EU trade chief urges China to cut steel overcapacity

BRUSSELS, Feb 5 (Reuters) - The European Union's top trade official has urged China to take measures to curb overcapacity of its steel industry and warned it that it will open three new anti-dumping investigations this month on steel imports from China.

European Commissioner for Trade Cecilia Malmstrom wrote a letter to China's minister of commerce, Gao Hucheng, saying she welcomed Chinese plans to cut steel production, but adding they would need to be translated into concrete action.

The call comes as the European Union begins a debate into whether to relax trade defences against China as Beijing demands, with a recommendation from the Commission set to come around July after public consultations.

Malmstrom said she was concerned about a surge of Chinese exports last year of some 50 percent and resultant price declines of certain products by up to a half. Thousands of EU jobs had gone and tens of thousands more were threatened.

"In the wake of a worrying trend, I urge you to take all appropriate measures to curb the steel overcapacity and other causes aggravating the situation," she said in the letter seen by Reuters and dated Jan. 29.

She (Munich: SOQ.MU - news) also said that the Commission was set to open three investigations in February into Chinese steel dumping, selling at excessively cheap or below cost price. EU steel prices have hit a 12-year low.

ArcelorMittal (Other OTC: AMSYF - news) , the world's largest steelmaker said that 2015 had been a very difficult year for the steel and mining industries despite strong demand in its core markets as excess capacity in China depressed prices.

Britain's largest steelmaker Tata Steel Ltd (BSE: TATASTEEL.BO - news) said last month it would cut 1,050 UK jobs, adding to some 4,000 British steel jobs lost in October alone.

China, which makes half the world's steel, exported a record 112 million tonnes last year, equivalent to total North American output, upsetting trade partners who argue it is dumping on world markets.

The European Union has in place 35 trade defence measures on steel product imports, 15 concerning China directly, along with six ongoing investigations, three involving China. New (KOSDAQ: 160550.KQ - news) complaints have increased.

It (Other OTC: ITGL - news) has also instituted registration of Chinese steel imports, meaning that any measures can be backdated and so offering quicker relief to EU industry. (Reporting By Philip Blenkinsop; editing by Robert-Jan Bartunek and Keith Weir)