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Imports put Kink in standard pipe: domestic producers of welded standard pipe are hoping their trade case, now before the U.S. Commerce Department, will provide some relief from predatory pricing of Chinese imports.

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GIVEN THE STRENGTH of nonresidential construction, U.S. producers of standard pipe should be having a good year. That is not the case, however, largely because of surging Chinese imports.

Even in 2007, which has been marked by a decline in overall steel imports from record high levels in 2006, Chinese imports of welded standard pipe continue to grow. Imports' share of the standard pipe market jumped from 35 to 40 percent in 2006 to over 50 percent as of mid-2007, estimates Christopher Plummer, managing director of Metal Strategies Inc., West Chester, Pa., with China accounting for most of that growth.

Roger Schagrin, general counsel for the Committee on Pipe and Tube Imports and president of Washington, D.C., law firm Schagrin Associates, explains that the Chinese are striving to alleviate their overcapacity and boost employment. "China has a production-oriented economy. Their main goal is to employ people and to sell product. Pipe and tube from China is up about 40 percent over last year, while finished steel exports are down 15 percent. China is concentrating on downstream products such as pipe and tube. They would rather ship pipe than sheet, and they would rather ship sheet than iron ore or coke."

"It's a tragedy," declares Ray Dubreuil, industry manager of tubular products for California Steel Industries Inc., Fontana, Calif. "China is selling pipe into the West Coast market at prices that are lower than we can buy coil." That does not even take into account the cost for mills like California Steel to convert that coil into pipe.

The same is occurring nationwide, maintains Schagrin. "It really makes no economic sense. I think in a broad way this demonstrates that there are significant subsidies in China. How else could companies absorb ocean freight and handling costs and sell pipe for lower than their raw material costs? It is impossible."

In the first quarter of this year, domestic...

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