Steelmakers cry foul on Chinese policies

Chinese subsidies are unfair, a report says.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
The closing of a Sharon pipe mill should warn the nation's leaders about what will happen if they don't take action against Chinese steel imports, industry officials said.
The industry is enjoying strong demand now, but domestic producers could be devastated when demand slows, officials said Thursday in announcing a new study on the Chinese steel industry.
The report -- titled "The China Syndrome: How Subsidies and Government Intervention Created the World's Largest Steel Industry" -- charges that China has unfairly supported its steel industry as it grew to acquire 31 percent of the world steel market.
Wheatland Tube made the same charges in March when it announced that it was closing its Sharon pipe mill, eliminating 80 jobs. The company, which also has plants in Wheatland and Howland, blamed the closing on an explosion of Chinese pipe imports.
Roger Schagrin, a lawyer who has represented steel producers in trade cases, said the nation is risking more mill closings by not taking action against the Chinese. The closings could be a repeat of the late 1990s when steel imports forced numerous domestic steel producers and fabricators to close or file for bankruptcy protection, he said.
Daniel DiMicco, chief executive of Nucor Corp., said steel producers today are efficient and can compete -- if other countries are playing by the rules.
The industry officials hope the report will spur U.S. officials to take action through the World Trade Organization to stop Chinese subsidies of steel and other industries.
"Since 2000, we have lost over 3 million manufacturing jobs in the United States, directly related to these subsidies and directly related to China," DiMicco said.
Complaints about Chinese
The report says that most of the steel produced in China comes from companies controlled by the Chinese government.
Chinese national steel policy provides steel companies with tax reductions, cash grants, land grants, raw materials at reduced costs and preferential loans, the report said. Also, the government has forgiven debt of steel companies or traded it for ownership interests in companies, it said.
Much of these activities are in violation of standards that China agreed to when it joined the WTO, officials said.
They said U.S. Trade Representative officials and member of Congress are to begin talks with the Chinese next month on trade issues.
The report said China's steel capacity rose 170 percent from 2000 to 2005 and exports rose 140 percent. It said China had 414 million tons of capacity last year with an additional 150 million tons of capacity either planned or under construction.
The U.S. has 100 million tons of capacity.
The report was prepared for the American Steel & amp; Iron Institute, Steel Manufacturers Association, Specialty Steel Industry of North America and the Committee on Pipe and Tube Imports.
shilling@vindy.com