China's steel makers are being urged to diversify their overseas markets to prevent trade rows with other countries.

Luo Bingsheng, vice-chairman of the China Iron and Steel Association, said domestic steel producers should find more destinations to export to try to avoid charges of dumping, the act of getting rid of excess goods cheaply in an overseas market.

China's steel exports have been growing rapidly since last year and focusing on regions such as South Korea, the United States and the European Union (EU), creating the risk of being accused of dumping.

China's exports of steel products rocketed by 154 percent year-on-year to 11.6 million tons in the first half of this year, according to statistics from the steel association.

South Korea, the US and the EU accounted for 46 percent of the nation's exports.

Current conditions "have raised our concerns," Luo said.

"The steel association has had discussions with its South Korean counterparts and is arranging communication with those from the US and the EU," he said.

The steel association has suggested domestic producers should be "self-disciplined to limit exports to a certain big destination" to avoid trade disputes, he added.

In the past few years Chinese steel makers have been accused of dumping many times by other countries.

Luo said the steel association must also "keep close tabs" on the import of steel sheets from Russia and Ukraine at very low prices.

Anti-dumping measures will be taken if necessary, he indicated.

"We have established an early-warning mechanism for the nation's steel exports and imports," he said.

An official from the international trade unit of the Shougang Group - one of China's biggest steel groups, based in Beijing - said:" We have been exploring more overseas markets."

To diversify overseas markets is the right direction for Chinese steel makers, according to Liu Wenlu, an analyst from the Shanghai Steelhome Information Technology Co Ltd, a steel industry consultancy.

However, Liu said: "It will take domestic steel makers some time to penetrate new overseas markets as they don't have enough sales networks now."

It will cost a lot to build up such networks in new overseas markets, he added.

Luo predicted China's exports of steel products will reach 22 million tons this year, up from 14.2 million tons in 2004.

The robust growth in China's steel exports since last year is largely due to the higher prices in the international steel market compared to the domestic market, according to industry officials and analysts.

The average steel price in the international market was 9.5 percent higher than China's domestic market at the end of June.

(China Daily August 2, 2005)