Economy, Business And Markets

Chinese Fear Grips Steel Market

Chinese Fear Grips Steel MarketChinese Fear Grips Steel Market

Turkey, Egypt, and Vietnam have imposed high tariffs on Chinese crude steel and steel products. There also have been similar calls by steelmakers in the Arab countries in the Persian Gulf region. Now, Iranian steelmakers insist on their demands for a similar measure to be taken by the government to save the steel industry, reported Fooladnews.

Apart from the United States that used the import tariff as leverage against the Chinese steel exports (the US recently raised tariffs on China’s steel to 40%), Turkey also imposed a 30% tariff on Chinese steel products and Vietnam did the same with raising its tariff rate to 37%, said Reza Shahrestani, a member of the Iranian Steel Producers Association (ISPA).

Now, the Chinese seem to have targeted Iran as a lucrative market for their cheap steel considering the fact that steel production costs in Iran are high, the final prices are not favored by the manufacturers, and the price of domestically-produced steel is higher than that of imported products.

That is why the Iranian steel manufacturers have frequently asked the government to impose import tariffs of at least 25% for different types of girders, 35% for bundles of rebar, and up to 15% for billets and ingots. Both the steelmakers and market analysts expect the administration to use the tariffs on imports as a powerful tool by which other governments can control the market.  

Many countries see Chinese steel as a serious threat against their domestic steel industries and have taken practical measures to confront such dumping policy. But despite numerous meetings held with the officials at the ministry of industry, mine, and trade, no specific figure for the tariffs has been agreed upon yet by the Iranian government.

The steel market is currently going through a difficult period as it finds neither adequate supply nor sufficient demand. Such a disappointing situation means that, as the world’s 15th largest steel producer, Iran needs to take immediate action to save its steelmakers from suffering further losses. Steel market experts believe the administration should think of tariffs that result in fair prices in the market.

They say there must be a separate tariff rate imposed on imported crude steel and imported steel products.

Currently, all the steel plants in the country are working at 30% of their full capacity, while the melting plants barely produce 50% of their nominal output because, according to steel market experts, production under the current situation is not economical.

This year, around 15% of the production by the steel manufacturing units has gone into warehouses.

If the administration does not impose tariffs on imported steel in the current critical situation, the country will always depend on imported steel in order to fulfill its needs, said Shahrestani.

Many countries so far have filed complaints at the World Trade Organization against China’s dumping policies.

During the past years, Beijing has been involved in a series of clashes at the WTO over its unfair trade practices. In one such occasion, the EU last August called China’s policy  “unjustified” trade measures, which do not comply with WTO rules and often seem to be motivated by retaliation.