U.S. to slap duties on steel pipe imports from South Korea
WASHINGTON — 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 move, which is subject to final approval by the U.S. International Trade Commission, is a victory for Iron Range miners and mining companies, who staged a large “Save Our Steel” rally last month to draw attention to the issue and support government sanctions against steel imports.
Critics say foreign-made steel, especially pipe for the burgeoning U.S. oil and gas industries, is being sold below cost — and that the “dumping” of foreign-made steel, especially from South Korea, is strangling the domestic steel industry, which is supplied largly by Minnesota-mined taconite iron ore.
“This decision points to the fact that Korea is clearly violating U.S. trade laws — putting jobs at risk by undermining our market for iron ore mined in America, and steel produced in America,” said U.S. Rep. Rick Nolan, D-Crosby. “The Commerce Department has struck a welcome blow for American workers, American companies and more sensible American trade policies.”
“Today is a good day for America’s steelworkers and OCTG (oil country tubular goods) producers, and also a good day for the U.S. economy,” Alliance for American Manufacturing President Scott Paul said in a news release. “The outpouring of bipartisan support from Congress and the thousands of workers who took the time to make their voices heard underscored the importance of this decision. We hope the International Trade Commission will come to the same, fact-based conclusion.”
The International Trade Commission is set to hold a hearing on the issue on Tuesday, and weigh in on the sanctions later this year.
Friday’s move was an about-face for the Commerce Department, which confirmed in its final determination that duties also would be set on oil country tubular goods from India, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey and Vietnam.
Although the investigation found pipe from Ukraine had been sold in the United States below cost, Commerce officials said they would not collect any duties from that nation.
Several U.S. steel companies lodged the complaint last year after imports of pipe from the nine countries doubled to account for nearly two-thirds of the U.S. market, according to the American Iron and Steel Institute, a steel industry group.
The turnaround cheered domestic steel companies battling a surge in imports from foreign rivals looking to cash in on demand for the specialized pipes due to a boom in U.S. oil and gas drilling.
The duties will lift pipe prices and tighten supplies, helping companies such as U.S. Steel. Its shares rose 3.2 percent to the highest close since mid-April, at $27.64.
“The Department of Commerce’s intensive investigation and final decision shows that the dumping of OCTG transpired through unfair methods and market distorting pricing which caused material harm to the American market,” U.S. Steel President and CEO Mario Longhi said in a news release. “As a result of rising imports, United States Steel has suffered mightily — orders have been reduced, mills have been idled and jobs have been lost. Our only recourse against such actions was with the U.S. Department of Commerce and their ability to support the rule of law and create a level playing field for American manufacturing.”
In its preliminary ruling in February, Commerce found goods from India, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine and Vietnam were sold below cost in the United States. But it did not initially find such dumping from South Korea, whose producers include Hyundai Hysco and Nexteel, excusing the country from duties and sparking a surge of complaints.
Lawmakers and industry groups wrote to the Commerce Department to express concern, steel industry executives complained to Congress and steelworkers staged rallies around the country, including on the Iron Range on June 23. Analysts had been cautiously optimistic of a reversal, which is not uncommon at the final investigation stage.
If the duties are ratified by the International Trade Commission, imports from Hyundai Hysco will have duties of 15.75 percent, Nexteel imports will have duties of 9.89 percent and all other South Korean producers will have a duty of 12.82 percent.
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 Department data.
Attention turns to ITC
Companies also will seek to prove to the ITC that they were injured by the flood of cheap imports.
“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 will tell the ITC how their communities suffered from dumping. The Alliance for American Manufacturing’s 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.”
“The damage already done to our domestic steel industry is severe,” Paul said.
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 Corp., that country’s largest producer of seamless steel pipe, building a $1.1 billion steel processing plant in Texas with joint venture partners.
The final Commerce Department ruling followed legal wrangling over how to define a benchmark price for South Korean products, given that its producers have no domestic market for the pipe.
After the ITC’s Tuesday hearing on the case, 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.
Three of Minnesota’s seven working mining operations supply mills that make steel pipe, John Rebrovich, assistant to the director of District 11 of the United Steelworkers of America, said before the June 23 rally on the Iron Range.
“The last time this happened, in 2000, when the Asian recession hit, they dumped their steel here, and we lost three iron ore companies in one shot,” he said.
Rebrovich was referring to the bankruptcy of LTV Steel, Eveleth Taconite and National Steel.
“Today’s decision is a huge victory for Minnesota steelworkers,” Minnesota Gov. Mark Dayton said Friday. “I thank President Obama and the U.S. Commerce Department for acting to halt this illegal dumping, which threatened the jobs of hard-working Minnesotans.”