Like many folks who write blogs, we use Google alerts for certain key words on a daily basis to keep tabs on news happenings involving events that may impact metal buying communities. This week, however, I have been on the road and therefore tend to rely a bit more on these alerts than I normally do (reading time tends to get a bit limited). So yesterday, when I received 6 alerts on anti-dumping, I knew the story had to involve either: the tire WTO case in which President Obama will have to make a decision by September 17 or a ruling of one sort or another on either the steel line pipe case or OCTG.
Take a look at our coverage on this specific steel line pipe case from earlier this year where we felt the domestic industry had a strong case.
To summarize what the alerts linked to, the ITC, part of the Dept of Commerce according to a Reuters article, imposed preliminary duties ranging from 10.90 percent to 30.69 percent on $2.6 billion of steel pipe from China used to transport oil. And according to this article also from Reuters, the US only imported 77 tons in July, or four truckloads. The import numbers are interesting and particularly so in context of what shipments looked like before, during and after the period in question. Undoubtedly, the mere filing of an anti-dumping petition by any domestic producer(s) casts a chilling effect on global trade, from a macro perspective. Indeed, that appears to have happened here as well. China steel pipe imports peaked in November 2008 at 376,000 tons.
It should come as no surprise then that China will likely fight the ruling and take its case to the WTO. According to the Reuters article, China will argue that the US domestic industry could not show harm unless a surge in imports occurred. In other words, how can a case of harm be proven when shipment volumes have fallen so much? Of course the answer to that question will depend upon the time frame in question as well as prices from Chinese suppliers vs. domestic suppliers and producers. But the case may embolden the domestic industry to become even more aggressive in pursuing anti-dumping cases.
Whether you agree with the tenets of this case or not, these anti-dumping cases are nothing when compared to other protectionist trade policies.
Meanwhile, buyers of steel pipe certainly aren’t feeling much of the pain yet because demand is still significantly down from last year. But in the longer term, as the market tightens, prices will rise. And as our team in Houston just told me today, demand for these metals may depend more on natural gas prices, not the price of a barrel of oil. We’ll see.