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US Steel Makers Call for Import Tariffs to Ward Off South Korean Imports

Although U.S. steel producers generally have indicated strong demand so far this year, especially in the pipe and tube related to the oil and natural gas sector, U.S. Steel, America’s largest producer, has demanded federal action to restrain imports from South Korea. So far, 2014’s January through April shipments from that highly productive Southeast Asian industrial nation have reached almost 900,000 tons, a 73% jump from the first quarter of 2013.

U.S. Steel indicated that it would be shutting plants in Texas and Pennsylvania, blaming what they considered were subsidized South Korean government arrangements, which allowed imported steel to be offered at discounts up to 20%. Previous complaints by U.S. Steel were filed with the U.S. Trade Commission back in February, but were considered not valid. Supporting the U.S. Steel position is Russian-owned TMK IPSCO, which is among the largest U.S. producers of lucrative tubular steel. TMK is simultaneously threatening plant shutdowns, charging similar government subsidized discounts by South Korea.

The hard-pressed U.S. steel industry, once the world’s mightiest, has been overtaken by massive expansion in China, India, Russia and even such European steelmakers as tiny Luxemburg. Despite the sharply increased demand for steel this year, engendered by piping system expansion, and the accelerating need for steel engendered by the almost unlimited surge of oil and natural gas fracking, have been outpaced by an overwhelming global steel industry that is today brimming with an over-capacity of 500 million tons. But even such a potentially explosive growth, capacitated by U.S. energy development, has been overridden by world imports, which have the ability to satisfy America’s booming demand, with thousands of tons to spare.

This is acknowledged by $4.7 billion worth of steel imports for the oil and gas industries alone last year. This caused prices for energy-related steel to fall by 2.4% during 2014’s first quarter, even though demand increased 22%, according to the OCTG Situation Report, which compiles data on the steel industry.

Even though steel prices in general have been weakening, tubular steel for “shale fracking” remains far more profitable than hot-rolled coil, which is used in cars and appliances. While U.S. steel makers substantially increased capacity in the last five years to accommodate higher demand from energy companies, they didn’t count on the requisite volume and acceptable quality levels available from South Korea and China. According to distributors primarily involved with pipe for “horizontal drilling” for hydraulic fracking developments which require more than twice the tons of pipe used in conventional vertical drilling, this is becoming more difficult to acquire in a timely fashion.

Latest information from the U.S. Energy Information Agency, indicates this trend of longer availability time, and higher future pricing is sure to manifest itself in the second half of 2014, as “fracking expansion” is now estimated to accelerate.

For future easy access to my blogs, please use the link below, and bookmark it to your desktop. The old link you may be using is still available. However, an alternate link is: https://mydesert.com/beschloss   Morris Beschloss, TDS

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