UPDATE 1-China responds to Britain, saying steel needs global cooperation

(Adds Ministry of Commerce comment on steel case)

China wants to work with the
rest of the world to find a resolution to overcapacity in the
steel sector, its foreign ministry said on Monday, after Britain
asked the world’s top producer of the alloy to tackle the
problem quickly.

Britain’s Foreign Secretary Philip Hammond made the request
while meeting his Chinese counterpart Wang Yi in Beijing on
Saturday.

Huge overcapacity and weak demand have prompted China, also
the world’s top steel consumer, to ramp up exports to record
highs, dragging down global prices to decade lows.

Britain wants to stem a flood of cheap imports, which
India’s Tata Steel has blamed for its decision to pull
out of the United Kingdom, putting 15,000 jobs at risk.

Chinese Foreign Ministry spokesman Lu Kang told a daily news
briefing that overcapacity was a global problem caused by
declining demand for steel and said Hammond and Wang had talked
about how to effectively address it.

“At this meeting the Chinese side also highly appraised the
long-term British policy of open free trade and said we are
willing to work with the international community, including
Britain, to appropriately resolve this issue via international
cooperation,” Lu added.

He did not elaborate.

China makes half of the world’s steel and produced 803.8
million tonnes in 2015. That was almost eight times the output
of Japan, the No. 2 producer, and nearly 20 times Germany’s.

China’s production capacity is far bigger at 1.13 billion
tonnes and it exported a record 112 million tonnes last year.

The country needs to step up efforts to shut down poorly
performing mills, a government official has said.

Tata put its entire UK business up for sale last month,
including its flagship production plant at Port Talbot in south
Wales, saying it could no longer endure mounting losses caused
by increased shipments to Europe from countries like China, high
manufacturing costs and domestic market weakness.

China’s Ministry of Commerce separately urged the European
Union to abide by the European Court’s decision this month that
found anti-dumping duties on China’s Hubei Xinyegang Steel Co.
were illegal.

The European Court decision indicated that the European
Commission had “abused its discretionary power and wrongly
applied the law” in its investigation, the ministry said in a
statement on its website.

“As an important World Trade Organization member, the
European Union should strictly respect world trade rules, and
draw lessons from this court decision,” it said.

(Reporting by Ben Blanchard; Additional reporting by Michael
Martina; Editing by Himani Sarkar and Simon Cameron-Moore)

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