China's announcement to reduce steel production has allowed the Korean steel industry to take a breath. The Korean steel industry has been facing significant downturns in performance due to sluggish demand from the construction market and the influx of cheap Chinese products.
According to Reuters on the 6th, China announced through its official gazette the previous day that it would "promote the restructuring of the steel industry through production cuts" and said it would "introduce policies and measures to solve structural problems in major industries, and end excessive competition through industrial regulation and upgrades."
Reuters cited analysts as saying, "This is the first time since the National Development and Reform Commission (NDRC) proposed reductions in steel production during the Two Sessions from 2019 to 2024." They reported that these measures are aimed at addressing the issue of overproduction that causes friction in global trade.
Countries around the world are responding to the dumping of Chinese steel with tariffs. South Korea's Ministry of Trade, Industry and Energy requested the Ministry of Strategy and Finance to impose a maximum anti-dumping tariff of 38.02% on Chinese hot-rolled steel plates (thick plates over 6 mm) on the 20th of last month. Vietnam will impose a maximum anti-dumping tariff of 27.83% on certain Chinese hot-rolled coil steel products for 120 days starting from the 7th, and the United States plans to impose a 25% tariff on all imported steel products starting from the 12th.
The steel industry expects that if China reduces its production, the influx of low-cost steel materials into the domestic market will also decrease. A source from the steel industry noted, "China produces about 55% of the world's steel production. If the output decreases, it will help stabilize the market."
According to the Korea Customs Service, imports of steel and steel products from China increased by 44.3% from 7.34 million tons (t) in 2020 to 10.6 million tons last year. The import value also rose by 55.4% during the same period, totaling $11.12326 billion (approximately 16.04 trillion won) last year.