U.S. announces countervailing duties on thick steel plates from Korea

The U.S. Department of Commerce has recently decided to impose countervailing duty on stick steel plate imports from South Korea, citing that Korea’s low electricity prices have actually served as subsidies for the country’s steel makers. It is the first decision made by the U.S. government to frame Korea’s electricity rates as a government subsidy.

According to the Ministry of Trade, Industry and Energy on Thursday, the U.S. Commerce Department will impose 1.1 percent countervailing duty on thick steel imports from Hyundai Steel Co. and Dongkuk Steel Mill Co.

Countervailing duties, or anti-subsidy duties, are one of the trade measures that an importer can take against an exporter for subsidizing its exports, directly or indirectly, which causes adverse effects on the economy of the importer.

In the latest decision, the U.S. Commerce Department finalized its preliminary decision in February that it would impose the countervailing duty of 1.1 percent on Korean steel imports. The Korean trade authority and relevant businesses failed to avert the decision.

In September, the U.S. authority even conducted an investigation into state utility Korea Electric Power Corp. (KEPCO) to assess whether its rates were reasonable in view of the prices of liquefied natural gas for industrial use.

In 2020, the U.S. government said in its decision that Hyundai Steel was not subject to its countervailing duties against foreign imports. However, the latest decision was a reversal of that prior exemption.

The U.S. decision came as Korea has seen relatively modest rises in electricity rates compared with other nations despite the recent surge in energy costs.

According to the International Energy Agency (IEA), Korea’s industrial electricity costs are $95.6 per megawatt-hour (MWh) as of 2021, which is below the OECD average of $115.5. It is even less than half of what major European countries such as the United Kingdom charges.

Russia’s invasion of Ukraine has led to a significant increase in the system marginal price (SMP) per kilowatt-hour (kWh), from 94.34 won ($0.07) in 2021 to 196.65 won in 2022.

Despite the surge, the country’s industrial electricity prices have only seen five incremental increases totaling a mere 49.6 won since 2022.