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OCTG ruling may be a bad omen: Goldman

Keywords: Tags  Goldman Sachs, OCTG, anti-dumping, rebar, Thorsten Schier


NEW YORK — The U.S. Commerce Department’s preliminary ruling in an oil country tubular goods (OCTG) anti-dumping investigation may foreshadow unfavorable rulings in other pending trade cases, according to Goldman Sachs Group Inc.

"Of all the trade cases filed in the United States, OCTG seemed to have the strongest argument in our view as almost 60 percent of market share is controlled by imports," analysts wrote in a note. "We believe this unfavorable ruling does not bode well for other trade cases, especially against rebar imports as rebar imports constitute only 14 percent of the U.S. rebar market."

However, the ruling—Commerce’s International Trade Administration assessed no dumping margins on South Korean OCTG producers and smaller-than-expected duties on other countries ( amm.com, Feb. 18)—has not changed Goldman Sachs’ overall bullish view on Pittsburgh-based U.S. Steel Corp., one of the petitioners in the trade case, due to improving steel market fundamentals.

"The OCTG trade case was just a small incentive in our positive view on (U.S. Steel), but not a fundamental driver of our thesis. We are buyers on any dip in U.S. Steel on the back of this news," the analysts wrote.

There also is a chance that the final determinations in the OCTG trade case could differ materially from the preliminary results, the analysts said, noting that in a 2009 case against Chinese OCTG the preliminary dumping margin for Tianjin Pipe (Group) Corp. was zero but the final ruling assessed a 99-percent dumping margin.

"Although we are not anticipating any major reversal in these recent preliminary duties, based on past experience some of these decisions could turn out to be more positive in the final (Commerce) determination," New York-based Goldman Sachs said.


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