US Steel accuses China of hacking secrets

US STEEL has accused Chinese government hackers of stealing its trade secrets and sharing them with Chinese producers, and has urged authorities to ban Chinese imports of advanced steel.

In a petition to the US International Trade Commission (ITC), US Steel said that in an attack in 2011 it had lost several gigabytes of valuable research data related to its production of advanced high-strength steel. Hackers targeted a researcher’s files for a hot-dip simulator which the company used to develop and improve production techniques for so-called dual-phased steels of interest to car makers.

The hack imitated methods used in an earlier attack by the Chinese government and was traced back to internet addresses linked to Chinese hackers, the company said in its submission.

US Steel says it spent millions of dollars researching and developing advanced steels over the last decade, including the chemistries and processes for manufacturing and coating products of keen interest to carmakers eager to improve fuel economy by using less metal to lighten their cars while still maintaining strength. Following the hack of one of the company’s well-known senior researchers, Chinese producers had brought their own version of these advanced steels to market within two years, says US Steel.

“Some of the [accused producers] have used valuable trade secrets stolen from US Steel to produce advanced high-strength steel that no Chinese manufacturer had been able to commercialise before the theft,” the company said in its filing.

Chinese producers have since begun exporting the advanced steels, which are already affecting US Steel’s sales to carmakers in Mexico, and are reaching US markets. If left unchecked, this would “devastate” the firm’s domestic sales of advanced steel and put steelworkers out of jobs, the company says.

Furthermore, US Steel alleges that China’s steel industry is colluding to fix prices and falsify documents.

“The Chinese steel industry conspires and acts in concert in an anticompetitive way to set and enforce prices and volumes of steel sold by all Chinese steel manufacturers to the United States,” says US Steel. “The Chinese steel industry benefits from its government’s theft of US Steel’s trade secrets. The [accused Chinese producers] have circumvented anti-dumping and countervailing duty orders through a pattern of falsifying origin documents and transshipping through third countries, making it difficult to identify the source of unfairly traded products. Overall, unfair trade is a routine practice of the Chinese steel industry,” it added.

Companies accused in the filing include Baosteel and Hebei Iron and Steel Group.

China’s Commerce Ministry has described the allegations as “groundless”, according to a statement seen by Bloomberg.

The ITC has 30 days to decide whether it wants to initiate the case.