South Korea is moving to slap anti-dumping duties on Chinese “fake” color-coated thick steel plates that have been altered after import in a bid to shield local steelmakers from circumvention dumping.
Korea’s Ministry of Economy and Finance on Tuesday announced it has amended the enforcement decree of the Customs Act to allow anti-dumping tariffs on products modified in Korea or elsewhere, if they are found to have dodged existing duties.
The change, announced as a legislative notice, will take effect Sept. 22 after a public comment period.
The decision follows a government’s probe into Chinese steelmakers that painted anti-corrosion coating onto standard thick plates, subject to duties of up to 38%, and declared them as color-coated plates, which are exempt from the anti-dumping tariffs.
The investigation found that once in Korea, importers stripped off the paint and sold them as standard thick plates at steep discounts, undercutting domestic prices.
Such unfair practices have increased since the Korean government started levying 38% anti-dumping duties on regular thick plate imports in April.
Since April, the Korea Customs Service has seized about 8,000 tons of such plates and fined 19 importers after inspections confirmed they were standard thick plates disguised with paint.
A SURGE IN COLOR-COATED STEEL PLATE IMPORTS
According to the Korea Iron & Steel Organization on Thursday, Chinese color-coated thick steel plate imports more than doubled to 3,977 tons in May from 1,633 tons in April and 1,495 tons in March. In June, their shipments hit 2,067 tons.
Chinese pre-painted steel plate imports have rapidly flooded the Korean steel market as importers can easily declare any painted steel with an import code for color-coated plates, defined simply as “painted,” to avert anti-dumping duties.
But the Korean government argues genuine color-coated steel plates require a full production process – rolling slabs into plates, plating, painting and heat treatment – and are intended for shipbuilding or exterior cladding.
The anti-corrosion coated steel plate, however, often shows peeling paint and is unsuitable for such uses.
The altered Chinese pre-painted steel plates were sold at 750,000 won ($540.74) per ton in Korea because they averted the tariffs. The price is 17.6% below that of Korean rivals. Standard thick steel plate imports sell as high as 850,000 won per ton, reflecting the duties.
CALLS FOR TIGHTER RULES
The Korean steel industry, which has been grappling with a surge in cheaper steel imports from China and Japan, is calling for tighter rules against foreign steel dumping.
Industry groups say the loophole stems from the trade ministry’s rules that apply anti-dumping duties only to seven import codes for unprocessed hot-rolled plates, excluding painted or coated products.
South Korea currently levies up to 33.57% on Chinese hot-rolled steel sheet imports and a maximum 25.8% on Chinese stainless steel imports.
The country plans to maintain a 32.7% anti-dumping duty on Chinese H-beams by next year.
The Korean government is expected to investigate the alleged dumping of foreign galvanized and color-coated sheets as well as special steel bars in the Korean market.
“This is a measure to protect the Korean steel industry,” said a government official. “We are stepping up efforts to inspect modified color-coated steel plate imports.”
By Jin-Won Kim and Woo-Sub Kim
jin1@hankyung.com
Sookyung Seo edited this article.
