Chinese PM Li Keqiang and VP Jusuf Kalla at Indonesia-China Business Summit - Photo by Chinese President Office

JAKARTA (TheInsiderStories)Chinese‘s Ministry of Commerce on Monday launched the anti-dumping probe into stainless steel billet and hot-rolled stainless steel worth US$1.3 billion from European Union, Japan, South Korea, and Indonesia.

The investigation targets eight foreign companies and several Chinese companies including Tsingshan Stainless, one of the biggest stainless steel producer that operates mills in Indonesia. The Chinese government also eyes 19 stainless steel importers.

Some mills are targetted by the China government including PT Jindal Stainless and South Korean Steelmaker Posco. The China government also targets European mills including Spain’s Acerinox, Finland’s Outokumpu Oyj, and Luxembourg-based Aperam. Among the Japanese companies are Nisshin Steel Co Ltd, Nippon Steel & Sumitomo Metal Corp, and JFE Steel Corp.

The flood of imported stainless steel made China conduct the anti-dumping probe. China imported 703,000-ton stainless steel in 2017, a 200 percent rise from the previous year. As much as 98 per cent of these imports come from the targeted countries.

Moreover, the Ministry of Commerce received a complaint from Shanxi Taigang Stainless Steel with support from four state-owned mills including Baosteel’s stainless steel division, the third biggest steel producer.

In a document released by Commerce Ministry, Shanxi Taigang complained the significant rise in imports of stainless steel products hurt domestic industries. The company contributed 23 percent to 35 per cent of Chinese’s stainless steel production, as reported by Reuters.

China recorded a 5 per cent rise in imported stainless steel from Indonesia in 2017, up from 5 per cent in 2016.

In addition, those imported stainless price decrease to US$1,867 per ton in 2017, 23 percent down from US$2,436 in 2016. The Shanxi Taigang stated the Chinese’s stainless steel products will lose its competitiveness if those imported products price is getting lower and taking up more market shares.

Meanwhile, Senior Consultant at CRU in Beijing Peter Peng said the anti-dumping probe is pushed by an industrial dispute between Chinese’s state-owned companies and fast-growing private mills. The private mills are growing fast due to cheaper cost production.

Moreover, the Chinese private years in recent years opened factories in Indonesia that has abundant nickel and lower production cost. Most of those private mills’ products in Indonesia is exported to China.

Tsingshan opened a factory in Indonesia since last year with a total capacity of 3 million ton per year, while Delong Holdings plans to start the production in Indonesia next year.

This China anti-dumping probe would be the second hit for Indonesia which had previously been threatened by the US on general system preferences (GSP) review.

The US is evaluating about 124 Indonesian export products, including textiles, plywood, cotton, and some fishery products such as shrimp and crabs. If the GSP for Indonesia is eliminated then the cost of Indonesian exports to the U.S becomes more expensive.

Both threats potentially exacerbate Indonesia’s trade balance that recorded US$1.02 billion of trade deficit from January to June 2018. According to the Central Statistics Agency data, Indonesia booked US$ 14.190 million in the trade deficit with China in 2017, of which US$13.89 was non-oil and gas trade deficit. Indonesia recorded US$21.32 billion in export to China, lower than the import from the country of US$35.51 billion.

Meanwhile, Indonesia booked US$9.59 billion trade surplus with the US in 2017.