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EU Commission finds China subsidises steelmakers -sources

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* Investigation on organic coated steel coming to an end

* Provisional duties already in place over price dumping

* EU member states to vote on maintaining duties for 5 years

By Philip Blenkinsop

BRUSSELS, Jan 15 (Reuters) - The European Commission has concluded China illegally subsidises steel producers and wants EU members to back punitive tariffs, which could anger the bloc's second largest trading partner, trade sources said.

The conclusion would address blame at China itself, rather than Chinese companies. China has in the past accused the European Union of protectionism and has filed its own complaints against the bloc with the World Trade Organisation.

The Commission, the EU's executive arm, is ending its investigation into alleged subsidies for and dumping of organic coated steel, which is painted or plastic-covered steel principally used in construction for walls and roofs.

In September, it imposed provisional duties of between 13.2 and 57.8 percent on the prices of imported products after it found Chinese manufacturers were selling at below-market prices.

Now it says duties of up to 52 percent would be needed to counter state subsidies given to Chinese producers, according to trade sources who have seen the Commission's latest proposals, on which EU member states will vote.

The finding would not increase the proposed tariffs beyond the level of provisional duties already imposed because they are already at the maximum level allowed.

The Commission will put its proposal to EU member states on Jan. 30, with a vote due by mid-March. The states will determine whether to impose definitive duties, which typically last for five years.

EU steelmakers made 4.3 million tonnes of organic coated steel in 2011. Producers with EU operations include ArcelorMittal, ThyssenKrupp and Tata Steel .

The Commission puts imports of the product from China at 563 million euros ($752.5 million) during its investigation period, the year commmencing on Oct 1, 2010. Chinese exporters' share of the EU market rose to 13.6 percent.

The Commission is investigating 37 dumping and subsidy cases, 21 of them involving China. The European Union is China's biggest trading partner while for the EU, China is second only to the United States.

The investigations include a study of the alleged dumping of 21 billion euros of solar panels and components by Chinese producers, the Commission's largest investigation to date.

($1 = 0.7482 euros) (Reporting by Philip Blenkinsop; Editing by Anthony Barker)

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