Steel Industry Welcomes Thick Plate Anti-Dumping Tariffs, Hot-Rolled Steel Sheets Show Diverging Views

Investigation of Chinese and Japanese Products Expected Next Week
Hyundai Steel Files Complaint, POSCO Remains Neutral
Trade Commission Probe May End if POSCO Opposes
POSCO Says "No Position to Disclose Yet"
Opposition from Post-Processing Steel Companies Also a Factor

The Trade Commission of the Ministry of Trade, Industry and Energy, which preliminarily ruled that anti-dumping duties of up to 38% should be imposed on Chinese hot-rolled thick plates, is reportedly planning to initiate anti-dumping investigations on Chinese and Japanese hot-rolled steel sheets as early as next week. The aim is to examine whether the domestic steel industry is being harmed by low-priced supplies, similar to the case of Chinese thick plates. However, unlike the welcoming stance on the imposition of tariffs on Chinese thick plates, domestic steelmakers have shown lukewarm reactions to the investigation of steel sheets, drawing attention to the background. Some predict that the investigation may not be easy due to disagreements within the steel industry.

According to related industries on the 21st, Hyundai Steel, a domestic steel sheet manufacturer, filed a complaint with the Trade Commission last December, claiming that China and Japan are supplying hot-rolled steel sheets at abnormally low prices. However, another maker, POSCO, is reported to hold a neutral stance, unlike Hyundai Steel.

POSCO's position is of interest because if it opposes, the investigation will be terminated regardless of Hyundai Steel's complaint. The investigation is divided into a preliminary investigation and a main investigation. At the preliminary investigation stage, the Trade Commission seeks consent from more than 50% of the suppliers. Currently, the domestic hot-rolled steel sheet makers are Hyundai Steel and POSCO. If one side opposes, the investigation cannot proceed. Ultimately, POSCO holds the key to anti-dumping regulations on hot-rolled steel sheets. A POSCO official said, "We have no position to disclose until the announcement of the investigation commencement."

POSCO's lukewarm response is interpreted as being due to its relationships with clients. Hyundai Steel has secured huge customers such as Hyundai Motor and Kia, while POSCO's export ratio to Japan reaches 20%. It is difficult for POSCO to voice direct opinions on anti-dumping regulations on Japanese hot-rolled steel sheets. There is also a difference in operating profit margins. POSCO's operating profit margin last year was 3.92%, whereas Hyundai Steel's was only 1.4%.

Hot-rolled steel sheets refer to steel plates processed to a thickness of 3mm by heating flat semi-finished products (slabs) made from molten steel at high temperatures. They serve as basic steel materials for most plate products, including cold-rolled steel sheets, galvanized steel sheets, color-coated steel sheets, and steel pipes. In Korea, blast furnace companies such as POSCO and Hyundai Steel produce them, and post-processing companies like Dongkuk Steel and SeAH Steel process and sell the products.

The industry estimates that POSCO and Hyundai Steel produce about 3,000 tons of hot-rolled steel sheets annually. POSCO and Hyundai Steel use more than 70% of this volume internally and supply the remainder to post-processing companies.

Hyundai Steel Dangjin Steelworks. Asia Economy DB

Hyundai Steel argues that regulation is necessary because the hot-rolled steel sheets supplied to post-processing companies (in the low 800,000 KRW per ton range) are losing price competitiveness against low-priced Japanese and Chinese products (in the mid to high 700,000 KRW per ton range). A company official emphasized, "We understand the need to coexist with post-processing companies, but the market is being disrupted and business conditions are worsening because Japanese and Chinese products are coming in too cheaply."

Opposition from not only POSCO but also post-processing steel companies is another variable. It is said that they have formed a united front under the banner of ‘anti-Hyundai Steel.’ An industry insider said, "For exports, it is necessary to diversify purchasing sources and negotiate well. With tariffs imposed by Trump, we need to increase exports focusing on competitively priced products, so conducting anti-dumping investigations on Chinese and Japanese hot-rolled steel sheets is like a secondary battery company refusing to import lithium."

There are also criticisms that Hyundai Steel's complaint is out of step with global trends. The European Union (EU) first imposed tariffs on processed hot-rolled steel sheets such as color-coated steel sheets in 2011, followed by galvanized steel sheets in 2021, and only began anti-dumping regulations on hot-rolled steel sheets in June last year. This is due to concerns that imposing anti-dumping regulations from basic materials could lead to increased raw material costs and loss of product price competitiveness.