Chicago: China, the largest steel producer, has spent $27 billion (Rs1.06 trillion) on energy subsidies for its steel industry since 2000, allowing producers to undercut overseas competitors, the Alliance for American Manufacturing said.
The Asian nation provides thermal and coking coal, electricity and natural gas subsidies for its steel makers, according to a report from University of New Haven Professor Usha Haley, commissioned by the Washington-based trade group.
Steel producers in the US and Europe are complaining that China is ignoring commitments made when it joined the World Trade Organization by illegally subsidizing its steel industry and unfairly putting overseas producers at a disadvantage.
China exported about 5.4 million tonnes (mt) of steel to the US in 2006, about double the amount a year earlier, contributing to a decline in US prices.
“Chinese subsidies exist, they are enormous and they are shaping the global steel market,” Haley said in the report. “China has identified steel as a strategic industry, and both the central and provincial governments have decided to ramp up steel production with massive subsidies.”
China has grown from a net importer of steel before 2005 to the world’s largest steel exporter, accounting for about 40% of the global market. From 2000 to 2006, China’s total energy subsidies to steel grew more than 14-fold, the report said.
China produced 422.7mt of steel in 2006, according to the International Iron and Steel Institute. Japan is the world’s second largest steel producer, with output of 116mt in 2006. The US is third with 98.6mt.
US Steel Corp. and Nucor Corp., the two largest US-based steel producers, rose in New York on 21 December after the China Securities Journal reported that China was planning to raise export tariffs on steel products to help deter exports. Duties on hot-rolled coil and long-steel products will be increased to 15%, from a range of 5% to 10%, the Journal said.
A July report by US law firm Wiley Rein Llp., on behalf of industry groups including the American Iron and Steel Institute, said China has granted more than $52 billion in subsidies to the industry.
Incentives provided to Chinese steel makers include $17.3 billion in loans and credits and about $18.6 billion in equity, the law firm had said.