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An official from the Ministry of Commerce (MOFCOM) said that dramatic changes had happened in the supply-demand situation after the anti-dumping decision was made.
"It is not necessary to impose the anti-dumping tariff as China is short of the coil," he said.
This was the first anti-dumping case stopped by the market situation, the official said.
The decision was made after the ministry opened a public hearing on June 1 this year on whether to continue anti-dumping duties on cold-rolled steel coil, an important material for China's prospering industries such as automotive, home electric appliances, machinery and construction.
The ministry ruled on September 23 last year to impose an average anti-dumping duty of 9 percent on cold-rolled steel coil but the implementation was delayed to January 14 this year because domestic market supply was short then.
An official from the bureau of fair trade for import and export of the ministry said when the anti-dumping investigation begun, supply outstripped demand in both international and domestic market but the situation was now reversed.
Many domestic users of cold-rolled steel coil have strongly complained that domestic supply can not feed their demand and that high prices have damaged their competitiveness.
The high prices also give a wrong signal to investors, which go against the country's efforts to curb blind investment in steel industries.
Investors are planning to build another 21 production lines with an annual capacity of 25 million tons.
The current domestic capacity is 12 million tons and the demand is for about 21 million tons.
The price for cold-rolled steel coil surged to 5,602 yuan (US$677) per ton from 4,982 yuan (US$602) on January 14, the day duties were imposed.
Representatives from foreign exporters say they believe the price will remain high given the strong demand in China.
They said the dropping of anti-dumping duties will not put domestic producers - who have enjoyed good profits - in danger.
"Dropping the duties will decrease their profits a little but help local users to gain products at reasonable prices," said Li Li, a partner from the Zhonglun Law Firm. He said foreign exporters would not dump their products when the duties are removed since demand is strong and prices are high in their own countries.
Gu Qing, manager of the import and export section of LG Philips Displays, welcomed the decision, saying the company has been suffering from supply shortages.
The company, a colour tube producer, usually consumes 2,100 tons of cold-rolled steel coil every month, 1,600 of which is provided by exporters in South Korea.
"But we can only afford 1,000 tons of imported products because of the imposed duties while domestic producers can not offer more," Gu said.
(China Daily September 10, 2004)
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