WASHINGTON DC – The International Trade Commission (ITC) on Friday confirmed the imposition of tariffs on imports of steel pipe and tube from South Korea and five other countries. The ITC ruling makes the tariffs, up to 15.75 percent for South Korean companies, permanent and marks a major political and economic victory for US steelmakers, especially US Steel Corp. X +2.66 percent , eager to protect their business of selling steel pipe and tube to American oil and gas drillers, which represents one of the world's most lucrative steel markets. US Steel stock rose on the news, up 2.5 percent around noon.
US Steel Chief Executive Mario Longhi said the ITC vote "will ensure a more competitive and fairer…market for American manufacturing and American workers." However, Longhi said his company would "continue to evaluate all of its options, including further litigation" against Saudi Arabia, Thailand and the Philippines, three steel exporting countries not covered by the ITC decision Friday.
The other five countries affected by Friday's ruling are India, Taiwan, Turkey, Ukraine and Vietnam.
With the rest of the world awash in mostly unprofitable steel, the US has become a jewel for foreign steelmakers. Imports of so-called oil-country tubular goods rose 22 percent during the first half of 2014 to 1.8 million tons from 1.4 million tons over the same period in 2013.
Steelmakers say there is plenty of opportunity in the future. "Because of this cheap energy, there's a lot of infrastructure with steel going on," Piotr Galitzine, chairman of TMK-IPSCO, said in an interview last week. "We've identified 120 billion worth of projects in the US which have to do with gas as a fuel and feedstock."
The tariffs are meant to punish foreign companies for selling below cost, at artificially low prices, in an attempt to grab market share in the US, at the expense of US-based steelmakers such as US Steel and TMK.
The decision is also the culmination of one of the fiercest trade battles in years. Mr. Longhi and Leo Gerard, president of the United Steelworkers union, made frequent appearances in Washington in an effort to put political pressure on regulators.
Because of the imports, TMK says it has had to cut operating hours at plants in Arkansas, Iowa and Kentucky, and idle one mill in Kentucky. US Steel, blaming imports, this month is "indefinitely idling" plants in McKeesport, Pa., and Bellville, Texas.
While protecting US steelmakers, the tariffs will raise the costs of oil and gas companies drilling everywhere from Western Pennsylvania to the Gulf of Mexico.
And they won't entirely stop imports, because foreign steel companies have such lower costs, partly because of subsidies, industry experts said.
"If the findings had been dramatic enough to stop all imports from South Korea, we'd be looking at Korea leaving behind a 25 percent market void," said
Galitzine, referring to South Korea's current share of the market. However, with tariffs in the 5 percent-to-15 percent range, some imports will still trickle through, he said.
Imports from another country will likely take South Korea's place, as happened when tariffs were imposed on imports from China in 2010, say steel executives. — Agencies
