Using anti-dumping measures to restrict Chinese steel exports will not provide a lasting solution to growing trade tensions in the sector, which is suffering from overcapacity on a global scale, China’s commerce ministry said.

With domestic demand weakening, the Chinese steel sector has seen the foreign market as a lifeline, with historically low prices allowing them to boost exports by as much as 26.5 percent in the first eight months of this year.

Chronic overcapacity has helped drive Chinese steel prices to their lowest level in decades, and European steel body Eurofer has accused Chinese producers of selling at prices that do not fully cover their costs.

But Shen Danyang, spokesman for the Ministry of Commerce, told reporters that there were no grounds to believe that Chinese steel was being dumped on overseas markets.

“Blindly determining any case involving China as dumping is unfounded and unjustified,” he said, noting that the costs of Chinese steel reflected the collapse in global iron ore prices.

“Overcapacity is the common problem faced by the global steel industry during its restructuring process, but simply imposing limits just isn’t the channel or method that will fundamentally solve the problems,” he added.

The China Iron and Steel Association (CISA) has warned that the industry’s growing reliance on exports might not be sustainable because of growing trade friction, and urged its members to refrain from selling overseas at below cost.