by Lisa Reisman on DECEMBER 14, 2016

China took action yesterday and filed a complaint with the World Trade Organizationagainst the U.S. and Europe for not automatically granting China Market Economy Status.

In fact, Commerce Secretary Penny Pritzker went on record specifically stating that the U.S. would not be granting China such status.

The granting of market economy status, of course, would make it harder for domestic companies to prove dumping against China. It all comes down to how price comparison data is calculated.

According to Tim Brightbill, an attorney at Wiley Rein LLP, “essentially the only thing that would force the Commerce Department to formally confront the China/MES question is a trade lawsuit filed by China, or implicating China, in which the latter would be explicitly able to make that type of request.”

Alhough Europe appeared to be teetering with its decision not to provide MES, Japan also sided with the U.S. and denied China MES.

Why This Matters to GOES Markets

GOES has been the subject of international trade dumping cases for the past several years. The real challenge to MES will be the first trade case filed by any domestic industry against China. GOES will unlikely serve as that test case.

For readers interested in how China sees this issue (and uses the word protectionism to make its case), this post provides a good example.

We remind readers that MetalMiner is a banned publication within China because of all of our subversive anti-China rhetoric.

On that note, GOES industry observers should take note of a steel mega-merger within China. China’s Baoshan Iron & Steel (Baosteel) and Wuhan Iron and Steel Corp.(WISCO) have formed China Baowu Steel Group with a whopping 60 million metric tons of capacity (that is more than half of the entire U.S. steel-making capacity).

The combined firm has publicly stated it would cut 16.6 million mt of capacity by 2018 to address the country’s over capacity concerns.

Baosteel is also major producer of GOES within China.

Grain-Oriented Electrical Steel M3 prices lost nearly all of last month’s gains dropping by nearly 3%.