importers took part, with only Steel Co Limited declining because of commercial sensitivity.

New Zealand is not the only country to look into issues involving Chinese steel.

US President Donald Trump is believed to be considering tariffs on steel imports, with Axios reporting he and a small group of officials are “hell-bent” on action - against the wishes of most of his Cabinet.

A national security review of the US steel industry was due to be completed by the end of June, but is now expected to be released in mid-July.

The review is making use of trade laws from the Cold War era, allowing the president to limit imports of materials that are believed to be critical for national defence.

Trump pledged during his election campaign to crack down on foreign steel dumping, and in a tweet this week alluded to possible action: “Really great numbers on jobs & the economy! Things are starting to kick in now, and we have just begun! Don't like steel & aluminum dumping!”

Newsroom Pro will have more analysis and reaction on the report later today.