China will impose anti-dumping duties on a specialty steel product imported from Russia and the United States in a landmark decision, the Ministry of Commerce said on Thursday.

China's move to slap punitive tariffs on grain-oriented electrical steel is the latest chapter in a simmering trade row between the Asian giant and the United States, and could also hit Russia's main supplier of the product, Novolipetsk Steel.

U.S. and Russian exporters will from Dec. 11 need to pay cash deposits, but the ministry did not specify the amount, adding that it was a preliminary ruling.

It found that U.S. dumping margins on the steel product were 10.7 percent to 25 percent and that the subsidy rate was 11.7 percent to 12.0 percent.

The dumping margin on the Russian version of the steel product was 4.6 percent to 25 percent, the ministry added in a statement on its website.

The ministry said it was the first time that China had conducted an anti-subsidy investigation against imported products, though it has previously launched many anti-dumping investigations.

"China's investigation was conducted according to Chinese law and World Trade Organization principles, upholding principles of equity, reasonableness, fair procedures and transparency," a ministry spokesman said in the statement.

Last month the U.S. Commerce Department leveled preliminary anti-dumping duties ranging up to 99 percent on $2.63 billion in Chinese-made oil well pipes in the biggest U.S. trade action to date against China.

Grain-oriented electrical steel, a high-value, specialized product used in transformers, motors and power generators, makes up only a tiny proportion of total steel production in Russia, the world's No. 4 steel-producing country. It is also known as transformer steel.

Novolipetsk Steel, or NLMK, is the only major producer of this particular steel product in Russia. In an e-mailed statement, the company denied it was dumping steel and said it is already paying a preliminary tariff of 4.6 percent on transformer steel exports while the Chinese investigation continues.

"NLMK intends to present its commentary on the current decision by the PRC's Ministry of Commerce, in as much as we think the company's tariff rate should be set at zero...," the statement said.

The company added that through end-September it produced 98,000 tons of transformer steel, and exported roughly 83,000 tons, sending 13 percent of this amount to China.

Renaissance Capital analyst Boris Krasnojenov said NLMK currently controlled between 15 percent and 20 percent of the global market.

He expects the company to produce 200,000 tons of transformer steel next year, and estimated it could export 80,000 tons to China.

"The negative impact on NLMK's full-year 2010 cash flow may be estimated at $20 million to $25 million," Krasnojenov wrote in an email.

"We do not see any significant impact of the Chinese anti-dumping duties on NLMK's cash flow in the short-term perspective."

Investors, however, reacted negatively. NLMK's Moscow-traded shares fell 2.3 percent, compared with a wider market fall of only 0.2 percent.

The company's London-traded stock was down 3.9 percent, while peers Evraz Group and Magnitogorsk Iron and Steel Works were both in positive territory.

NLMK expects to produce a total of about 10.5 million tons of steel this year, matching last year's level.

In the third quarter, transformer steel accounted for 1 percent of NLMK's sales by volume.

However, it currently sells for $2,700-$2,800 per ton, well above the $483 per ton average selling price for all of NLMK's products.

Other major players in the transformer steel market include Japan's JFE, China's Wuhan, South Korea's POSCO, Germany's ThyssenKrupp and U.S. AK Steel.