On September 9th 2009, the US Department of Commerce announced its affirmative preliminary determination in the countervailing duty investigation on imports of certain oil country tubular goods from the People's Republic of China. US DOC Commerce preliminarily found that Chinese producers & exporters of OCTG have received net countervailable subsidies ranging from 10.90% to 30.69%.
Mandatory respondents Jiangsu Changbao Steel Tube Co. Ltd, Tianjin Pipe (Group) Co, Wuxi Seamless Pipe Co Ltd and Zhejiang Jianli Enterprise Co Ltd. received preliminary subsidy rates of 24.33%, 10.90%, 24.92% and 30.69%respectively. All other Chinese producers & exporters received a preliminary subsidy rate of 21.33%.
Mr Anil Jain Group CFO of DP Jindal Group, whose flagship company Maharashtra Seamless Tubes is one of the biggest seamless players with presence in US, while commenting on this development said that as the size of business affected is very large and it would have positive impact on other Seamless Tubes suppliers including MSL.
Q: As a seamless pipe major, how do you view this decision?
A: This is good for US based OCTG makers and bad news for Chinese. Although the ruling covers both seamless and welded OCTG, except for high chrome, the major effect would be on seamless players.
As far as we are concerned, it is certainly a good move as we are also present in US Market.
Q: Why did US DOC initiated this probe?
A: The volume of OCTG imports from China into US almost went up by 155% YoY from about 0.78 million tonnes in 2007 to 1.9 million in 2009. Further, there is substantial Export Rebate available in China to the Chinese Mills by their govt. This was prompting lots of Exports from China. This investigation was launched on the petition of US based OCTG majors.
Q: Who are the major seamless pipe makers in US?
A: The petitioners for this investigation are Maverick Tube Corporation, United States Steel Corporation, TMK IPSCO, V&M Star LP, Wheatland Tube Corp and Evraz Rocky Mountain Steel.
Q: What is the dimension of this decision?
A: Chinese OCTG tube imports in 2008 amounted to USD 2.6 billion, which is sizable.
Q: What is the repercussion of this decision?
A: US based tube makers would be able to regain the market. As such they stand to benefit most from this decision.
As US is the biggest market for OCTG and a major export market for us, we see many positives. The market vacated by Chinese players coupled with the strengthening of crude oil prices, which will propel drilling increasing OCTG requirements in US, would open more opportunities for us.
Q: What are the options with Chinese OCTG makers?
A: Chinese tube makers would like to become more aggressive in other markets. But with the AD move in second biggest OCTG market Europe & India, Chinese are left with limited options.
(Sourced from CNBC-TV18)
