A Baosteel booth at an industrial show in Shanghai. The largest Chinese steelmaker said it has won a US anti-dumping case involving drill pipes. [Photo / China Daily]

Company's victory sets a precedent for peers to defend their rights

SHANGHAI - Baoshan Iron & Steel Co Ltd (Baosteel) has won an anti-dumping case in the United States involving imports of drill pipes to the country.

Analysts said the result sets a precedent for Chinese steelmakers to defend their interests in overseas markets.

On Wednesday, Baosteel, China's largest steelmaker, said on its website that it had won the case in which some US competitors accused the company of dumping drill pipes in the country. The complaints sparked an anti-dumping and anti-subsidy investigation at the end of 2009.

The US Department of Commerce ruled in August 2010 that Baosteel had a dumping rate of 7.64 percent, but later downgraded it to 2.66 percent. After a year's preparation, Baosteel provided convincing evidence in its defence and was exonerated.

"This is a victory against anti-dumping allegations in overseas markets," said a report in Baosteel Daily, the in-house newspaper of Baosteel.

"The success will not only protect Baosteel's good relationship with its US clients, but also maintain its good reputation in the US market," said the report.

"This is the best result for Chinese producers and exporters since the US started to impose anti-dumping duties against Chinese steel products imports," said the Beijing-based Hylands Law Firm, which represented Baosteel in the case.

According to the law firm, Shanxi Yida Special Steel Group Co Ltd was also cleared of dumping charges.

Both Baosteel and Shanxi Yida have confirmed the facts with China Daily, but neither would comment on the issue.

The drill pipes, used in oil production, are high-end products that involve sophisticated technology in their manufacture. The US is the world's largest oil-pipe market, said Zeng Jiesheng, an analyst from Mysteel.com, a steel industry information provider.

The US drill-pipe market used to be dominated by companies from Europe, Japan, and US domestic producers. Baosteel was the first Chinese company to export the pipes to the US as early as 1997. After more than a decade of development, Chinese steelmakers had gained a substantial competitive edge in the US market, which made competitors sit up and take notice.

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Although the two steelmakers were cleared of the accusations, the US Commerce Department has approved dumping allegations on other Chinese steel makers, which will be penalized with duty rates ranging from 69 percent to 429.95 percent.

"Traditionally, Chinese companies have appeared very passive towards trade protectionism overseas. Winning this case in the US has underlined the need to fight back," added Zeng of Mysteel.

Hu Kai, an analyst with Umetal.com said, "While Chinese companies are encouraged by Baosteel's victory, it is also necessary to clear their minds and focus on more value-added products."

According to Hu, Chinese steelmakers exported 42 million tons of products last year globally, a rise of 75 percent compared with 2009.

However, the average export price for a single ton of steel products dropped 8.33 percent to $860 a ton during the same period.

"The lower average export price for each unit indicates that made-in-China steel products have less added value, and that's contrary to the industry goal of producing high-end goods," said Hu.

Only by producing more value-added products can China's steel industry avoid being known as a manufacturer of low-end products, and build a better reputation for its products, Hu added.