Chinese subsidies on steel imports not hitting NZ Steel margins: MBIE
By Paul McBeth
July 7 (BusinessDesk) - The Ministry of Business, Innovation and Employment says Chinese subsidies on galvanised steel
coil imports are too small to have injured the domestic industry, dominated by Australian-owned New Zealand Steel, which
cried foul about the Chinese government help last year.
The ministry's June 9 essential facts and conclusions report found Chinese imports were undercutting NZ Steel prices,
but couldn't be blamed on government support for Chinese manufacturers, which was minimal at most. Rising Chinese steel
coil imports have moderated over the past two years and MBIE noted there hadn't been "a significant increase in the
volume of imports of the subject goods in either absolute terms or relative to production or consumption in the domestic
market."
NZ Steel, owned by ASX-listed BlueScope, filed a complaint with MBIE last year and mobilised a political campaign
accusing Chinese government subsidies of causing material injury to the domestic industry.
In March, Commerce Minister Jacqui Dean wasn't convinced there were grounds for provisional measures to be imposed on
Chinese imports and she is expected to make a final decision today.
"MBIE's overall conclusion, based on the subsidy levels established, is that while there is evidence of injury to the
domestic industry attributable to the price effects of imports from China, material injury to an industry is not being
caused by the subsidisation of imports from China," the report said.
NZ Steel's average selling price shrank 25 percent between September 2011 and June 2016 as the local company tried to
match cheaper Chinese imports, which the company said was its strategy of trying to keep market share. While it lost
market share between 2012 and 2014, it has since regained that ground, the report shows.
The company's earnings also showed steady and significant decline, which MBIE said "correlates significantly with and
can be attributed to price undercutting, price depression and price suppression," but not linked to Chinese subsidies.
New Zealand importers who took part in the investigation were largely against imposing duties on Chinese steel imports,
which would force them to lift their own prices and potentially push up the cost of construction.
MBIE started its investigation with little fanfare in December, simply noting it in the government's gazette without a
public statement. Chinese steel imports have been a bone of contention around the world as US and European producers
claimed their own industries were being undercut by dumping of subsidised steel in their markets. When New Zealand was
dragged into the matter last year there were claims Kiwi firms could face a backlash if the government pursued an
anti-dumping probe.
The ministry found it difficult to secure responses from Chinese manufacturers, with just one of seven responding to its
questionnaire, while Chinese government officials said they could only provide general answers "due to the lack of
cooperation with the investigation by such producers". Several intermediary exporters provided information, and MBIE
also used on US, European and Australian investigations and World Trade Organisation documents.
(BusinessDesk)
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