Steel producers from seven European countries accused of dumping steel in the U.S. denied yesterday that they are the cause of the American steel industry's woes.

The foreign companies' remarks came during the second of two days of hearings before the International Trade Commission which must make a preliminary decision on an international trade disagreement that could become the basis for a trade war.

The battle yesterday, however, was fought only with words as foreign companies from Belgium, France, Italy, Luxembourg, the Netherlands, the United Kingdom and West Germany used hundreds of pages of documents and eloquent presentations to challenge dumping charges filed by U.S. Steel. The complaints also were backed up unofficially by six other domestic steelmakers.

For the past few months the Carter administration has attempted to dissuade U.S. steelmakers from filing dumping complaints against U.S. allies, saying the charges could lead to international tensions. But U.S. Steel ignored such pleadings.

The hearings yesterday and Thursday will be used by the ITC staff to recommend to the commission whether there is a reasonable indication that injury to a domestic industry exists from dumping. The commission is to make its determination by May 1. If the decision favors the foreign countries, the investigation by the ITC and the Commerce Department will end.

If a vote favors U.S. Steel, Commerce must decide within 210 days of the filing of the complaint whether there is a reasonable basis to believe that dumping exists. At that time, considerable dumping duties could be levied against the foreign producers.

The ITC now must begin sifting through about "25,000 bits of information" from the case, said ITC Director of Operations Charles W. Ervin, who conducted the sessions.

For a finding of dumping, U.S. Steel must prove that the foreign producers are selling products here at prices below the costs of production and that such sales are injuring, or could injure, the domestic industry.

The foreign producers said that if U.S. steel and others have any complaints they should blame high steelworker wages and antiquated equipment.

The foreigners added that the U.S. steel industry already is well protected from import competition and in that, in fact, the domestic steelmakers have told their stockholders they are doing well.

One area of discussion yesterday, which could be pivotal to the ITC's decision, is whether the cases against the seven countries should be considered separately or together.

U.S. Steel contends the cases should be lumped together, but the foreigners are against that. They say their circumstances differ and that, since each country individually has only a miniscule share of the U.S. market, they couldn't injure American producers.

The commission members are divided on whether the cases should be decided together or individually, an ITC spokesman said.

The representatives of the countries also said that the prices of their products have been increasing and in almost all cases the amount of products they ship to America has been declining.