A probe by the European Commission into dumping of stainless steel by Chinese and Taiwan manufacturers could hurt China's steel exporters.

According to the EU statistics office, cold-rolled stainless steel sheets from China and Taiwan in 2013 amounted to 758 million euros, roughly US$1.03 billion, ten times more than the value accounted for in 2002, Reuters learned.

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The EU investigation was launched on Thursday after European steal association, Eurofer, filed a complaint in May that claimed steel from China and Taiwan were being dumped at prices below cost.

China's steel industry has grown over the last few years. However, the local shrinking demand has left manufacturers with an excess supply and capacity. Subsequently, these steel manufacturers now seek to export overseas to maintain operations, China Daily reported.

Shanghai-based Mysteel.com information director Xu Xiangchun said that increased Chinese exports were mostly due to "weak domestic demand and falling prices."

 "IF the EC decided to impose punitive taxes on stainless steel products, it will hurt many of these companies," he added.

However, he said sanctions by the EU will unlikely cause a dent on China's full year steel exports since stainless steel is only a small part of the country's total exports.

Based on information from the China Iron and Steel Association, first quarter steel exports were 18.33 million metric tons, up 27 percent year on year.

"With China's products taking a bigger share in the international market, it is natural that the industry will face increasing trade disputes as foreign companies will use trade protectionism to protect their interests," Xu said.

Likewise, China Iron and Steel Association head Zhang Changfu said that anti-dumping investigations into Chinese steel have been increasing steadily, pointing out that China's steel industry were involved in 25 trade disputes last year including in South Korea and the United States.

Nevertheless, he believes that these disputes and sanctions will hurt China's steel sector and "will eventually slow in the long run," and warned that increasing Chinese steel exports will likely see a rise in anti-dumping investigations worldwide.

Taiwanese steel producers are also concerned with the probe.

"The impact on Taiwan would be massive. The European zone is the biggest export market of Taiwan's cold-rolled stainless, accounting for about 25 percent of total exports," a Taiwanese manufacturer said.

TagsEuropean Steel Association, Eurofer, China Iron and Steel Association, Zhang Changfu, Xu Xiangchun, Mysteel, China steel industry, Taiwan steel industry, trade dispute, dumping, steel dumping