* U.S., Indonesia among nations taking steps against steel
* Export-reliant Japan, S.Korean steelmakers may be hit
* Chinese mills seen unaffected as local demand remains key
By Manolo Serapio Jr and Yuka Obayashi
SINGAPORE/TOKYO, July 12 Asian steelmakers have
begun cutting exports in the face of growing cross-border trade
disputes, raising the prospect that they may be forced to
curtail production as they grapple with weak domestic demand and
The protectionist steps taken by steel-importing countries
could hit steelmakers from major exporters Japan and South
Korea. But China, which produces nearly half the world's steel,
may only be pushed to curb output if domestic demand shrinks.
From the United States to Indonesia, countries are trying to
stem the flood of imports by slapping anti-dumping duties and
confronting companies deemed to be taking business away from
Last week, a group of U.S. steel pipe makers led by United
States Steel Corp, launched one of the biggest steel trade
cases in years, asking the U.S. International Trade Commission
to stop what it claimed is a deluge of unfairly traded steel
products from nine countries.
Japan, the world's No.2 steel producer, exporting nearly 40
percent of its output, is worried the situation may erupt into a
trade war, and is among major producers taking steps.
"We are refraining from exporting certain products and to
certain areas due to concerns over trade conflicts," said Jun
Kadota, general manager at the main steel unit of JFE Holdings
Inc, the second-biggest steelmaker in Japan and No.9
in the world.
JFE has stopped exporting flat-rolled magnetic steel sheets
and strip to China, for example, he said.
Indonesia too has slapped anti-dumping duties on cold-rolled
coils and sheets from Japan. While Tokyo was not named in the
latest U.S. steel case, American producers argue a weaker yen
currency amounts to an unfair advantage.
"Should other countries accelerate steel exports to areas
where there is strong demand, it may spark off a trade war and I
am afraid that Japan will get caught up because we are an
exporter," said Ryuichi Yamashita, director at Japan's Ministry
of Economy, Trade and Industry.
"Nationalism is increasing and we are seriously concerned
about the trade issue," he said.
Trade disputes tend to rise when producers are confronted by
weak demand at home and those losing money try to find ways to
return to profitability, said Kaye Ayub, senior market analyst
at British steel consultancy MEPS.
"Mills are likely to cut output, or carry out maintenance
stoppages, in the second half of 2013 to tackle trade disputes,"
The global steel market has excess capacity of around 334
million tonnes, of which around 200 million tonnes is in China,
according to investment bank Morgan Stanley.
That glut is pressuring steel prices with global demand only
forecast to grow by 2.9 percent this year, and by a similarly
slow 3.2 percent in 2014, based on estimates by the World Steel
Despite slower demand growth, Chinese crude steel production
remains near a record of about 2.2 million tonnes a day as the
country's producers fight for market share.
Exports account for less than 10 percent of China's total
crude steel output which last year stood at a record 716.5
million tonnes. But they continue to grow, with Chinese exports
of steel products rising 14 percent to nearly 56 million tonnes
in 2012, trumping Japan's 42 million tonnes.
"It seems the trade disputes don't really have much impact
on China's export volume. Chinese steel exports have been at
relatively stable levels since the global financial crisis and
improved in recent years," said Bill Chen, a senior trader with
Smart Timing Steel, a Hong Kong-based exporter that traded
around 500,000 tonnes of steel last year.
"But with the slow recovery in the global economy and
fiercer competition, Chinese steel mills and traders are facing
falling profits. However, I don't see any fall in exports would
really help cut China's steel production or force any
Other countries named in the U.S. case, such as India,
Vietnam and South Korea, said they were watching what happened
with the probe.
"If they lose the case, for sure Vietnamese companies will
face more difficulties in exporting steel overseas, especially
to the United States," said Dinh Huy Tam, general secretary of
Vietnam Steel Association.