SAO PAULO, Sept 27 (Reuters) - The Brazilian government closed an investigation Thursday into the dumping of flat steel products by five countries after finding that the practice did not hurt local mills.

The probe, which local steelmaker CSN filed with an Industry and Trade Ministry body in October 2010, had sought evidence that exports of rolled and zinc-coated flat products from Australia, South Korea, China, India and Mexico were entering the Brazilian market at prices below production costs.

CSN, the nation's second-largest producer of flat steel products, had the support of larger rival Usiminas and the local unit of ArcelorMittal, the world's biggest steelmaker, to push for the investigation.

In December 2010, the ministry body known as Decom, an acronym for Commercial Defense Department, began to look into the allegations.

"Even as the investigation has found evidence of the existence of dumping in exports of coated flat steel products from Australia, China, India and Mexico, it didn't come to the conclusion that the domestic steel industry was affected by that as a result," Decom said, according to a report in the government gazette on Thursday.

The decision comes amid aggressive steps by President Dilma Rousseff to shield local manufacturers that are losing domestic market share to foreign competitors. Some of those measures included tax and interest-rate reductions, greater access to state-sponsored subsidized funding, and hikes in import tariffs for over 100 different goods.

Evidence showed that imports of coil and similar products did not affect the already strong market position of local steelmakers in Brazil. In the decision, Decom cited a local steel distributor which resorted to imports from some of those countries because CSN, which has almost full control of the domestic coil market, tightened payment deadlines.

Some of the foreign companies mentioned in the probe include Dongbu Steel, Union Steel and Hyundai Hysco from South Korea, the Mexican unit of South Korea's Posco , China's Baosteel, and Australia's Bluescope Steel .

For decades, prices of local steel products enjoyed premiums of as much as 35 percent over international prices as government tax breaks and high tariffs curbed demand for imported bars, rods, hot-rolled coil and plates.

But the phasing out of price premiums, which began to take place at the time CSN requested the investigation, plunged some local mills into their worst crisis in years.

Steelmakers in Brazil have been grappling this decade with global steel overcapacity and weak prices, a strong local currency and a domestic output glut that makes it harder to export excess production.