The Korean steel industry is facing new challenges as protectionism spreads.

According to the Korea Trade-Investment Promotion Agency, or Kotra, yesterday, the U.S. steel industry could take legal action against dumping, or selling items below cost. This is a red flag for Korean steel producers. Just last month, the European Confederation of Iron and Steel Industries, or Eurofer, dropped an antidumping lawsuit against Korean stainless steel products.

The primary target for the U.S. antidumping move is China’s steel exporters, according to the Korean trade agency. However, Korea could get entangled in the dispute considering its presence in the market. Korean steel has a substantial position in the U.S. with a market share of 10.9 percent. In January, 235,600 tons of steel were shipped to the U.S., which is a 130 percent increase year-on-year.

The growth of the local steel industry might also fall under the scrutiny of the antidumping investigation because China saw its annual steel exports to the U.S. fall 10.2 percent to 396,100 tons in January and steel imported from Canada, the second-largest steel exporter to U.S., increased by just 5.3 percent year-on-year.

If the world strengthens its protectionist moves, the Korean steel industry as well as petrochemical producers will probably be the most heavily affected areas, Samsung Economic Research Institute said in a recent report.

Despite protests from foreign markets including Europe, the U.S. House of Representatives in January approved the controversial “Buy American” steel provision that limits government infrastructure projects to using only U.S. steel and iron.

And Indonesia has taken measures to regulate steel imports. Its government earlier this month started an antidumping investigation on hot rolled steel coil imported from Korea and Malaysia.

The Indonesian government last year excluded Japan, Korea and Malaysia from an investigation into countries accused of dumping practices.

The Kotra report said if Korea and Malaysia are included in the investigation, the court might rule against the two countries on antidumping.

Meanwhile, Posco Research Institute advised Korean steel companies to globalize their products and diversify. Noting that in the last 30 years only 13 of the world’s leading 30 steelmakers survived, the report advised Korean steelmakers to focus on developing high-quality products like Nippon Steel.

By Lee Ho-jeong [ojlee82@joongang.co.kr]

March 25, 2009

Source: joongangdaily.joins.com