Korea to probe Chinese, Japanese steel imports over anti-dumping claims

South Korea is set to launch an anti-dumping investigation into hot-rolled steel imports from China and Japan, according to government and industry sources on Wednesday. The probe could lead to the termination of their non-tariff policy on these products and intensify trade tensions.

The Ministry of Trade, Industry and Energy (MOTIE) decided to initiate the probe following a petition filed by Hyundai Steel Co. in December.

The country’s second-largest steelmaker alleged that Chinese and Japanese steelmakers – including Baowu Steel Group, Nippon Steel Corp., JFE Steel Corp. and Kobe Steel Ltd. – have been selling hot-rolled steel in South Korea 10-15% lower than domestic prices and 12-37% below their home market rates.

If it finds evidence of dumping practices, South Korea is expected to impose tariffs on these imports, similar to existing duties on cold-rolled steel imports.

The government is expected to publish the launch of the investigation in its electronic gazette next week, sources said.

A spokesperson of the trade ministry said: “The decision to launch a formal investigation is still under review and no final determination has been made.” 

RISKS OF MOUNTING TRADE TENSIONS

Amid weakening domestic demand, China and Japan have ramped up steel exports to South Korea, where shipments have entered duty-free under the Regional Comprehensive Economic Partnership (RCEP).

They have undercut South Korea’s major steelmakers, including POSCO Holdings Inc. and Hyundai Steel as domestic buyers increasingly opt for cheaper alternatives.

Meanwhile, there are risks that the investigation could escalate trade tensions. The Japan Iron and Steel Federation has warned that Tokyo may consider raising trade barriers against South Korean products if Seoul proceeds with anti-dumping tariffs.

Write to Ji-Eun Ha and Kyung-Kyu Kim at hazzys@hankyung.com

Yeonhee Kim edited this article.