Thomson Reuters Tax & Accounting News

Featuring content from Checkpoint

Back to Thomson Reuters Tax & Accounting News

Subscribe below to the Checkpoint Daily Newsstand Email Newsletter

U.S. oil pipe tariff ruling hits western manufacturers

February 20, 2014

By Michel Rose, Blaise Robinson and Raoul Sachs

PARIS (Reuters) – Shares in steel tube makers Tenaris and Vallourec tumbled on Wednesday after U.S. trade authorities decided not to impose tariffs on the South Korean imports that compete with their products.

The U.S. Department of Commerce launched an investigation last July in response to a petition from the two European companies and others including Northwest Pipe Company.

The group complained that manufacturers in South Korea, India and seven other countries were selling the kind of steel pipe mainly used by oil and natural gas producers at unfairly low prices in the United States.

In a preliminary decision dated February 18, the Department of Commerce said it had found dumping of imports from India, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine and Vietnam, but not from South Korea’s Hyundai Hysco and Nexteel Co.

France’s Vallourec, which made 29 percent of its sales in North America in 2012, is a big manufacturer of pipes in the United States, having built a $650 million plant in Ohio to capitalise on the U.S. shale gas boom. It had joined the case against Asian-based manufacturers. Tenaris owns U.S. manufacturer Maverick Tube Corporation.

A spokeswoman for Vallourec noted that the decision was a preliminary ruling and said that “a counter investigation is expected to be launched”.

Tenaris and Vallourec shares fell by 5.6 percent and 5.1 percent respectively on Wednesday, making them the biggest losers on Europe’s broad STOXX 600 as traders cited the U.S. anti-dumping ruling hitting the sector.

“There was expectation that South Korea would be included, which would have been good news,” one Paris-based trader said.


Natixis analyst Julien Laurent said: “Many people in the market were thinking that the key for improving the pricing power would be some reduction in the imports coming from South Korea.

“I assume that the consensus will have to downgrade its estimates (of future earnings per share) a bit. I would say for Tenaris it would be more than 5 percent.”

U.S. producers were asking for anti-dumping duties as high as 240 percent on India, 158 percent on South Korea, 118 percent on Thailand and 111 percent on Vietnam to offset what they said was below-market pricing. They asked for lesser, but still hefty, duties on the other countries.

Imports of oil country tubular goods (OCTG) from the nine countries totalled nearly $1.8 billion in 2012, more than double the 2010 total, as rising U.S. oil and natural gas production boosted demand.

A final ruling by the Department of Commerce is expected “on or about” July 8, it said in the statement. The U.S. International Trade Commission (ITC) is then expected to give a final decision on August 21.

Under the U.S. system the Department of Commerce investigates charges of unfair trade to determines whether duties are appropriate and at what level, but the ITC has the final word on whether duties are imposed.

(Additional reporting by Blaise Robinson and Raoul Sachs)