Exclusive Ukraine urgently needs protection from imports of long rolled products from Turkey and China

The sharp increase in imports of these products threatens domestic producers with the loss of a significant part of the domestic market

The increase in imports of long rolled products from Turkey and China to Ukraine is beginning to significantly affect the position of domestic producers who manufacture similar products. There is an urgent need to protect the domestic market from these unfair imports, which receive price preferences due to the import of cheap energy and steel billets from Russia.

The situation with imports

Even before the war, Ukraine did not produce the entire range of steel products, especially flat rolled products for mechanical engineering. Therefore, the share of imports amounting to 25-30% of the domestic market was quite understandable and acceptable. Imports mainly consisted of products that were not produced in the country or had a limited range. If products were imported that had analogues produced in Ukraine, restrictive measures were introduced—against bars from Belarus and Moldova, coated rolled products from China, etc. Such cases were isolated and not widespread.

As a result of the war, Ukraine lost the Mariupol steel plants and, along with them, part of its product line. The influx of steel imports into Ukraine in 2022 was largely caused by the shortage of domestic steel.

The import problem is already becoming catastrophic for national producers. In the first half of this year, imported steel products accounted for a record 37% of the domestic market. In the first half of this year, imports of steel products to Ukraine grew by 21%, while domestic consumption grew by only 7%.

Of particular concern is the growth in imports of long products from the range that Ukraine already produces or is capable of producing independently, namely rebar and wire rod. If the situation does not change, imports of long products will take up a significant part of the domestic market.

We are ready to compete fairly with countries that do not receive subsidies and price preferences by purchasing energy and semi-finished products from the aggressor country. Unfortunately, it is precisely from those countries that continue such purchases – Turkey and China – that imports are growing. At the end of the first half of the year, imports of steel products from Turkey grew by 50% and accounted for about 57% of the total volume. At the same time, the share of imports from the EU decreased by 10% and amounted to 23%.

Restrictive measures

If products are manufactured in Ukraine, the domestic market must be protected in the interests of domestic producers. At the same time, as a member of the WTO, Ukraine is obliged to comply with international rules for the protection of the domestic market.

The following protection tools are available:

1. Anti-dumping duties.

It is quite difficult to prove unfair competition in the form of dumping, but this mechanism has already been tested in Ukraine and is actively used.

On the other hand, an anti-dumping investigation can take a year or more. During this time, the market continues to be saturated with imported products, resulting in a deterioration in the position of domestic producers. Even with the introduction of high protective duties, importers can slightly change the chemical composition of products or resort to re-exporting through third countries. For example, China exports its products through Vietnam, Malaysia, and Indonesia. New facts of re-export will require additional investigations, which will again take time.

Therefore, combating the circumvention of restrictive measures requires a well-coordinated process on the part of the Ministry of Economy. In this regard, we propose simplifying the procedure for submitting applications for anti-dumping investigations for domestic producers.

2. Anti-subsidy duties.

These are applied if the importing country provides subsidies or other price preferences that allow its producers to dump on foreign markets. This primarily concerns countries that purchase energy resources from Russia, such as Turkey, China, and other Asian countries. They receive oil, gas, and other energy resources at prices significantly lower than those paid by Ukrainian producers.

The second aspect is the import of semi-finished steel products from Russia at reduced prices. This applies to Turkey and even some European countries. The cost of electricity and gas for Russian steelmakers is several times lower than for Ukrainian or European companies, which allows them to offer significant discounts. According to our estimates, such discounts can reach $130-150 per ton of product.

When it comes to subsidies, China has been supporting export industries, including steel sector, for decades through grants, preferential loans, tax breaks, and other mechanisms. All of this contributes to dumping, although it is extremely difficult to prove unfair competition due to subsidization.

3. Safeguard measures.

They are applied in cases of sharp increases in imports and deterioration in the financial situation of domestic producers. If such facts are confirmed, this provides grounds for conducting an investigation and introducing protective measures. These measures may also be applied in cases of threats to national security, although certain complications arise here.

The procedure for applying special measures takes six months or more, although preliminary sanctions may be imposed. However, such investigations cannot be directed against specific countries — they apply to product types as a whole. If they are launched, our key international partners — the EU, the US, and others — will also be affected.

What should be done?

The Ukrainian domestic steel market is relatively small, and per capita steel consumption is several times lower than in neighbouring Eastern European countries. However, its volume can and should grow, especially during the post-war recovery period. Consumption currently stands at around 3 million tons. Over the past 10-15 years, this figure has remained at 5 million tons, but now it is only 2.5-3 million tons.

The growth in imports of long rolled products is leading to domestic producers losing a significant part of the domestic market. At the same time, for any country with a developed steel industry, the domestic market is a “safety cushion” that ensures the stability of the industry. In turn, the state gains confidence that its own steel industry is capable of meeting basic product needs.

It is now necessary to take urgent measures to restrict imports of long rolled products from Turkey and China to Ukraine, which have preferences due to imports of cheap energy and steel billets from Russia.

I sincerely hope that the Ministry of Economy will respond to the current situation in the near future and take the necessary measures to protect Ukrainian producers, who are already working under extremely difficult conditions. I am confident that our international partners will treat this with understanding.