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Line pipe profitability hurt amid tepid demand

Keywords: Tags  large-diameter line pipe, American Cast Iron Pipe, Berg Steel Pipe, Dura-Bond Pipe, Stupp, Welspun Tubular USA, anti-dumping, International Trade Commission Thorsten Schier

NEW YORK — The U.S. large-diameter line pipe market remains tepid, with capacity utilization below 50 percent and producers recording losses, according to counsel representing the domestic industry in a sunset review of anti-dumping duties on imports from Japan.

"(The industry) has massive excess capacity; its capacity utilization rates are well below 50 percent," counsel from Washington law firm Schagrin Associates wrote in a pre-hearing brief to the International Trade Commission on behalf of American Cast Iron Pipe Co., Birmingham, Ala.; Berg Steel Pipe Corp., Panama City, Fla.; Dura-Bond Pipe LLC, Export, Pa.; Stupp Corp., Baton Rouge, La.; and Houston-based Welspun Tubular USA LLC.

At the same time, demand has been crimped by stalled approvals for proposed pipelines such as the Keystone XL due to regulatory concerns, while low natural gas prices have meant that others, like the Alaskan North Slope project, have been put on hold indefinitely, according to the filing.

Rail cars also have increasingly taken the place of pipelines in transporting crude oil, "an alternative that is in some ways more flexible and attractive than capital-intensive dedicated pipeline construction," lawyers wrote in the filing.

As a result, profitability also has been crimped. "Profits and return on investment have been falling for years, and in the first quarter of 2013 the industry began losing money. Inventory levels are high and prices are low," the lawyers wrote.

Some mills would face closure if the anti-dumping duties are revoked and exports start flooding the market, according to the filing. U.S. industry maintains that the duties also should be kept in place because Japanese producers have "enormous" excess capacity as a result of Chinese manufacturers taking market share, according to the filing.

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