Canada's decision to impose anti-dumping duties on steel seamless casing pipe from China is unfair and unacceptable, the Chinese industry association said.

A Canada Border Services Agency (CBSA) probe concluded earlier this month that Chinese steel seamless casing pipe manufacturers are subsidized by the government and are dumping products in the Canadian market.

It was Canada's first anti-dumping and countervailing investigation into Chinese steel products.

The Canadian International Trade Tribunal is yet to make a final decision on whether to impose anti-dumping duties.

"The CBSA decision is unfair on Chinese steel manufacturers and the result of the investigation is unfounded," the China Iron and Steel Association (CISA) said on its website.

Steel company Tenaris Algoma Tubes, which initiated the complaint, said steel products imported from China had harmed Canada's domestic market. But local industry sources said the market downturn is not due to Chinese products but other factors.

Canada's seamless casing market has been falling as the Canadian dollar appreciates and demand drops on a sluggish market and less natural gas in the country, according to a source from the CISA, who did not wish to be named.

The case is about protection of the local market in Canada, as the company that made the complaint is the nation's largest steel importer and sole manufacturer, Li Kan, manager of Imex Canada Inc, a steel importer, said.

The case could lead to a monopoly situation, the CISA source said. "And once the sanction is imposed, it could set a bad example for other countries," the source said.

The CBSA also deemed China's steel seamless casing sector non-market-oriented and claimed the value of products is based on an unauthorized price from a metals magazine, officials from Tianjin Pipe Group Corp, the largest seamless casing maker in China, said.

Tianjin Pipe Group, although government-owned, is a market-oriented company, Zhang Wenfeng, vice-president of the company, said. "We've always determined prices based on market forces," Zhang said.

"It's unfair to decide whether a company is market-oriented based solely on its ownership," the CISA source said.

Global demand for steel products is rising, as are Chinese exports, and local steelmakers are facing increasing trade allegations.

"We are quite confident that we will win the case and continue to trade fairly," Zhang said.

China exported 68,700 tons of the investigated products in 2006, valued at $100 million, according to Canadian Customs.