The U.S. Commerce Department is expected to launch a formal investigation on Monday into whether Chinese companies shipped steel through Vietnam to avoid import tariffs, the Wall Street Journal reported on Sunday, citing a person familiar with the matter.

The development comes after lawyers for four U.S. steel producers said in September that they would file petitions with the department alleging that Chinese competitors diverted shipments to Vietnam immediately after the U.S. government set preliminary anti-dumping duties on their stainless steel.

The U.S. duties, ranging from 63.86 percent to 76.64 percent, were proposed after preliminary findings showed the imports were being dumped in the U.S. market at below fair value.

The U.S. firms alleged the Chinese steel was modified to be corrosion-resistant and then sent to the United States at Vietnam's U.S. tariff rate, which is lower than for China.

The newspaper said the heart of the issue is whether the steel is modified enough to be a new product made in Vietnam.
The newspaper said a spokesman for the department declined to comment on its story. The department did not immediately respond to a request for comment from Reuters on Sunday.

The U.S. firms that were petitioning the department include ArcelorMittal USA, Nucor Corp (NUE.N), AK Steel Holdings Corp (AKS.N) and United States Steel Corp (X.N)