TPT September 2013

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Global Marketplace
100 September 2013
Steel
US Steel is among the petitioners
for a government investigation
into OCTG imports from nine
nations
A group of US makers of speciality steel pipe for oil and gas
drilling has launched one of the biggest trade cases in years,
asking the US International Trade Commission (ITC) to curb
what they claim is a flood of unfairly traded products from
nine countries. If the effort is successful, the price of some
high-margin steel products sold to the energy industry could
rise, benefiting United States Steel Corp and other domestic
producers.
The petition, filed 2 July on behalf of US Steel and eight other
companies, asked the commission to investigate imports
of some oil country tubular goods (OCTG) from India, the
Philippines, Saudi Arabia, South Korea, Taiwan, Thailand,
Turkey, Ukraine and Vietnam.
In the opinion of Nomura Securities analyst Curt Woodworth,
the filing was a “modest positive” for US producers, but he
noted that domestic capacity is already set to rise in 2014 and
2015. “These trade cases can be time-consuming,” he told
Reuters (2 July). “With anti-dumping cases you need to prove
financial injury. That will be difficult, given that most of the
[petitioners] are still very profitable.” (“US Steel Pipe Makers
Defend Energy Business with Trade Case.” India edition, 3
July)
Cutting its profit estimates for US Steel on 3 July, the ratings
agency Standard & Poor’s also saw the ITC complaint as a
potential positive, although a final resolution would take some
time. In the short term, Mr Woodworth said, some countries
exporting to the US may dial back their aggressive pricing.
Even as US steel manufacturing suffers weaker demand,
steel pipe sales to the oil sector are a bright spot. In a sign
of how quickly demand for pipe has grown – driven by
shale rock exploitation facilitated by such horizontal drilling
techniques as hydraulic fracturing (“fracking”) – the number of
horizontal drilling rigs tracked by Baker Hughes has risen 83
per cent since the start of 2010.
Spurred by this activity, imports of OCTG from the nine
countries cited in the petition have doubled in the past few
years to almost 1.8 million metric tons. They accounted for
about 63 per cent of the US market last year, according to the
American Iron and Steel Institute.
› For its part, the American Institute for International Steel
(AIIS), the Washington, DC-based trade organisation
representing steel importers and exporters alike, called the
ITC filing “excessive and unwarranted” and warned that it
could disrupt oil and gas drilling.
According to David Phelps, the AIIS president, while the
low end of the market is over-supplied, this is not the case
for high-end seamless pipe sold by US Steel and others. He
said, “We think this” – the ITC petition – “is an overreach.”
› In 2010, the US Commerce Department applied anti-
dumping duties ranging from about 30 to 99 per cent on
OCTG from China. The parties to the latest ITC petition are, in
addition to US Steel: Tenaris subsidiary Maverick Tube Corp;
Boomerang Tube; Energex Tube, a division of JMC Steel
Group; Northwest Pipe Co; Tejas Tubular Products; TMK
IPSCO; Vallourec Star; and LP Steel.
On the other hand . . .
› “Buy America” rules require the federal government to
source domestically melted steel for use in transportation
infrastructure projects. But American Metal Market reported
(5 July) that, according to numerous sources in themarketplace,
“it appears that a handful of players may circumvent those
rules in an effort to improve their margins”.
“There are honest mills and there are dishonest mills, and
there’s no one doing anything to check and certify the mills,”
one industry source said of the alleged violations.
This source told AMM that the steel wire mill where he was
once employed was one such company: “[The mill] would
say it was this made-in-America melt chemistry. They would
submit made-in-America paperwork for foreign material.”