World War over Steel

World steel war is expanding uncontrollably as China following U.S. and EU took a safeguard on imported steel products.

Korean government and steel business is worried about the hit on the steel export from expanding protectionism, though the safeguard of Chain would not influence from the present.

According to government and steel business on the 22nd, China is likely to officially announce that it will levy a high custom duty of 8 to 26 percent on imported steel products according to the 9 categories of goods for 6 months from 24th this month.

Previously, U.S. established a safeguard of 30 percent tariffs on the 14 items of imported steel products from March 20th, and EU also operated a similar import restriction April 3rd.

Southeast Asian countries including Malaysia and Thai along with Japan and Canada are considering the establishment of safeguard measure.

Korean government and steel business think that China’s safeguard would not have much influence, though it will be known after the official announcement of Chinese government.

People think that the export of Korean companies to China would not decrease much, as Chinese companies use steel plates, which covers 80 percent of exports to China, as raw materials, and domestic supply of the plates is not sufficient.

Kim Kyung-Joong analyst from Samsung Securities said, “ Korean firms will take a burden of additional tariffs around 200 million dollars, and the export to China will decrease 10 percent. However, the profit would not diminish, as the price of steel in China will increase. ”

Korea had exported 3.81 million ton of steel products for 1.72 billion dollars to China last year.

Steel industry circles are worried more about the expansion of protectionism than the safeguard of China.

Kim Sung-Woo Trade Team Head of Korea Iron and Steel Association (KOSA) said, “what worries us more than the safeguard measure of China is that steel products lost the market due to the protectionism on steel industry expanding like a domino concentrate in a limited market exerting bad influence on Korean export. ”

In fact, the export of steel goods in the 1st quarter (January to March) decreased 16.4 percent year-on-year at 1.57 billion dollars.

Especially, the export to U.S. originator of world steel war decreased over 42 percent not avoiding the decreasing trend in every country, for example EU (-25 percent), Japan (-21 percent), and Hong Kong (-41 percent).

Meanwhile, U.S. Trade Representative Robert Zoellick announced on the 21st that America would adhere to the safeguard measure on steel in spite of protests from internal societies including EU. Representative Robert Zoellick, who spoke to European Trade Commissioner Pascal Lamy by satellite hookup, implied the possibility of negotiation saying, “the safeguard on steel is a legal measure within WTO rules. Both sides should settle the problem through a neutral mediator. ”

Chi-Young Shin higgledy@donga.com