Mounting pressure on governments to impose protectionist tariffs is not likely to halt surging Russian steel exports because widespread foreign demand can blunt the impact of scattered import duties.
A sharp slowdown in global trade has also made it difficult for countries to prove domestic producers are under threat from imports, even though an increasing number of governments are considering tariffs.
The London-based Iron and Steel Statistics Bureau says global steel production fell 22 percent year on year in January through May, while exports by the world’s top 10 exporters dropped 30 percent in the first quarter.
“We’ve seen a slowdown in global trade and I don’t think there is any question that this makes it more difficult for domestic industry in the U.S.A. and elsewhere in the world to file dumping cases,” said David Phelps, president of the American Institute for International Steel.
Ordinarily, tariff actions increase during recessions as politicians respond to pressure from local industries to preserve jobs by blocking foreign competitors’ access, and from Washington to Beijing, anti-dumping investigations and other measures are on the rise.
In May, the WTO noted that anti-dumping investigations rose 17 percent year on year in the second half of 2008.
While some analysts argue that the situation is destined to change as the global downturn worsens, Morgan Stanley’s Dmitry Kolomytsyn maintains that Russia, the world’s fourth-largest steel producer, will continue to thrive.
“Risk remains but is less of a concern given the wide dispersion of Russian steel exports across countries and continuing hesitation on the part of some governments to increase duties,” he said, adding Iran, Turkey and Taiwan were Russia’s top export markets for long steel in the first quarter.
In recent months, almost every major Russian steel producer has announced that first-quarter exports increased compared with the fourth quarter.
Some analysts, however, are convinced that the pace of Russian steel exports to China could raise hackles among domestic producers there.
Thus far, China’s sole move has been a June investigation into Russian and U.S. electrical steel, though a recent Citibank report cited industry newsletters reporting that Beijing had also ordered a probe of Russian flat steel imports.
“It’s surprising that Russian steel exports have endured as long as they have, and we still question whether it is sustainable,” said Michael Kavanagh, UralSib senior metals and mining analyst.
“Don’t be surprised when the Chinese producers scream to the government for protection.”
But Morgan Stanley’s Kolomytsyn said that, despite recent inroads, Russian steel exports remain a small part of the overall Chinese market.
“Russia is selling nothing compared to how much China is consuming or producing,” he said, adding that this makes it difficult for Beijing to make a successful anti-dumping case.
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