NEW YORK South Korean steelmaker Posco Ltd. should be designated as the producer of oil country tubular goods (OCTG) made by Koreas Nexteel Co. Ltd. due to its extensive involvement in Nexteels supply chain, lawyers for domestic OCTG producers have argued in a filing with the U.S. Commerce Department.
Posco should therefore be named a respondent in the anti-dumping investigation, the lawyers argued. "The bottom line is that Posco controls the production and sale of the subject merchandise and should be considered the producer of the OCTG processed at Nexteels plant."
Nexteel is a mandatory respondent for South Korea in the anti-dumping case, along with Hyundai Hysco Co. Ltd. (amm.com, Sept. 23).
Lawyers argued in the filing that Nexteels rise to become Koreas top exporter of OCTG "in less than five years" after it started building OCTG forming lines in late 2006 points to close cooperation between the two companies.
"Without Poscos substantial and direct involvement in Nexteels operations, it is highly unlikely that Nexteel, a company that had no presence in the international OCTG market, could have rapidly overtaken the market positions of long-established OCTG producers such as Hyundai Hysco, SeAH Steel Co. Ltd., Husteel Co. Ltd. and others," the lawyers wrote.
The supply of hot-rolled coil forms the base of the companies relationship, but it includes other services as well, U.S. OCTG producers allege. "Given that Posco almost unilaterally sets the price for hot-rolled coil in the Korean market, it is clear that Posco can control Nexteels costs of production," the lawyers wrote.
Coil supply figures from Posco to Nexteel were redacted in the filing, although lawyers said Nexteel is Poscos largest customer for American Petroleum Institute (API)-grade coil.
Posco personnel also oversee the shipping of finished Nexteel products, the lawyers wrote, among other services that were redacted in the filing.
Market sources have pointed out that Korean OCTG producers main cost advantage compared with domestics may well be the cheap coil they receive from Korean producers like Posco (amm.com, July 3).
Poscos top executive weighed in on the case in October, predicting a slowdown in OCTG shipments from Korea to the domestic market (amm.com, Oct. 7).
Meanwhile, the domestic OCTG market is said to be at a near-standstill as market participants await preliminary decisionsscheduled to be announced Feb. 13in the anti-dumping case against nine countries.
"Everybodys just waiting for this case," one trader said, adding that the outcome, which has drawn much speculation but is unclear at this point, will be significant for the industry. "Im at the roulette table, waiting for red or black."