NEW YORK U.S.
sheet steel producers are expected to see a bump in business as
a result of the trade case filed by domestic mills earlier this
week against imports of oil country tubular goods (OCTG) from
are positioned to benefit from the filing, market participants
and analysts said, because the tubing mills they sell substrate
to stand to gain business at the expense of foreign mills.
"Anything that arrives
in the next couple of months has a big risk attached to it,
which means the foreign (OCTG) mills will likely stop shipping
or ship much less product," a trader said. "I have to assume
this will tighten up the hot-rolled market significantly."
Earlier this week,
nine petitionersincluding Boomerang Tube LLC, Maverick
Tube Corp., TMK Ipsco and U.S. Steel Corp.filed a trade
complaint alleging that imports from India, the Philippines,
Saudi Arabia, South Korea, Taiwan, Thailand, Turkey, Ukraine
and Vietnam have injured domestic producers (
amm.com, June 2).
The energy patch has
been one of the strongest end markets for steel in the United
States in recent years, a fact underscored by the large number
of companies planning to expand capacity or build greenfield
But while flat-rolled
sheet producers are seen as poised to experience an uptick in
demand, not all mills will benefit equally, according to
Charles Bradford, an analyst at Bradford Research Inc.
"Hot-rolled sheet from
the integrateds (integrated mills) is a little different than
that from the minis (mini-mills). The mini-mills make the
perfect grade of hot-rolled for pipe makers," he told
AMM. "Because they melt mostly scrap, hot-rolled
produced by the minis in some cases has a higher nitrogen
content. As a result, the steel is not as well-suited for
certain types of bending so you dont typically see it
being made into the outer body of a car. But it is perfectly
suitable for pipe."
If the trade petition
is successful, scrap-based steelmakers, including Nucor Corp.
and Severstal North America Inc.s Columbus, Miss.,
facility, are likely to be major benefactors, Bradford
Earlier this year,
Severstal NA was named one of United Metallurgical Co.s
domestic suppliers of hot-rolled coil to source its Houston
amm.com, March 4), while Nucor said in an earnings
conference call that the growing number of planned OCTG mills
would be an "opportunity" for its flat-rolled segment (
amm.com, April 19).
"It is definitely a
positive development for us," a Severstal NA spokeswoman told
AMM. "The pipe and tube market, and especially OCTG,
is an important segment for Severstal in the South and a
fast-growing one. Any increase in domestic production will
benefit Severstal Columbus."
The flat-rolled market
has experienced a few weeks of upward momentum after three
successive rounds of sheet price hikes have taken hold,
bolstered by inventory replenishment requirements and supply
amm.com, June 26) .
Mill and buyer sources
said that even if the massive OCTG trade filing does not prove
successful, merely taking the action may prolong the upward
pricing momentum in the market.
"I think the pipe
dumping case will ... strengthen everything thats already
going on, and maybe hold it for a little more long-term than it
might seem. It will definitely keep the flat rolled market
tight," a flat-rolled mill source said.
however, that a sustained climb could open the door for
competitively priced foreign steel to add market share.
"The trade case will
have immediate benefits, whether its won or not, because
the trading partners will withdraw due to the uncertainty
thats created," Michelle Applebaum, managing partner at
Steel Market Intelligence, told AMM. "The domestic
steel (sheet) market will definitely see a bump, but whether
that bump goes to domestic or imported steel will be a function
of what the price premium looks like in the U.S. vs. foreign