‘Pro-China’ Brazil Launches Anti-Dumping Investigation Into Chinese Steel and Other Products

Investigation of 6 sectors, including chemicals and tires
Inventories piled up as China’s domestic demand shrinks, exported at low prices
Investigation could escalate trade tensions

Brazil, known for its friendly relations with China, has launched an anti-dumping investigation targeting China. This move comes as a countermeasure against China’s low-cost export of surplus products due to its economic downturn. With the U.S. and the European Union (EU) moving to impose additional tariffs on Chinese products, there is a growing tension in trade between China and its allies.

According to the Financial Times (FT) on the 17th (local time), the Brazilian government launched anti-dumping investigations into Chinese products in at least six sectors over the past six months at the request of its domestic industries.

The most recent investigation began in the steel sector. Earlier this month, CSN, a major steel producer in Brazil, requested an investigation into Chinese products, stating that imports of certain types of Chinese carbon steel plates increased by nearly 85% from July 2022 to June 2023.

In response, the Brazilian government announced that it had launched an anti-dumping investigation into Chinese steel. It stated that some factors estimating domestic industrial damage due to dumping practices of products exported from China to Brazil were confirmed.

The Brazilian industry demands a tariff of 9.6~25% on imported steel products, including those from China. The investigation is expected to take about 18 months.

Brazil is the world’s largest exporter of iron ore, the main raw material for steel. The surge in steel imports could hurt Brazil’s economy, so the government is taking action.

A slowdown in domestic demand has driven Brazil’s increased imports of steel from China due to a slump in the real estate market, which has led to a buildup of inventories, causing Chinese domestic products to be pushed out at bargain prices.

According to data from the Chinese General Administration of Customs, China’s steel exports from January to February amounted to 15.91 million tons, an increase of 32.6% compared to last year. The average export price fell 32.1% to $791.2 per ton.

It’s not just steel. From July 2018 to June 2023, the import volume of the chemical substance phthalic anhydride from China increased more than 20 times. During the same period, tire imports doubled, 80% of which were from China.

Following the U.S. and EU’s announcement of costly tariffs on Chinese-made electric vehicles in response to China’s low-price offensive, concerns are growing that trade friction stemming from China could intensify as Brazil, a friendly country participating in the China-led BRICS (Emerging market cooperation body consisting of Brazil, Russia, India, China, etc.), joins in.

In a report, analysts at Nomura Holdings said, “A prolonged decline in Chinese export prices could intensify trade tensions between China and some major economies.”