Section 201 trade case: Possible effects on the Steel Pipe industry

I am quoting few press releases about President Bush To Resist 201 Steel Import in the United States. There is no need to explain why this matter is extremely important for Tube and Pipe industries globally. You can draw your own conclusions from these press releases below:

By EARLE COHEN
NASPD Past President

Now that the Section 201 case has been filed and the effects and strategy of this action are starting to fall into place, it puts our business into a whole new perspective and leaves much doubt as to where our supplies of pipe will come from in the future.

The International Trade Commission has determined that there has been injury on the following products:

• All Welded Pipe, Carbon and Alloy
• Flanges and Fittings

At the same time, (to my surprise), the Commission found no injury on:

• Seamless Pipe
• Seamless Oil Country
• Welded Oil Country

While injury was not proven on Seamless Pipe and Welded Oil Country products, it is widely felt that an "anti" dumping case is forthcoming in the near future. Meanwhile, how will this affect the Welded Steel Pipe distribution business?

At this time, many foreign mills have suspended quotes and sales of Welded Pipe due to uncertainty of the outcome of the 201 Action. The next critical date will be Dec. 19, at which time the ITC will make its recommendations to President Bush. The President will make his determination by Feb. 16.

Most foreign producers are not willing to take the risk of pipe arriving after the President's decision, as the potential penalties could be too large to absorb. In order for shipments to be exempt they must arrive prior to the President's determination, which means that they must be shipped no later than December for arrival by Feb. 16. After the damages are determined -- if it is economically desirable to restart export to the U.S. -- the foreign mills will require time get their materials and production back up to speed. It could take three to four months after receipt of an order for it to arrive in the U.S. Therefore, we might not see pipe begin to arrive until the end of May or early June, which would mean approximately four to five months without any receipt of import Welded Pipe.

The results of the 201 Action will have a huge impact on the Welded Steel Pipe industry, regardless of the findings. Just the interruption in supply of material from the time of the President's decision to July alone will cause availability problems for suppliers and users. The other areas of concern are that quantities, penalties, duties and/or any other actions will certainly have a dramatic impact on pricing and will undoubtedly cause prices to increase significantly and rapidly.

Whether you are a supplier or an end user, be aware of this situation and plan accordingly to minimize the adverse effects that this might create for your company.

Original Press Release available :
http://www.aiis.org/release/?file=release89.htm

AIIS CALLS ON PRESIDENT BUSH TO RESIST 201 STEEL IMPORT RESTRICTIONS

The American Institute for International Steel (AIIS) released today a January 8, 2002 letter submitted to President George W. Bush that urged the Bush Administration to resist pleas by the domestic industry for more protection under the pending steel section 201.

The AIIS letter shreds the arguments for import relief used by the domestic industry and calls on the Bush Administration to focus on the first two elements of the President's Multilateral Steel Initiative: the elimination of non-economic excess capacity worldwide, and through international negotiations, the elimination of subsidies and other trade distorting practices.

In the letter, AIIS President David Phelps states that AIIS members do believe that some legacy cost assistance is appropriate, but only for workers whose facilities are closed, and as part of an effort to trigger a merger and consolidation wave so needed in the U.S. steel industry.

Phelps outlines the reasons why more protection for the U.S. steel industry will fail, including:

Section 201 import restrictions will hamper the Bush Administration's ability to advance the cause of free trade. The U.S.'s major trading partners have complained about the abusive use of the U.S.'s dumping law. Each time they have filed a complaint against the U.S. on steel, the U.S. has lost at the WTO.

There are more than 12 million workers in the steel consuming sector in the U.S. compared to only 200,000 workers in the steel manufacturing sector. Protectionist actions will cost more jobs in the steel consuming industries than they will save in the steel-producing sector.

The U.S. steel industry has had more than 30 years of protection and still some companies cannot compete. More protection will not solve these companies' problems.

As recently shown by the Commerce Department's finding that iron ore imports pose no threat to national security, the domestic industry's arguments that steel import restrictions is a national security issue simply do not bear any level of scrutiny. Steel shipments to the defense sector from the domestic industry are less than 1% of steel industry shipments.

If additional protection is granted, U.S. ports and related industries will be forced to bear the cost of any additional protection.

A full text of the letter is available at www.aiis.org/html/to_bushadministration3.html.

AIIS: ITC RECOMMENDATIONS ON STEEL IMPORTS WILL HURT CONSUMERS AND DO NOTHING TO HELP U.S. STEEL INDUSTRY

American Institute for International Steel (AIIS) President David Phelps said today that the International Trade Commission's (ITC) recommendations on restricting steel imports would do nothing to help the U.S. steel industry, but would hurt steel consumers and severely undercut President George Bush's ability to open markets to U.S. products and services around the world.

The ITC recommendations are part of the Section 201 investigation on steel imports implemented by President Bush. The six ITC commissioners announced their recommendations today. The Commissioners each recommended a variety of remedies, including tariffs ranging from 20 to 40 percent, quotas and tariff rate quotas. The ITC will send these recommendations to President Bush on December 19. President Bush then has 60 days to accept, reject or modify the recommendations.

"The ITC recommendations were all over the map," said Phelps. "Three commissioners recommended 20 percent tariffs on most steel products while two commissioners recommended 40 percent tariffs. Another recommended quotas and additional tariffs. From the domestic steel industry's own testimony during the ITC hearings, the majority recommendation of 20 percent tariffs would raise steel prices by three to four percent. This duty and overall price increase is enough to devastate steel consuming industries, but will do nothing to help save the distressed companies in the domestic steel industry."

"These tariffs and duties would be layered on top of existing U.S. dumping and countervailing duties already in place on more than half of all steel imports into the United States," Phelps said. "What the ITC is saying is that the problems of the domestic steel industry should be solved by passing the burden onto U.S. steel consumers."

"Outside the ITC, in the real world, it is well known that the domestic steel industry's problems do not stem from imports, but rather from legacy costs and inefficient steelmaking capacity," Phelps continued. "The ITC recommendations, if implemented, will only hurt consumers and cause more problems for the Bush Administration in its attempt to lead the world in a new round of global trade talks."

Phelps concluded, "We encourage President Bush to focus on global negotiations to reduce inefficient steelmaking capacity and eliminate subsides, including those received by the U.S. steel industry, and ignore these ill-advised recommendations. In the end, free trade and open markets are the only solution that will benefit the steel industry, its customers and the overall economy. Governmentally-mandated protection for the domestic steel industry has not worked in the past, and it will fail to make the weak companies in the industry competitive this time."

Atlanta Marathon

The last thing I am telling you this time is pretty much personal and proud thing for me. One week after Fabtech Chicago I managed to run Atlanta Marathon. 26.2 Miles (42.1 km) and the time was 4 hours 26 minutes and 56 seconds. The reason why I am very happy about it is because it was my first marathon ever. The results can be seen from http://www.atlantatrackclub.org/at03026.htm. The story goes like this:"Beer loving Tube man runs a marathon".

Cheers and let's run!
Juha Haapala