2nd UPDATE: China Sets Duties On US, Russia Electrical Steel Imports

China has imposed duties on imports from the U.S. and Russia of a common type of electrical steel used in the power sector following a final decision on its countervailing and antidumping investigation, the nation's Ministry of Commerce said Tuesday.

The duties took effect Sunday and are valid for five years, the ministry said in statements on its Web site. In December, China had made a preliminary ruling and required importers to pay deposits ahead of a final decision on the matter.

Tuesday's announcement by China's Commerce Ministry comes after last week's decision issued by the U.S. Commerce Department to impose antidumping duties of up to 99.14% on imports of steel pipes from China.

The latest trade ruckuses, especially between China and the U.S., come as Chinese President Hu Jintao is in Washington for a nuclear security summit and after a bilateral meeting between Hu and U.S. President Barack Obama on Monday.

In the meeting, Hu told Obama that letting the Chinese currency appreciate against the dollar wouldn't solve the trade imbalances between the two countries and that the two sides need to resolve trade frictions through consultations on an equal footing.

China has become more aggressive in its handling of trade disputes amid rising protectionist attitudes as economies recover from the global financial crisis.

In coming to its final decision on grain-oriented flat-rolled electrical steel, the ministry said China's domestic industry has sustained substantial damage due to subsidies and dumping of the product--used in various types of transformers and electrical devices--by U.S. and Russian firms.

China has adhered to Chinese law and World Trade Organization principles in coming to its decision, it said.

In the probe against U.S. companies, the ministry said it will levy countervailing duties of as much as 44.6% and antidumping duties of as much as 64.8% on imports of the electrical steel from the U.S.

The investigation into Russian companies has resulted in maximum antidumping duties of 25% on the same type of products, the ministry said in its statement.

Companies that responded to the investigation--AK Steel Corp. (AKS) and Allegheny Ludlum Corp. of the U.S. as well as Russian firm Novolipetsk Steel, or NLMK, and its affiliate VIZ-Stal Ltd.--will face lower duties, it said.

NLMK is Russia's largest electrical steel producer by sales and sells slightly less than a fifth of its transformer steel output to China, company spokesman Anton Bazulev said Tuesday. Bazulev said NLMK has been informed of the decision by the Chinese authorities at the weekend, but said he couldn't comment further.

-By J.R. Wu, Dow Jones Newswires; (8610) 8400-7711; jr.wu@dowjones.com (Will Bland in Moscow contributed to this article.)

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