Economy

Chinese steelmakers urged to build plants abroad

(Xinhua)
Updated: 2010-05-12 11:17

SHANGHAI - Chinese officials and experts Tuesday suggested the nation's steel producers set up plants abroad to avoid a rising number of international trade barriers.

Opening steel mills in regions with abundant raw materials and strong market demand abroad would be easier than exporting steel products, as it would bring tax revenues and employment to the areas, Jia Yinsong, an official with the Ministry of Industry and Information Technology, said at an international trade fair for the steel tube industry in Shanghai.

China's steel pipe exporters had been frequent victims of protectionism, said Wang Zhenfu, vice director with the Fair Trade Bureau of Import and Export of the Ministry of Commerce (MOC).

Data from the WTO showed China's steel producers were named in 29 trade disputes since 2007, involving products valued at $6 billion.

The most serious, in which the United States imposed in April anti-dumping duties ranging from 30 to 99 percent on Chinese steel pipes imports used in oil and gas wells, had curbed steel tube exports to the US by more than 80 percent, said Wang.

According to the US Department of Commerce, 37 Chinese firms received a final dumping rate of 29.94 percent, and all other Chinese exporters were subject to a final dumping rate of 99.14 percent.

Wang warned of a risk of losing the US market as the US government was mulling further anti-dumping investigations against Chinese steel pipe exports.

Jia said Chinese enterprises should be aware of the significance of transforming from production exports to capacity exports.

At present, domestic steel enterprises were mainly focused on acquiring mineral resources abroad, but that would become more difficult given global commodity price hikes fueled by a booming market, said Jia.

The costs of energy, raw materials, shipping and rising trade protectionism and pressure for China to appreciate its currency would pose challenges for Chinese exporters, according to a survey conducted by the Ministry of Commerce last month.

Jia said a few of Chinese steel firms, such as Wuhan Iron and Steel Group, had invested in capacity exports. Wuhan Iron and Steel, China's third-biggest steelmaker, announced on April 19 it would team up with Brazil's LLX Logistica S.A. to build a steel plant with an annual capacity of 5 million tons in Brazil's Acu Super Port Industrial District.

Besides focusing on the US market, Chinese steel firms should step up efforts to tap into emerging markets such as South America and the Middle East, said Wang.

Chi Jingdong, vice secretary general of China Iron and Steel Association, encouraged domestic steelmakers to learn from Japanese counterparts, who followed automobile manufacturers abroad, providing with matching steel products from their overseas mills.