China Daily reported that Chinese steel industry leaders have branded the European Union's accusations of receiving illegal government subsidies as groundless after Brussels announced it was imposing punitive duties on Chinese made organic coated steel.

Mr Zhang Changfu, secretary general of the China Iron and Steel Association said that "We strongly disagree with the EU's decision to impose tariffs on Chinese coated steel products entering the European market on the grounds of us receiving governmental subsidies."

At an EU meeting on Wednesday January 30th 27 member countries voted to back a European Commission proposal to add duties to the export products which are used in construction and to make household appliances.

The highest subsidy punitive duties will be up to 45.5% much higher than 12% tariffs imposed on Chinese coated fine paper in European countries 2 years ago which marked the first time the EU had penalized the country for alleged illegal subsidies.

Together with dumping duties total tariffs on China's coated steel products entering the European market have now reached 58.3%. According to a report by the association China's steelmakers are already battling various high taxes in their own country such as mineral resources taxes.

Mr Zhang said that "Chinese steel companies have been doing business strictly in accordance with the international trade laws. We hope that the EU stops trying to trigger a trade war and tries to solve disputes through dialogue and communication."

Mr Fan Libo, a researcher at the China Institute for WTO Studies under the University of International Business and Economics, said that earlier the EU had been using of the World Trade Organization to protect its own steel companies a natural move given the economic situation in Europe. But Mr Zhang pointed out that the Chinese government is not even encouraging steel exports.

He said that “Current prices for iron ore imports are largely dominated by major global mining companies and with Chinese steelmakers currently buying iron ore at a high price and selling steel products abroad at uncompetitive prices that would be far from beneficial for the domestic industry.”

Over the past year China's total net steel product exports were 44.38 million tonne accounting for about 6.2% of the country's crude steel output according to figures from the association.

Exports grew to 9.61 million tonne up 27.6% YoY. The average price of imported steel products in 2012 was USD 1,303.4 a tonne while the average price for exported steel products from China was USD 923.8 a tonne.