Posted on 22 Jul 2014
The US Department of Commerce decided late last week on
final antidumping margins against imported oil country tubular goods from 9
countries including Korea. Against Korean products for which AD margins were
nil at the stage of the provisional decision in February this year, the DOC
determined to impose AD margins of the range of 9.89% to 15.75%.
As those margins are nearly double digits, attention is paid
to whether Korea's export of OCTG is ceased but Korean pipe mills is
transmitting to related parties of Japan that they continue export to the USA
for the time being. Japan's export quantity of hot rolled steel coils to API
grades is 20,000 tonnes to 30,000 tonnes a month.
As its export quantity of HR coils are 170,000 tonnes to
200,000 tonnes a month in total, that of HR coils to API grades accounts only
for 10% to 15% of its total export of HR coils to that country. Even if Korea
stops its export of OCTG to the USA, it is expected not to become a great loss
for the Japanese mills.
The DOC's final AD margins against Korea are 15.75% for
Hyundai Hysco, 12.82% for 8 companies including Dongbu Steel and SeAH Steel and
9.89% for Nexteel. Prices of OCTG (electric resistance welded pipes) for the
USA to API X65 grade are said to be generally USD 1,200 CFR including Japanese
prices.
While, Korea's export prices are said to be the level of USD
900 CFR. Although demand for OCTG in the USA is expanding due to development of
shale gas, it is said that the US mills have a tough time and US Steel
suspended operations of 2 pipe plants. The US pipe mills are like to have
import from Korea stop anyway.
However, the Korean mills are said to be revealing the
confidence to maintain their competitiveness even if AD duties are imposed on
their products. The Japanese pipe mills are also observing that if the AD
margins are 20% to 30%, export from Korea might be stopped but if those are 10%
to 15%, the Korean mills will be able to continue export. It is because even if
the Korean prices become the level of USD 1,100 CFR including AD duties, those
prices are still cheaper than those of other countries by around USD 100.
The question is the case for US customers to reject tax
burden. It is because there is a possibility for the Korean pipe mills to pass
a part of such duties on to the Japanese and Korean blast furnace mills by
reducing HR coil price largely.
As Nexteel receives the supply of HR coils mostly from
POSCO, the company is no concern of the Japanese mills but if Hyundai Hysco,
Dongbu, SeAH and so on ask for a decrease in price, it is likely to take on an
ugly look. It is because the Korean pipe mills are thought to request a price
decrease of HR coils by about USD 50 against the Japanese blast furnace mills
as their tax burden becomes close to USD 100.
The Japanese mills are saying that there is a room to study
it if prices fall related to supply and demand but it's absolutely absurd to
burden such AD duties on Japan and they will never accept such price decreases.
Fortunately, even if export of HR coils to Korea decreases, they do not feel
necessity to stick to export to Korea even going out of their way to cut their
prices as there are no mills to face difficulty to find customers under the
current environment.
