U.S. slaps new duties on Posco, Hyundai Steel

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U.S. slaps new duties on Posco, Hyundai Steel

Korean steelmakers are preparing legal action to respond to the U.S. Department of Commerce’s (UDC’s) decision to slap the maximum 57 percent duty on Korean hot-rolled flat steel.

The decision was based on the U.S. conclusion that the Korean government grants subsidies to the country’s steelmakers so they can sell steel at unfair prices in other countries, though Seoul and Posco both rejected the claim.

Korea’s top steel maker Posco was slapped with 3.89 percent anti-dumping duties and 57.04 percent anti-subsidy duties by the U.S. on Friday local time, while Hyundai Steel, the second largest player, was charged with 9.49 percent anti-dumping duties and 3.89 percent anti-subsidy duties.

An anti-dumping duty is a tariff imposed when a government concludes that foreign imports are priced below fair market value. Anti-subsidy duty aims to offset unfair market trading advantages of subsidized imports.

The tariffs could push Korean players from the U.S. market, especially Posco. Posco has been the largest Korean supplier to U.S. It supplied over 800,000 tons of hot-rolled steel from a total of 1.16 million tons exported to the U.S. last year. The balance was exported by Hyundai Steel.

“It seems the U.S. government thought Posco receives support from the Korean government through slashed electricity rate and various other tax cuts to supply steel at an extremely low price,” a spokesperson from the steelmaker said. “As that is not true, we are looking at legal action against the decision such as filing a petition to the World Trade Organization.”

The ruling could still be overturned by the U.S. International Trade Commission, which will be assessing the actual damages Korean steel caused to U.S. steelmakers. Posco will watch the assessment carefully to decide on future responses to the U.S. government and find ways to redirect U.S. sales to other countries.

Industry insiders worry about spreading protectionism.

It’s not the first time the U.S. imposed tariffs on Korea’s steel. Last month, Washington imposed 64.7 percent tariffs on Posco’s cold-rolled steel, which is used for cars and home appliances. Both U.S. presidential candidates have protectionist platforms.

Among other large trade partners, China has also imposed 37.3 percent anti-dumping duties on electrical steel products from Posco.

“The anti-dumping tariffs could hurt Posco’s sales in the United States but by less than a percent in terms of operating profits since the steelmaker has various sales channels and hot-rolled steel accounts for only about 2 percent of total production volume,” said Yi Hyun-soo, a research fellow at Yuanta Securities.

“However, I think investors today were more concerned of a longer term protectionism trend.”

Posco shares on Korea’s main bourse closed at 214,000 won, down 3.39 percent from the previous trading day while Hyundai Steel fell 3.54 percent to close at 47,750 won on Monday.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]
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