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A closer look at the OCTG trade petition

Keywords: Tags  OCTG, oil country tubular goods, anti-dumping, Philippines, Thailand, Saudi Arabia, Korea, China Turkey

NEW YORK — The Philippines and Thailand have been included in a recent anti-dumping and countervailing petition filed against nine nations that produce oil country tubular goods (OCTG) because Chinese tube makers that were barred from supplying the domestic market by anti-dumping and countervailing duties imposed in 2009 have set up shop in the two countries, the filing alleges.

"The likely source of most, if not all, of that material (OCTG imports from the Philippines to the United States) is an operation that was set up in the Philippines by a Chinese producer of OCTG (HLD Clark Steel Pipe Co. Inc, a subsidiary of China-based Huludao City Steel Pipe Industrial Co. Ltd.) whose access to the U.S. market was restricted by the 2009 anti-dumping and countervailing cases against Chinese OCTG," attorneys wrote in a filing on behalf of domestic producers.

Likewise, Thailand’s inclusion in the case was the result of a similar association with a Chinese seamless producer, WSP Holdings Ltd., whose subsidiary in the country is WSP Pipe Co. Ltd., attorneys with Washington-based law firms Skadden, Arps, Slate, Meagher & Flom LLP; Wiley Rein LLP; and Schagrin Associates said in the filing.

Market sources expressed surprise at the inclusion of the two countries, as well as Saudi Arabia, due to their relatively low shipment volumes compared to other countries cited in the filing.

"The only two that are surprising ... are Saudi Arabia and Philippines. Thailand is interesting too," one trader said.

In addition to Chinese producers transplanting their operations to other Asian countries, threats to the domestic industry mentioned in the filing were significant expansions in seamless and welded production in India by Rashmi Seamless Ltd., Khanna Industrial Pipes Private Ltd. and Maharashtra Seamless Ltd.; welded OCTG production expansions in Turkey by Toscelik Profil Ve Sac End. AS, which has claimed it is building the largest pipe plant in Turkey in a single investment, and a seamless capacity expansion to 2 million tonnes annually by Interpipe NTRP in the Ukraine.

The case against South Korean OCTG producers, by far the largest shippers of the countries targeted in the suit, could be complicated by the fact that many sources believe their advantage lies in low coil prices.

A second trader said that in his opinion, "this case is as much against (South Korean flat-rolled producers) as against the pipe mills."

As a result, he said he expects a difficult case.

"This will not be decided within the regular deadlines. It’s going to be a long, long, drawn-out affair," he said, but added that a trade case had become almost inevitable due to growing import volumes.

"When imports take half of the market, it’s bound to happen," he said.

Sources have said some countries might try to increase shipments before any preliminary margins are set, though there is a danger of essentially retroactive provisions coming into play that would make any potential duties effective closer to the date of filing, they said.

Countries where foreign producers with U.S. operations participating in the case have facilities were largely left out of the filing. An exception is Chesterfield, Mo.-based Maverick Tube Corp., a subsidiary of Tenaris SA, and Vallourec Star LP, a subsidiary of France’s Vallouorec SA, which did not take a position in the filing against Saudi Arabia, where Luxembourg-based Tenaris has a threading operation, according to its website.

Prior to the filing, the U.S. International Trade Commission had revoked anti-dumping duties on imports of OCTG from Argentina, Italy, Japan, Korea, and Mexico in 2007, determining that the move "would not be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time," according to a statement.

In other recent energy tubular filings, domestic producers filed an anti-dumping petition against Chinese and Korean producers of circular-welded steel line pipe in 2008, only to later withdraw the filing against Korea.

The domestic industry lost a case last year asking for anti-dumping duties on circular-welded carbon-quality steel pipe from India, Oman, the United Arab Emirates and Vietnam, with the ITC determining in a 4-2 vote that the domestic industry was not hurt by imports from those countries.

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