Local steel industry advocates are cheering a government decision to set duties on foreign imports that undercut prices fetched by U.S. products used in oil and gas exploration.
The U.S. Department of Commerce has decided that tariffs will be added to imports of steel pipe from nine oil countries: India, South Korea, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine and Vietnam.
The steel pipe is used mainly in drilling oil and gas wells, and the imports, especially from South Korea, have figured heavily in the recent U.S. drilling boom, including the shale fields in eastern Ohio.
“We believe the trade case sets a precedent which will have a positive impact on future import prices, as the affected countries will want to avoid any further trade case investigations,” said Dave Mitch, president and chief executive of Houston-based TMK IPSCO, which employs 350 at a plant in Wilder, Kentucky.
TMK was among nine companies that last year petitioned for trade relief, citing concerns that imports were sold at less than fair value in the United States or benefited from a foreign government subsidy. As a result, companies said they were being hurt by a rising number of imports.
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The duties will make steel pipe from those countries more expensive but domestic manufacturers say that’s important to leveling the competitive landscape.
“We support fair trade,” U.S. Rep. Tim Ryan, D-Ohio, said this week in a conference call with reporters. “We support opening markets abroad, but we also support enforcement in the face of countries trying to take advantage of the American market.”
The Friday ruling by the Commerce Department is the first of two decisions expected to deal with the issue. By late August, the International Trade Commission is expected to make a final determination whether U.S. producers suffered harm or would be threatened by the imports without any interventions.
Several legislators including U.S. Sen. Sherrod Brown, D-Ohio, spoke at a Trade Commission hearing Tuesday on the case. In his testimony, Brown focused on two South Korean producers who accounted for the biggest share of imports flooding the market because there is no domestic market for the product.
Groups ranging from trade associations such as the American Iron and Steel Institute to the AFL-CIO and United Steelworkers lobbied members of Congress and the Obama administration to push for a ruling that would support domestic manufacturing.
“I’m pleased with this ruling reaffirming that American manufacturers deserve to compete on a level playing field,” U.S. Sen. Rob Portman, R-Ohio, said. “Ohio pipe and tube companies are among the best in the world, but we must stand up to foreign competitors who break trade rules at the expense of Ohio workers.”
Oil country tubular goods are high-value steel products that are serving the energy sector, which is seeing growth as a result of fracking and other means of domestic energy production. Several manufacturers have spent millions to upgrade or build new U.S. facilities to serve this market.
In Wilder, TMK has invested $77.5 million in equipment and technology upgrades and new buildings since the second half of 2007, the company says.
It turns steel bought from producers such as Gallatin Steel into steel pipe up to 16 inches in diameter. Steel production ended at the mill in 2001, but higher levels of domestic energy production is helping the mill remain viable.
Steel produced for the U.S. energy market accounts for about 10 percent of domestic steel production and nearly 8,000 American jobs in more than 22 states, according to a news release from Brown and Portman. Imports of oil country tubular goods have doubled since 2008 and increased by 61 percent so far in 2014 compared to 2013.