AFP
The US Commerce Department on Friday set duties on South Korean steel pipe used in the oil and natural gas industry, reversing itself in one of the most contentious trade disputes in years after hefty lobbying from US producers and lawmakers.
The turnaround cheered domestic steel companies battling a surge in imports from foreign rivals looking to cash in on surging demand for the specialist pipes due to a boom in US shale drilling.
Duties will lift pipe prices and tighten supplies, helping companies like US Steel Corp. Its shares rose 3.2% to the highest close since mid-April, at $27.64.
Commerce Department also confirmed duties on oil country tubular goods (OCTG) from India, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey and Vietnam. Ukraine was exempted from duties under a suspension agreement.
Steel companies lodged the complaint last year after imports of pipe from the nine countries doubled, accounting for nearly two-thirds of the US market, according to steel industry body American Iron and Steel Institute.
The ruling will also aid pipe specialist Tenaris subsidiary Maverick Tube Corp, Boomerang Tube, Energex Tube, a division of JMC Steel Group, Northwest Pipe Company, Tejas Tubular Products, Russia’s TMK IPSCO and France’s Vallourec Star.
In its preliminary ruling in February, Commerce Department found all countries but South Korea had sold imports below cost, excusing the country from duties and sparking a surge of complaints.
Lawmakers and industry groups wrote to Commerce Department to express concern, steel industry executives complained to Congress and steelworkers staged rallies around the country. Analysts had been cautiously optimistic of a reversal, which is not uncommon at the final investigation stage.
The duties are still subject to a final decision by the US International Trade Commission (ITC), where companies must prove they were injured by the flood of cheap imports.
But if they prevail, imports from Hyundai Hysco will have duties of 15.75%, from Nexteel 9.89% and all other South Korean producers will have a duty of 12.82% – levels US Steel CEO Mario Longhi said were “significant.”
US imports of South Korean OCTG were worth $818mn in 2013, more than the imports from all eight other countries combined, according to Commerce data.
“Our job is to demonstrate to the ITC that the US industry was injured by these imports so we ought to have the margins in place for at least five years,” said attorney Roger Schagrin from Schagrin Associates, representing some of the petitioners. United Steelworkers International President Leo Gerard said workers would tell the ITC how their communities were suffering from dumping.
Alliance for American Manufacturing President Scott Paul pointed to layoffs in Ohio and idled plants in Texas and Pennsylvania and said he hoped the ITC would reach a “fact-based conclusion.”
But independent steel analyst Charles Bradford said imports were a “sideshow” compared to a surge in domestic supply, suggesting it may be hard to prove injury. US steel manufacturing has been hit by weaker demand in recent years but pipe sales to the oil sector in the wake of the shale boom had been a bright spot for the industry, which successfully imposed duties on Chinese imports in 2009. Investment in US facilities has risen, with China’s Tianjin Pipe Corp, that country’s largest producer of seamless steel pipe, building a $1.1bn steel processing plant in Texas with joint venture partners.
A report by the Economic Policy Institute and lawyers Stewart and Stewart found US steel imports rose 12.3% between 2011 and 2013 while prices fell 15%.
The final Commerce ruling followed legal wrangling over how to define a benchmark price for South Korean products given producers have no domestic market for the pipe.
The ITC will hold a hearing on the case on July 15. Its decision is due by Aug. 25 for India, the Philippines, Saudi Arabia, Thailand, Turkey, Ukraine, and Vietnam and by September 23 for South Korea and Taiwan.
