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Lawyers duke it out over OCTG case ruling

Mar 05, 2014 | 05:14 PM |

Tags  Roger Schagrin, Donald Cameron, Schagrin Associates, Morris Manning & Martin, oil country tubular goods, OCTG, anti-dumping, trade case Hyundai Hysco

NEW YORK — Lawyers on opposite sides of the oil country tubular goods (OCTG) trade case against nine countries debated data submitted to the Commerce Department, politics concerning respondent countries, production costs and slimming domestic margins despite a strong energy market.

Roger Schagrin, a trade attorney with Washington-based Schagrin Associates representing seven of the nine domestic petitioners, questioned whether South Korean steelmakers were covering their costs when selling into the United States as well as the accuracy of some of the submitted data.

"How many of you believe that (Hyundai) Hysco (Co. Ltd.) and Nexteel (Co. Ltd.)—at the prices that they were selling OCTG for in the United States between July 1, 2012, and June 30, 2013—were covering all their costs of production plus a reasonable profit?" he asked attendees at AMM’s seventh annual Steel Tube and Pipe Conference in Houston. Commerce "found that nearly half of their sales as reported by importers ... reselling into the United States were priced above U.S. prices," he said.

Donald Cameron, an attorney at Atlanta-based Morris, Manning & Martin LLP representing two Korean and one Turkish steelmakers in the case, responded that data accuracy claims are common after a trade ruling that does not go in the domestic industry’s favor.

"If the industry loses, the lawyers say: The data’s gotta be wrong, it couldn’t possibly be right," Cameron said, pointing out that the dumping rates alleged by the domestic industry in the petition were vastly overstated compared with the preliminary Commerce Department margins (, Feb. 18). He said he was not surprised that Korean steelmakers received an initial margin of zero.

As for countries chosen for the trade case, Cameron pointed out that not one country affiliated with a petitioner was cited in the trade case.

But Schagrin said that the steep rise in imports over the past few years was due to the countries cited in the filings. "People complain and say ‘jeez, why aren’t some of the U.S. producers ... filing against their related countries in foreign countries?’ The answer is those aren’t the countries that accounted for the increase in imports," he said.

Despite ongoing profitability for most domestic OCTG producers and significant investments in the industry, domestic interests indicated that unfair imports remain a threat as slimming profit margins are coming during an unprecedented boom in demand.

"When you have consumption go from 5 million to 7.2 million tons, you would expect the industry’s profits to increase," said Schagrin, noting that profit margins fell to 1.7 percent in the first quarter of 2013 despite the rise in volumes.

While U.S. producers and some of their representatives have claimed that raw material costs play little role in finished OCTG pricing, Cameron countered that the significantly lower hot-rolled coil prices enjoyed by Korean OCTG makers drive competitiveness despite logistical obstacles.

"For most producers in the world, there is a correlation between costs and price, and those things do relate and that means that a $200-(per-ton) differential (on hot-rolled coil prices) is going to have an impact and is going to result in a lower dumping margin," he said.

Schagrin said that if the trade case is unsuccessful the results for U.S. steelmakers could be dire. "If there is a negative final determination against the Koreans—and they’ve already gone from 80,000 tons a month last year to 125,000 tons a month of OCTG in the first two months of this year—by 2015 they’ll be doing 200,000 tons per month, and I will absolutely guarantee that one-third of the new mills that were on the drawing board won’t get built and about eight to 10 mills that are either new or older mills will get shut down," he said.

U.S. steelmakers filed the trade case last summer (, July 2). A final ruling is due by July 7.

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