Hot-rolled steel plates are waiting to be processed into precoated metal sheets at Dongkuk Steel's plant in Busan. Korea Times file

The Korean steel industry's ongoing efforts to build stronger trade barriers against low-priced Chinese products are beginning to cause internal strife, drawing criticism from steel product consumers like construction firms and shipbuilders.

Amid rising antidumping complaints against steel imports from China, international trade experts have warned of potential economic retaliation by Beijing against Korean exporters.

According to industry officials, domestic steel product manufacturers are divided over the government's investigation into hot-rolled steel plates from China and Japan, which began Tuesday, following Hyundai Steel's antidumping complaint filed in December.

Unlike POSCO and Hyundai Steel, which have blast furnaces capable of producing 3-millimeter steel plates, Dongkuk Steel, SeAH Steel and KG Steel are concerned about potential cost hikes, as they need to import hot-rolled steel plates to produce galvanized steel sheets, precoated metal sheets and pipes.

Korea's antidumping tariffs on Chinese hot-rolled steel plates could further affect companies without blast furnaces, as Chinese firms may attempt to circumvent regulations by exporting precoated metal made from their own hot-rolled steel plates.

As a preventive measure, Dongkuk Steel has decided to file a separate antidumping complaint against Chinese precoated and galvanized steel sheets. In collaboration with SeAH Steel, the company plans to submit the complaint by the end of this month.

"The oversupply of low-priced precoated and galvanized steel sheets from China has prevented the growth of Korean companies, which have tried to make differentiated products," Dongkuk Steel said in a statement. "Chinese products have distorted the market price, threatening the safety of buildings made with those products."

If the government decides to impose antidumping tariffs on Chinese precoated metal and galvanized steel sheets, construction firms will face additional cost hikes. These companies have already expressed concerns over the provisional antidumping duties on thick steel plates from China.

Thick steel plates are piled up at Hyundai Steel's Dangjin plant in South Chungcheong Province in this undated photo. Courtesy of Hyundai Steel

Thick steel plates, which are defined as plates with a thickness of 6 millimeters, are mainly used in shipbuilding and construction. Last month, the government decided to impose antidumping tariffs of up to 38.02 percent on steel plates from China, accepting Hyundai Steel's claim that the oversupply of low-priced Chinese products has harmed the domestic industry.

The decision has drawn backlash from shipbuilders as well, given their heavy reliance on Chinese products.

"The domestic shipbuilding industry recently started making profits after 10 years of losses," an official from one of Korea's major shipbuilders said. "However, steelmakers supplying thick steel plates have never suffered losses, despite the recent decline in their profits."

The Korea Offshore & Shipbuilding Association also collected opinions from its members to deliver their concerns about the antidumping tariffs on thick steel plates to the trade ministry.

Chang Sang-sik, head of the Institute for International Trade under the Korea International Trade Association, did not dismiss the possibility of China's retaliation against Korea's antidumping tariffs, despite acknowledging the challenges facing the domestic steel industry.

"When Korea increased tariffs on Chinese garlic from 30 percent to 315 percent in 2000, China banned the imports of Korean mobile phones and polyethylene," he said.

"However, the business environment surrounding the steel industry is too harsh, so it seems that the government has no choice but to build barriers to protect domestic companies."