NZ Steel lawyers guarded on profit squeeze from Chinese subsidies

Wednesday 9th May 2018

New Zealand Steel's lawyers, who are trying to have a government decision not to tax Chinese steel imports overturned by the High Court, wouldn't tell the judge how much the decision had cost its business, though stressed the impact on its profitability.

In July 2017, then-Commerce and Consumer Affairs Minister Jacqui Dean decided not to impose countervailing duties on imports of galvanised steel coil from China, following an investigation by the Ministry of Business, Innovation and Employment which found that Chinese subsidies on the steel were too small to have injured the domestic industry.

NZ Steel, which is a wholly-owned subsidiary of Australia's Bluescope Steel, lodged an application for judicial review of the former minister's decision in September 2017. It says Chinese steel flooded the local market and cut into its profits.

Justice Jillian Mallon asked the company to detail the injury it has suffered, and NZ Steel's lawyer Daniel Kalderimis pointed to the final report from MBIE, which identified evidence of price undercutting by imports from China and resulting price depression and price suppression in the local market.

While the report included margins and prices, these were blanked out in the version publically available, meaning the judge could not tell the undercutting margin, nor the size of the New Zealand steel industry nor NZ's Steel's market share.

However, Kalderimis noted that the un-redacted information showed that 55 percent of imports from the table involved price undercutting, and that NZ Steel's average selling price dropped by the second quarter of 2016 to 75 percent of the average selling price in the third quarter of 2011.

"So I'm not going to know that. I'm just - how big is this? How big is this issue, for New Zealand, for New Zealand Steel, for China?" the judge asked.

"What we can say is that New Zealand Steel is the only steel producer in New Zealand, and it makes a significant volume of steel," Kalderimis said. "What is at issue is the profitability and the sustainability of the New Zealand steel industry."

NZ Steel wants the court to quash the decision and have it be reconsidered by going back and re-investigating the matter. The hearing is set down for the rest of the week.

(BusinessDesk)

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