The Ministry of Commerce Tuesday opened a public hearing on whether to continue anti-dumping duties on cold-rolled steel coil, an important material in prospering industries like automotive, electric appliances, machinery and construction.

This is the first review on anti-dumping measures initiated by the ministry itself.

An official from the bureau of fair trade for import and export of the ministry said the review is necessary because dramatic changes have happened in the supply and demand situation after the anti-dumping decision was made.

When the anti-dumping investigation began, supply outstripped demand in both international and domestic markets but now the situation has reversed.

The ministry ruled on September 23 last year to impose an average anti-dumping duty of 9 per cent on cold-rolled steel coil from South Korea, Russia, Ukraine, Kazakhstan and Taiwan but the implementation was delayed to January 14 this year because domestic market supply was short then.

Many domestic users of cold-rolled steel coil have complained strongly that the domestic supply cannot feed their demands and high prices have damaged their competitiveness.

The high prices will also give the wrong signal to investors, and also 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 present demand annually is about 21 million tons.

Future price movement will be an important index for the ruling, which was a focus at the hearing.

The price for the cold-rolled steel coil surged to 5,602 yuan (US$677) per ton on April 14 from 4,982 yuan (US$602) on January 14, the day duties were imposed.

But it dipped to 5,059 yuan (US$611) in response to the government measures to control investment.

Representatives from the foreign exporters say they believe the price will stay high given strong demand in China.

They said the dropping of anti-dumping duties will not put the domestic producers, who have enjoyed good profits, in danger.

"Dropping of the duties will decrease profits a little but help the local users to gain products at reasonable prices," said Li Li, partner from the Zhonglun Law Firm.

He said the foreign exporters will not dump products even when the duties are removed because demand and prices are high in their own countries.

Wang Xuehua, a lawyer from Beijing Huanzhong & Partners who represent domestic steel companies, said the price will be lower because of worries about government moves to curb over-heating industries.

"If the department decides to drop duties when the price is dropping, it will be a big blow to domestic steel producers," Wang said.

In addition, Wang said it was too soon to draw conclusions as the duties had been imposed for less than five months.

Gu Qing, manager of import and export at LG Phlips Displays, said the company has been suffering from the supply shortage.

The company, a color tube producer, usually imports 2,100 tons of cold-rolled steel coil every month, 1,600 of which is provided by exporters in South Korea, and 500 tons from Shanghai Baosteel and Wuhan Steel.

"But we can only afford 1,000 tons of imported products because of the imposed duties while the domestic producers can not offer more," Gu said.

Many users have to suspend their production because of the supply shortage.

According to the anti-dumping hearing rules, the ministry should produce a result in one year.

An official said they will try to give a ruling as soon as possible.

(China Daily June 2, 2004)