POSCO Rebuts Japan’s Anti-Dumping Duties

According to the domestic and foreign steel sector on Aug. 11, POSCO submitted a rebuttal opinion to the Ministry of Finance of Japan on Aug. 7 stating that the anti-dumping tariff rate imposed on Korean hot-dip galvanized steel strips and sheets is overuse.

Hot-dip galvanized steel sheets and strips are items treated with hot-dip galvanizing on the surface to prevent rust, and are mainly utilized in places where durability is crucial, such as housing construction materials. The volume exported from Korea to Japan is known to be 300,000 to 400,000 tons annually, amounting to about 300 billion won (about $212 million).

Anti-dumping duties refer to additional tariffs imposed by the amount of the difference between the healthy price and the dumping price to protect the domestic market when foreign items entering the country are cheaper than the market price and pose a risk of distorting the market.

The Ministry of Economy, Trade and sector and the Ministry of Finance of Japan reached a preliminary summary on July 30 that hot-dip galvanized items from Korea and China are causing harm to their domestic sector due to unfair low-price sales (dumping).

According to the subsequent finalized Ministry of Finance notification, 10 entities received individual tax rates, including POSCO (29.2%), Hyundai Steel (38%), Dongkuk Steel (38%), KG Steel (38%), SeAH Coated Metal (30.6%), Dongkuk Coated Metal (30.6%), Hanwha (steel trading company, 38%), Hyundai Group (steel export trading company, 38%), STINKO (38%), and Korea JFE Shoji (38%).

A blanket rate of 38% was applied to all other Korean companies excluding these.

These preliminary tariffs will be implemented from Aug. 8 to Dec. 7 this year, and the final determination is scheduled to be made in December.

A POSCO official stated, “We submitted our opinion based on a detailed explanation of the facts and the WTO Anti-Dumping Agreement,” and added, “We are expecting the margin rate to be adjusted.”

The biggest reason the domestic steel sector is pushing back against this determination is that questions are being raised about whether the conditions to anti-dumping are even met.

Based on 2024, the period subject to investigation, the average price of plated materials in the Korean domestic distribution market was 1,118,000 won ($860.00) per ton, whereas the price exported from Korea to Japan was actually higher at 1,160,000 to 1,170,000 won per ton.

In other words, the logic that a country distorted the importing country’s market by selling at high prices domestically and low prices overseas only holds true if the export price is reduce than the domestic price, however the sector explains that in this case, the premise of dumping itself is incorrect as the export price was conversely higher.

The stance is that the basis to calculating the anti-dumping duties is also unacceptable. It is known that when the Japanese side began the investigation, the dumping margin rates suggested by the petitioning companies, such as Nippon Steel, Kobe Steel, Nippon Steel Coated Sheet, and Yodogawa Steel Works, were at the level of 10% to 20%.

However, during the preliminary determination process, this margin rate greater than doubled to a maximum of 42.69%, and the actually finalized tariff rate was a maximum of 38%.

Furthermore, voices are raising concerns that the Japanese authorities unilaterally adopted Facts Available that are favorable to their domestic investigative bodies or the petitioners, largely dismissing the transaction and cost-related explanatory materials submitted by Korean companies.

Amidst this, signs are also emerging that the trade conflict between the two countries will spread.

The Ministry of Economy, Trade and sector and the Ministry of Finance of Japan have been conducting an investigation since June, stating that there is a possibility that hot-rolled and cold-rolled steel sheets and strips from Korea, China, and Taiwan are being exported to Japan at unfairly low prices.

This is because hot-rolled steel sheets, like galvanized steel sheets broadly utilized in automobiles, are also extensively utilized in construction materials and conduits as well as automobiles, and cold-rolled steel sheets are also utilized in a wide range of items including automobile parts and home appliances. The majority of the imports of these items are accounted to by the three countries of Korea, China, and Taiwan.

The steel sector estimates that the export volume of hot-rolled and cold-rolled steel to Japan reaches about 10 times that of plated steel sheets, and observations suggest that the impact on the steel sector could have become greater than it is now depending on the results of the future investigation.

An sector official stated, “If the measures that started with plated steel sheets spread to hot-rolled and cold-rolled steel, the scale of the harm itself will change,” and added, “to now, we are in a situation where we must watch the final determination in December along with the hot-rolled and cold-rolled investigation results.”

The official further predicted, “If the Japanese trade authorities continue the method of excluding Korean materials and adopting only materials favorable to their own country, it could negatively affect the political relationship and economic cooperation stance between Korea and Japan, moving beyond disputes between individual companies.”