MBIE galvanised into wire dumping action

A steel chimney at the Pacific Steel Group plant in Otahuhu, Auckland. Photo / Brett Phibbs

Imports of galvanised wire from China and Indonesia are to be investigated following a dumping complaint by Pacific Steel.

Pacific, owned by BlueScope Steel, complained earlier this year that its business had been "materially" injured by the increased wire volumes coming from the two countries in the 2019 and 2018 financial years. The harm probably went back to 2016, it estimated.

By working back using steel billet prices in the two countries, and calculating labour, energy and other costs, Pacific estimated the Indonesian product was being sold here for almost 20 percent less than its normal factory gate price, while the Chinese product was selling at a 30 percent discount.

Officials at the Ministry of Business, Innovation and Employment kicked off their investigation last week.

A series of complaints

The Pacific Steel complaint is the latest in a series BlueScope has brought against imports of galvanised steel coil and hollow steel sections from China and Malaysia. None of those investigated since 2017 have resulted in duties being applied.

BlueScope's NZ Steel business operates the Glenbrook smelter south of Auckland and acquired Pacific Steel from Fletcher Building in 2015. In 2018 it acquired almost 16 percent of distributor Steel & Tube Holdings to prevent its takeover by Fletcher.

But the firm has been struggling in recent years amid low regional metal prices and increasing costs for electricity and gas. In May it announced plans to shut its unprofitable pipes and hollow section business citing "considerable pressure" from imports.

In an April report recommending a formal investigation of the galvanised wire trade, MBIE officials said the imports appeared to be suppressing prices in the local market and reducing Pacific's earnings by preventing it raising prices sufficiently to recover increased costs.

Under-cutting prices

They calculated the discount on the Chinese product at 18 percent and just over 5 percent on the Indonesian wire. Their estimate of the under-cutting of prices was also lower at 2 percent to 8 percent, versus the 5 percent to 12 percent range Pacific had estimated.

They noted that volumes of imports from China and Indonesia had generally increased during the past five years, while imports from other countries had declined, principally from Australia. An analysis of prices from Australia and Canada suggested those producers were not undercutting Pacific Steel's prices.

"MBIE is satisfied that there is sufficient evidence, for the purpose of initiation, of a causal link between the allegedly dumped imports from China and Indonesia and the volume and price effects and consequent impact on the domestic industry," they said.

"MBIE is satisfied that injury caused by any other factors has not been attributed to the dumped imports. MBIE notes that any investigation will need to have regard to the extent to which imports from other sources might be affecting the state of the domestic industry. It will also need to examine any other factors to determine whether they are relevant."