(Adds comment on ITC decision)
By Krista Hughes
WASHINGTON, July 11 The U.S. 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
U.S. 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 U.S.
Duties will lift pipe prices and tighten supplies, helping
companies like United States Steel Corp. Its shares rose
3.2 percent to the highest close since mid-April, at $27.64.
Commerce 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 U.S. market, according to steel industry body
American Iron and Steel Institute.
The ruling will also aid pipe specialist Tenaris
subsidiary Maverick Tube Corporation, 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 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 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 U.S.
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 percent, from Nexteel 9.89 percent and
all other South Korean producers will have a duty of 12.82
percent -- levels U.S. Steel CEO Mario Longhi said were
U.S. imports of South Korean OCTG were worth $818 million in
2013, more than the imports from all eight other countries
combined, according to Commerce data.
MUST PROVE INJURY
"Our job is to demonstrate to the ITC that the U.S. 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
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
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.
U.S. 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 U.S. facilities has risen, with China's
Tianjin Pipe Corporation, that country's largest producer of
seamless steel pipe, building a $1.1 billion steel processing
plant in Texas with joint venture partners.
A report by the Economic Policy Institute and lawyers
Stewart and Stewart found U.S. steel imports rose 12.3 percent
between 2011 and 2013 while prices fell 15 percent.
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 Sept. 23
for South Korea and Taiwan.
(Reporting by Krista Hughes; Additional reporting by Julie
Gordon in Vancouver and Josephine Mason in New York; Editing by
Alden Bentley and David Gregorio)