Commerce imposes higher penalties on S. Korean drilling pipe; impact questioned
The Department of Commerce on Friday imposed penalties on South Korean imports of pipe into the United States, an action sought by the steel industry and its supporters who said thousands of jobs were at stake.
The agency's final decision reversed a preliminary finding in February — sharply criticized by the industry — which did not levy any anti-dumping duties on South Korean producers. The earlier ruling said Korean prices weren't below what steel was sold for in the American market.
The final penalties on so-called oil country tubular goods range from 9.89 percent on Nexteel Co. Ltd. to 15.75 percent on Hyundai Hysco, South Korea's two largest producers, and a 12.82 percent margin on other producers.
South Korea is the biggest importer of pipe among nine nations targeted in a trade case filed last year by U.S. Steel Corp. and eight others.
U.S. Steel “is pleased with the Department of Commerce's final decision finding significant unfair trade margins against the vast majority of subject imports, including South Korea,” CEO Mario Longhi said in a statement. “U.S. Steel has suffered mightily — orders have been reduced, mills have been idled and jobs have been lost.”
The Pittsburgh-based steelmaker's stock jumped on the news, rising 3.2 percent to $27.64, up 86 cents. The company has blamed competition from cheap imports for a decision to idle money-losing plants in McKeesport and Bellville, Texas, that make line pipe for the drilling industry.
The decision on Friday will not change the closings, said spokeswoman Courtney Boone. The plants will be closed indefinitely in early August, affecting 260 workers, including 180 in McKeesport.
U.S. Steel is working to cut costs after five years of annual losses. The company's Carnegie Way initiative so far has achieved $290 million in annual savings with cost cuts and undisclosed layoffs.
The Korean government is “deeply disappointed by the determination, which disrupts the current level playing field with inflated dumping margins,” said Youngjae Kim, an official at the Korean embassy in Washington.
John Tumazos of Tumazos Very Independent Research of Holmdel, N.J., said the decision likely won't change South Korea's behavior.
“I don't think that's a big deal because some of these products sell for $1,500 a ton and have large profit margins. A $150-per-ton duty clips them but there's still significant profit,” Tumazos said. “I don't expect a 10-15 percent duty to change their behavior; it could actually embolden them because it's so small.”
“Dumping duties of at least 30 percent would be needed to chase them away, and 50 percent would be better,” Tumazos said.
The next step in the process happens on Tuesday, when the International Trade Commission will hold a hearing on the case. The six-member independent federal agency makes final rulings on investigations conducted by the Commerce Department. The ITC is expected to take a final vote in mid-August.
Steel industry figures show that imports surged nearly 110 percent since 2008 from those countries. Total steel imports are at record levels — 28 percent of the United States market in May — and are largely to blame for one of the industry's worst crises in a decade.
An estimated 4,184 workers in eight states lost their jobs to the import surge since the beginning of 2012. And nearly 1,000 steel jobs were lost in the first three months of 2014, said a recent study by the Economic Policy Institute, a Washington think tank.
U.S. steelmakers were anticipating big benefits from supplying pipes for the booming drilling industry in Pennsylvania and other states. But those gains were being neutralized by cheaper imports that have depressed prices. Victory for steelmakers could mean higher costs for drillers. Pipe imports rose from 840,313 tons in 2010 to 1.76 million tons in 2013, according to the American Iron and Steel Institute, the industry's trade association, which claimed the nations dumped products in the United States at below cost. South Korea alone shipped 894,300 tons in 2013.
The latest decision has been highly anticipated by the industry and its supporters. They have held rallies and have lobbied Congress and the administration for action. Lawmakers sent letters to Secretary of Commerce Penny Prizker and Trade Ambassador Michael Froman.
“Today's announcement by the Commerce Department sends a long-overdue signal to foreign countries that trade crimes will not be tolerated, but it's a bittersweet ruling for the hard-working Southwestern Pennsylvania families who've already lost their jobs due to illegal dumping by South Korean steelmakers,” said Steel Caucus Chairman Tim Murphy, R-Upper St. Clair.
Petitioners included TMK IPSCO, which has two plants in Beaver County; Vallourec Star, with a tubing plant in Youngstown, Ohio; Boomberang Tube; Energex Tube, a unit of JMC Steel; Maverick Tube Corp.; Northwest Pipe Co.; Tejas Products; and Welded Tube USA Inc.
John D. Oravecz is a staff writer for Trib Total Media. He can be reached at 412-320-7882 or firstname.lastname@example.org.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Trib 30 stocks drop to 4-month low
- Natural gas industry buys share of Super Bowl spotlight
- PPG submits offer for French sealants, adhesives business unit
- Kennametal plans plant closings, job cuts in fallout from oil and gas decline
- Consumer comes to the rescue as companies step back
- Obama seeks $215M for precision medicine initiative
- Consol Energy posts $74M profit in fourth quarter
- Subaru BRZ still needs upgrades
- Wall Street closes January on down note; Dow sheds 251 points
- BNY Mellon is putting iconic Citizens Bank Tower up for sale
- Phelan: Fuel-saving tips for winter driving