July 2014

The last barrel

Pipe dumping trade case proceeds in U.S.

Kurt Abraham / World Oil


Not receiving much publicity, but still proceeding is a trade case launched by nine U.S. pipe manufacturers, alleging that South Korean firms, and others, are illegally dumping large amounts of oil country tubular goods (OCTGs) on the U.S. market at abnormally low prices.

Executives at TMK IPSCO recently updated World Oil on the case, which is now a year old. Back on July 2, 2013, TMK IPSCO and eight other domestic pipe manufacturers launched a trade case (Docket no. 2965 at www.usitc.gov) with the U.S. Department of Commerce (DOC) and the U.S. International Trade Commission (ITC), requesting that they launch anti-dumping and countervailing duty investigations against nine countries. They alleged that OCTGs were being dumped on the U.S. market by South Korea, Taiwan, Saudi Arabia, Vietnam, the Philippines, India, Thailand, Turkey and Ukraine.

Two of the companies did not take positions on Saudi Arabia. “In our petitions, we, the companies, charged that the above-named countries have been flooding the U.S. market with OTCGs at ‘dumping margins’ ranging anywhere from about 12% to as high as 240%,” said TMI IPSCO Chairman Piotr Galitzine.

As explained by TMK IPSCO Senior V.P. and Chief Commercial Officer Scott Barnes, and quoted from the Tariff Act of 1930, the term, dumping margin, means “the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise.” For instance, in the case of the South Koreans, if the fair, normal value of items being exported to the U.S. is $1,000, and the exporting companies are only charging $470.90, the difference, the dumping margin, is $529.10. On a percentage basis, compared to the $470.90 level, the $529.10 equates to a dumping margin of 112.36%.

South Korea is the most egregious case, because in 2012, it exported nearly half of the 1,771,320 net tons in question. “Unfortunately, 40% to 50% of all pipe on the U.S. E&P market is coming in as imports—there’s just too much excess global capacity directed at the U.S.,” said Barnes.

Once the case was launched, DOC engaged in data and information collection, after which DOC released preliminary results on Feb. 18. Federal officials inexplicably gave the South Koreans a temporary free pass, even though DOC did not send its own accountants out, to look over the nine companies’ books, until later.

However, the process is not finished, said Barnes. “We were disappointed, because DOC felt that zero additional tariff was warranted or should be imposed on Korea. But the DOC had not had the chance to review many of the complainant companies’ briefs. So, we’re very hopeful that by July 11, when DOC has to issue its final ruling, that they will have a clearer picture, and a margin will be assigned.”

Once DOC issues its ruling, the ITC has to act on those findings and determine whether there has been injury to U.S.-based pipe producers, explained Barnes. A July 15 hearing will be followed by additional filings and a final decision on approximately Aug. 14. The U.S. firms hope that after numerous plant closings, including one by TMK IPSCO, and reduced hours at others, there will be a positive finding. The trade case results, one way or the other, will certainly have repercussions for TMK IPSCO’s future, said Galitzine.

Farewell to a prominent independent. It is with great sadness that we report the death of Thomas J. (Tommy) Taylor on June 19, when a plane he owned, and was piloting, crashed west of Lubbock, Texas (see also page 171). Tommy was the former chairman of the Texas Alliance of Energy Producers while I was still on that group’s staff, so I was fairly acquainted with him. He was a colorful fellow, well-known and liked among U.S. independent producers, as well as legislators in Texas and Washington, D.C. He was a good friend of Texas Gov. Rick Perry for roughly 30 years.


Tommy Taylor speaks to a Texas Alliance meeting in Abilene, as chairman, during 2011, with Bill Stevens standing at far right.

Tommy’s businesses did very well for him over more than 35 years, and he accumulated three homes and a ranch. “He was a first-rate negotiator; he loved to negotiate a deal,” remembers Bill Stevens, chief government relations advisor for the Texas Alliance, who grew up with Taylor in Abilene. “Tommy was a really good athlete. He was a good polo player, a good snow skier, and at age 60, he could still barefoot water ski. And he loved to fly that airplane—he was a really good pilot. Most of all, he was a great father—he loved his four kids (now adults).”

Tommy died while using one hobby (flying) to take care of another hobby (polo). The two Colorado residents, who died with him in the crash, were friends that he had hired and was ferrying down to Brenham, Texas, to pick up some polo ponies and drive them back to Aspen. Sadly, due either to bad weather, mechanical failure or both, they never got to Brenham. Tommy Taylor will be missed by many. wo-box_blue.gif

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Kurt Abraham
World Oil
Kurt Abraham kurt.abraham@worldoil.com
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