NEW YORK U.S. Steel Corp. said it has struggled to make an adequate return on its $2.1-billion investment in welded oil country tubular goods (OCTG) producer Lone Star Technologies Inc. in 2007 due to a rise in unfairly traded imports.
"U.S. Steel properly saw that demand for these products was growing, and it made a massive investment to take advantage of that fact," attorneys at Washington-based law firm Skadden, Arps, Slate, Meagher & Flom LLP wrote in a post-hearing brief filed with the International Trade Commission (ITC) in an anti-dumping and countervailing case against nine OCTG-producing countries.
However, the domestic market was hit first by an influx of dumped OCTG from China, and, after the successful filing of a trade case, by another wave of unfair imports from the nine countries, all of which increased their exports to the United States by "huge percentages" during the 2010-12 investigation at "very low prices."
As a result, even as domestic OCTG consumption is on pace to grow to 6.5 million tons this year, profit margins for domestic producers have fallen over the last three years, lawyers for the Pittsburgh-based steelmaker wrote.
If prices of imports from the nine countries had been 5 percent higher between 2010 and 2012, domestic revenues would have increased by $793 million to $1.3 billion, Dr. Michael Whinston, professor of economics and management at the Massachusetts Institute of Technology, testified during an ITC staff conference July 23, according to the filing.
"In short, the record contains overwhelming evidence that during three of the best years in recent history for OCTG demand, subject imports deprived U.S. mills of the money that they could have made in a fair market," the lawyers wrote.