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OCTG ruling vs. Korea may bolster US projects

Keywords: Tags  oil country tubular goods, OCTG, capacity additions, Commerce Department, anti-dumping, Paul Vivian, Preston Publishing, International Trade Commission ITC


NEW YORK — The recent dumping margins assessed on imports of oil country tubular goods (OCTG) from South Korea could set some domestic expansion projects rolling again, market sources told AMM.

"Some of them will be re-energized. We would hope that the ones that are waiting on financing will meet with a better financing environment now that the hurdle of the trade case is out of the way," Paul Vivian, principal of St. Louis-based Preston Publishing Co., told AMM, adding the caveat that the U.S. International Trade Commission (ITC) still needs to rule on injury in final decisions set for August and September.

"Maybe it causes some of these people who might have just had one backhoe going to get backhoe number two back up and running," Vivian said of the potential impetus from the decision on projects.

"I think this would be a big boost," a trader said.

Several domestic welded OCTG projects are in the works, including Prolamsa Group’s mill in Bryan, Texas (amm.com, Aug. 22), Welded Tube of Canada Ltd.’s project in upstate New York (amm.com, March 31) and Tejas Tubular Products Inc.’s expansions in Norfolk, Neb. (amm.com, Jan. 31), and New Carlisle, Ind. (amm.com, Sept. 17), among others.

Another new domestic OCTG project, Alamo Tube Co. (amm.com, July 22), was announced shortly after the duties were imposed, despite the group’s view that the duties assessed by the U.S. Commerce Department’s International Trade Administration (amm.com, July 11) are unlikely to significantly slow Korean shipments.

"Despite our view on the market, the news was welcomed by the welded ERW (electric-resistant welded) producers planning to build capacity," Kim Leppold, an analyst in Metal Bulletin Research’s tube and pipe group, wrote in a recent report.

A source at one southern tubular distributor agreed with the assessment that the duties would not be enough to deter Korean shipments and fretted about a continuing influx coupled with added domestic capacity over the next few years. "They can’t lock out the new mills coming online. They didn’t solve the import problem and they didn’t solve the domestic capacity issue," he said.

Any price increases from domestic producers following the ITC’s final injury decisions will be "hard fought" due to inventory build and domestic capacity coming online, Leppold said. "As well as high inventories of imports thanks to the recent run-up in OCTG volumes, Borusan (Mannesmann Boru Sanayi ve Ticaret AS) is now producing commercially in the United States and looking to sell."

The trader added that more capacity might now also come from an unlikely source: Korea. "I think you’ll see at least one (Korean mill in the United States)," he said. "Everybody is trying to put a mill here, so why wouldn’t the Koreans?"


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