China, the world's biggest steel consumer, said it will impose anti-dumping duties of up to 25 percent on specialized steel imports from Russia and the United States, stepping up a trade row with Washington.

China's announcement on Thursday it would slap punitive tariffs on a type of electrical steel used in transformers is likely to hurt exports from leading U.S. producers AK Steel and ATI Allegheny Ludlum.

The move follows U.S. steel industry trade cases against China that led Beijing to accuse Washington of protectionism.

This shows clearly that trade-remedy cases are a two-way street as are their disruptive effects, said Daniel Price, a senior partner at Sidley Austin who was a White House adviser on trade issues for former President George W. Bush.

China's Commerce Ministry, announcing the decision, said this was the first time that China had conducted an anti-subsidy investigation against imported products, although it has previously launched many anti-dumping investigations.

U.S. and Russian exporters will from December 11 need to pay cash deposits equal to a percentage of the steel import value, but the ministry did not specify the amount, adding that it was a preliminary ruling.

It found that U.S. dumping margins on the steel product were 10.7 percent to 25 percent and that the subsidy rate was 11.7 percent to 12.0 percent.

The dumping margin on the Russian version of the steel product was 4.6 percent to 25 percent, the ministry added in a statement on its website (www.mofocom.gov.cn).

Last month the U.S. Commerce Department leveled preliminary anti-dumping duties ranging up to 99 percent on $2.63 billion in Chinese-made oil well pipes in the biggest U.S. trade action to date against China.

Russia also has tariffs in place against Chinese steel, including a 28.1 percent tariff on some steel pipes.

ELECTRICAL STEEL SHOCK

The product in question, grain-oriented electrical steel, is high-value and is used in transformers, motors and power generators. It makes up only a tiny proportion of total steel production in Russia, the world's No. 4 steel-producing country.

Novolipetsk Steel , or NLMK, is the only major producer in Russia of this particular product, also know as transformer steel.

In an emailed statement, the company denied it was dumping steel and said it was already paying a preliminary tariff of 4.6 percent on transformer steel exports while the Chinese investigation continues.

NLMK intends to present its commentary on the current decision by (China's) Ministry of Commerce, in as much as we think the company's tariff rate should be set at zero..., the statement said.

The company added that through end-September it produced 98,000 tonnes of transformer steel, and exported roughly 83,000 tonnes, sending 13 percent of this amount to China.

Renaissance Capital analyst Boris Krasnojenov said NLMK currently controlled between 15 percent and 20 percent of the global market.

He expects NLMK to produce 200,000 tonnes of this steel next year, and said it could export 80,000 tonnes to China.

The negative impact on NLMK's full-year 2010 cash flow may be estimated at $20 million to $25 million, Krasnojenov wrote in an email.

We do not see any significant impact of the Chinese anti-dumping duties on NLMK's cash flow in the short-term perspective.

Investors, however, reacted negatively. NLMK's London-traded stock was down 3.75 percent at 1530 GMT, while other Russian steel companies were in positive territory.

In the third quarter, transformer steel accounted for 1 percent of NLMK's sales by volume. But it sells for $2,700-$2,800 per tonne, well above the $483 per tonne average selling price for all of NLMK's products.

Other major players in the transformer steel market include Japan's JFE <5411.T>, China's Wuhan <600005.SS>, South Korea's POSCO <005490.KS> and Germany's ThyssenKrupp .

(Editing by Anthony Barker)

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