July 12 (Bloomberg) -- The Obama administration handed a victory to U.S. Steel Corp. and the United Steelworkers union yesterday by imposing duties on steel pipe imports from South Korea and eight other nations.
The U.S. Commerce Department set duties from 9.89 percent to 15.75 percent on Korean pipe, which is used in oil drilling, the agency said in a fact sheet released yesterday.
“We applaud their decision to prevent further gamesmanship of our laws and to secure our nation’s economy,” U.S. Steel Chief Executive Officer Mario Longhi said in an e-mailed statement. U.S. Steel rose 3.2 percent in New York trading.
Last year, pipe worth $818 million was exported to the U.S. from South Korea. Duties ranging from 2.05 percent to 118.32 percent also were imposed on pipe from the other nations, which sent $722 million worth of pipe to the U.S. last year.
The Commerce Department determined the pipe had been sold in the U.S. below cost, or dumped, in violation of international trade rules, after the steel industry filed a complaint.
The duties must be paid on the imports immediately, though will be refunded if the U.S. International Trade Commission determines that American producers weren’t harmed by the imports, a ruling scheduled in the coming months.
“This practice has already caused serious harm to our domestic steel industry,” Steelworkers President Leo Gerard said in a statement. “Plants are being idled, workers are losing jobs and communities are suffering.”
The finding reverses a preliminary determination by the Commerce Department in February not to set anti-dumping duties on the Korean imports. U.S. Steel, the nation’s largest metal producer, and the steelworkers’ union, said that determination was miscalculated and lobbied for penalty duties.
U.S. Steel rose 86 cents to $27.64 at the close in New York, and touched $28.30, a 5.7 percent increase, after the decision was disclosed. Shares are down 6.3 percent this year.
South Korea threatened to take the case at the World Trade Organization.
The ruling “is an important step toward ensuring a level playing field for our workers and businesses,” Ohio Senator Sherrod Brown, a Democrat, said in a joint statement with Rob Portman, his Republican colleague.
U.S. Steel has a major manufacturing facility for the goods in Lorain, Ohio, about 30 miles (48 kilometers) west of Cleveland.
Pipe exported by Hyundai Hysco Co. will be subject to 15.75 percent duty, and products from Nexteel Co. will face a 9.89 percent duty, according to the Commerce Department. Other Korean manufacturers will pay a duty of 12.82 percent.
“I’m not sure that they’re big enough to have a big difference,” Michelle Applebaum, an independent steel consultant and adjunct professor at Lake Forest College in Illinois, said of the penalty duties in a telephone interview. “Nine to 15 percent, it will give some relief, but considering how much overcapacity there is in the global pipe market it’s a better-than-nothing kind of solution.”
The other nations shipping pipe subject to duties are India, Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine and Vietnam.
The U.S. set duties as high as 118.32 percent on products from WSP Pipe Co. in Thailand, and as low as 2.05 percent on GVN Fuels Ltd. of India.
The Commerce Department said it will require the foreign producers to pay cash deposits on the imports. The International Trade Commission is scheduled to issue its decision on Korea and Taiwan by the end of September and the remaining countries in late August.
The dispute united industry and union leaders who pressed their case with lawmakers, President Barack Obama’s administration and the media in recent months. They say they’ve been especially harmed by the surge in imports of the Korean-made goods, which increased about 45 percent in volume and 19 percent in value from 2011 to 2013, according to Commerce Department data.
U.S. Steel on June 2 said it was closing two plants, with a total of 260 workers, in Pennsylvania and Texas because of foreign competition. U.S. Steel is the biggest domestic producer of pipes and tubes sold to oil and gas companies, and the sales of the products represented 48 percent of its 2013 operating income.
To contact the editors responsible for this story: Jon Morgan at email@example.com Justin Blum