U.S. oil pipe tariff ruling hits western steel manufacturers

By Michel Rose and Silvia Antonioli

PARIS/LONDON (Reuters) - Shares in companies producing steel tube for the oil and gas industry in the United States tumbled on Wednesday after U.S. trade authorities decided not to impose tariffs on the South Korean imports that compete with them.

The U.S. Department of Commerce launched an investigation last July in response to a petition from producers including Europe's Tenaris (MIL:TEN.MI - News), Vallourec (PAR:VK.PA - News) North American companies Northwest Pipe Company (NSQ:NWPX - News) and U.S. Steel (NYS:X), and Russia's TMK (MCX:TRMK.ME - News), all of which have production or manufacturing sites in the United States.

The group complained that manufacturers in South Korea, India and seven other countries were selling the kind of steel pipe mainly used by oil and natural gas producers at unfairly low prices in the United States.

In a preliminary decision dated February 18, the Department of Commerce said it had found dumping of imports from India, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine and Vietnam, but not from South Korea's Hyundai Hysco and Nexteel Co.

U.S. imports of South Korean oil country tubular goods (OCTG), used to drill for oil and gas, were at 894,000 tonnes in 2013, more than the imports from all eight other countries combined, according to brokerage Cowen and Company.

Following the announcement, shares in the companies that filed the petition fell.

"Many people in the market were thinking that the key for improving the pricing power would be some reduction in the imports coming from South Korea," Natixis analyst Julien Laurent said.

Tenaris and Vallourec shares were down by 7 percent and 4.5 percent respectively by 1536 GMT, making them the biggest losers on Europe's broad STOXX 600 (.STOXX) as traders cited the U.S. anti-dumping ruling as hitting the sector.

"There was expectation that South Korea would be included, which would have been good news," one Paris-based trader said.

Shares in U.S. Steel and Northwest Pipe Company were down by 6 percent and 1.5 percent respectively while shares in Russia's TMK lost more than 10 percent.

Shares in Hyundai Hysco were 4.5 percent up.

France's Vallourec, which made 29 percent of its sales in North America in 2012, is a big manufacturer of pipes in the United States, having built a $650 million plant in Ohio to capitalise on the U.S. shale gas boom. It had joined the case against Asian-based manufacturers.

Tenaris owns U.S. manufacturer Maverick Tube Corporation and TMK also produces steel pipes in the U.S through its subsidiary

TMK IPSCO.

A spokeswoman for Vallourec noted that the decision was a preliminary ruling and said that "a counter investigation is expected to be launched".

U.S. STEEL DISAPPOINTED

U.S. producers were asking for anti-dumping duties as high as 240 percent on India, 158 percent on South Korea, 118 percent on Thailand and 111 percent on Vietnam to offset what they said was below-market pricing. They asked for lesser, but still hefty, duties on the other countries.

Imports of oil country tubular goods (OCTG) from the nine countries totalled nearly $1.8 billion in 2012, more than double the 2010 total, as rising U.S. oil and natural gas production boosted demand.

"We are disappointed by the preliminary determinations at the Department of Commerce and by its failure to deal with important issues at this stage of the investigations," a spokeswoman for U.S. Steel said.

"Having said that, the determinations do confirm the existence of large-scale dumping in this market - something that has caused extensive injury to the domestic industry. When all of the facts come to light we are confident that we will prevail with respect to all countries and exporters in the final determinations."

A final ruling by the Department of Commerce is expected "on or about" July 8, it said in the statement. The U.S. International Trade Commission (ITC) is then expected to give a final decision on August 21.

Under the U.S. system the Department of Commerce investigates charges of unfair trade to determines whether duties are appropriate and at what level, but the ITC has the final word on whether duties are imposed.

(Additional reporting by Allison Martell, Stephen Eisenhammer, Josephine Mason, Blaise Robinson and Raoul Sachs; Editing by Andrew Callus and Tom Heneghan)