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UPDATE 2-U.S. slaps duties on steel pipe from China

* Ruling is victory for U.S. Steel, union workers

* U.S. expected to announce more duties in April (Updates with Commerce Department announcement)

WASHINGTON, Feb 24 (Reuters) - The United States on Wednesday imposed preliminary duties ranging from 11 to 13 percent on steel pipe from China to offset government subsidies, the Commerce Department said.

The decision puts further strain on U.S.-China trade relations, already tested by disputes over other U.S. trade actions and China’s currency policy.

It is a victory for U.S. Steel Corp X.N and the United Steelworkers union, which filed a petition in October asking for protection against the Chinese imports.

Texas company V&M Star LP and Illinois company TMK IPSCO also signed the petition asking for relief.

Roger Schagrin, an attorney representing the petitioners, said he believed the Commerce Department underestimated the amount of Chinese government subsidies.

But “we’re still happy (with the countervailing duties). They’re in the double digits,” Schagrin said.

The case concerns seamless carbon and alloy pipe of 16 inches (41 cm) or less in outside diameter used in industrial piping systems to carry water, steam, petrochemicals, chemicals, oil products, natural gas and other liquids and gasses.

The United States imported $382 million of the pipe from China in 2008, compared to $130 million in 2007.

Imports declined in 2009 along with the overall drop in world trade but surged late in the year as importers tried to beat anticipated duties, Schagrin said.

The Commerce Department set a preliminary duty rate of 12.97 percent on the Hengyang group of companies and 11.06 percent on the Tianjin Pipe Group Co and related firms.

All other Chinese producers and exporters will face a country-wide duty rate of 12.02 percent.

U.S. petitioners have also asked the Commerce Department to impose anti-dumping duties in addition to the countervailing duties announced on Wednesday.

Those duties aimed at below-market prices are often far larger than countervailing duties that Commerce imposes.

“We’re optimistic that we’ll get significant anti-dumping duties” when the decision comes out in April, Schagrin said.

Reporting by Doug Palmer; Editing by Eric Beech