Wary of trade war, Asian steelmakers curb exports – by Manolo Serapio Jr and Yuka Obayashi (Reuters U.S. – July 12, 2013)

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SINGAPORE/TOKYO, July 12 (Reuters) – 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 overcapacity.

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 local producers.

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.

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