Economy, Business And Markets

Steelmakers Call on Gov’t to Confront Dumping

Steelmakers Call on Gov’t to Confront DumpingSteelmakers Call on Gov’t to Confront Dumping

The looming threat of underpriced steel imports has turned into a major concern for Iranian steelmakers who are already struggling with numerous domestic hassles. Amid stagnated housing market and increasing production costs as a result of economic sanctions over Iran’s nuclear energy program and increasing energy prices, Iranian steel manufacturers expect the government to take proper measures, mostly by imposing anti-dumping duties on imports, to prevent yet another burden on the currently feeble steel sector.

CEOs of three prominent Iranian steel companies, Isfahan’s Mobarakeh Steel Co., West Alborz Steel Complex and Yazd Rolling Mill, wrote articles in the Persian daily Donya-e-Eqtesad on Monday, urging the government to take prompt action.

Dumping is a policy based on which manufacturers export a product to another country at a price either below what is charged at home or even below the cost of production. China—with steel production twice as much as the aggregate production of other countries—is struggling with a slowdown in construction which has led to a sharp fall in domestic steel demand. Accordingly, the country has decided on cheap-selling the surplus steel to consumers abroad.

However, China is not the only country having to lower the price of exported steel. Russia and Ukraine have also been doing the same. Political disputes between the two neighbors, along with sanctions imposed by the United States on Kremlin, have led to a nosedive in ruble’s value, resulting in lower prices of steel produced in the countries’ giant steel companies.

Anti-dumping and countervailing measures are also embedded in World Trade Organization regulations. The policy has been used by WTO members on numerous occasions. WTO has formed a committee tasked with settling disputes between WTO members over dumping and anti-dumping allegations. If the committee confirms that the price of an exported commodity is at an unreasonable level, it authorizes the country to which the commodity is exported to impose high tariffs to protect domestic industries.

Steelmakers in the United States—the world’s pioneer of free trade and one of the most influential members of WTO—have been hurt by China’s cheap exports. Prominent manufacturers United States Steel Corp., Nucor Corp., Steel Dynamics Inc., ArcelorMittal USA, AK Steel Corp. and California Steel Industries filed a complaint early in June, seeking punitive tariffs for the alleged unfair pricing of imported steel from China, India, Italy, South Korea and Taiwan.

The usage of anti-dumping policies has also been popular in Iran’s neighboring countries. Turkey, for instance, has curtailed importation of rolled steel by imposing duties on the product. The country adopted a policy to reduce production of raw steel on the one hand and import cheap billet and slab from China, Russia and Ukraine on the other to use as raw material for rolled steel production. Turkey is now one of the major producers and exporters of rolled steel in the world.

According to many experts, anti-dumping policies are most effective when implemented at the right time. Immediate action on the part of the government is needed to curb steel imports from Turkey, Russia and Ukraine via Iran’s northern borders and seaborne imports from China via southern ports. This may be the reason why Iranian steelmakers are already sounding the alarm on import of underpriced steel.

Without the government adopting such pro-manufacturing policies, annual production capacity of 55 million tons from the current 14.5-16 million tons (according to estimates by the Parliament’s Industries and Mining Commission) by 2025, as targeted in Iran’s 20-year Vision Plan, seems like a farfetched goal.