US-China trade war could lead to dumping of Chinese steel

India fears that China may soon start shipping its surplus steel to other countries after the United States raised tariffs on Chinese goods due to the escalating trade war between the world's two largest economies.

As a result, the Indian steel industry asked the Indian government to impose so-called protective duties of 25 percent to protect it from rising imports. They will be imposed on steel, which the government believes has been dumped in India at below cost.

Since last year, China and the United States have been embroiled in a trade conflict as Washington tries to fix the trade balance currently tilted in favor of Beijing. Both countries raised or threatened to raise tariffs on each other's goods, steps that could re-attract trade flows and that threatened to undermine the global economy.

“China has surplus (steel) capacity and fears that they could reroute it through other countries such as Vietnam and Cambodia to India,” said an Indian government source who is directly aware of this.

“The steel sector is vulnerable,” the source said, refusing to be identified due to the delicate nature of the discussions.

India, the world's second largest steel producer, became a net importer in the year ended March 31, 2019, after a three-year hiatus. This is because the country is unable to produce high-quality steel and has lost some of its global customers due to cheaper exports from China, Japan and South Korea.

“China, Japan, Korea, which are major exporters to the US, Europe and Canada, are also redirecting steel to India due to trade activities,” said JSW Steel Ltd. Managing Director.