The U.S. International Trade Commission voted that the domestic steel industry has been damaged by subsidized steel from China.  The result will mean a duty of 10-16% on all future Chinese steel imported piped.  This ruling is the latest trade decision that is aggravating other trade dealings between the US and China.  

The U.S. International Trade Commission rules unanimously against Chinese steelmakers, in the latest blow in an ongoing trade war between the two countries. The steel-pipe case is the ITC's biggest ever by dollar amount, and comes as the world's recession and overall drop in demand for steel products has left steelmakers competing for a smaller pool of customers.

However, an official in the news department of China's Ministry of Commerce said that China "resolutely opposes" the ruling, arguing that the U.S. industry is trying to stymie legitimate competition and wasn't injured by the imports. They note the U.S. steel industry was making record profits, especially in 2008, when selling pipe and tube to energy and exploration countries, and argued that Chinese imports increased to meet demand in the U.S.

While prices did eventually fall and inventories grew in the U.S., China's steelmakers said the same thing happened around the world as a result of the weakening world economy.  But U.S. steelmakers, along with the United Steelworkers, said China tripled its imports into the U.S. - a big consumer of tubular steel - causing a 50% drop in prices, swelling inventories and causing the layoffs of 3,000 workers.

"By shutting off this Chinese steel, it's going to put a tremendous amount of pressure on the tubular (pipe) industry," said Mike Jordan, CEO of Mike Jordan Co. in Fort Smith, Ark.  Mr. Jordan said his company, which sold $250 million of tubular steel pipe in the past three years, is searching for products from other countries, but he added: "There's not enough quality steel mills in the world to produce the type of steel needed for wells being drilled in the U.S." He predicted domestic steel producers will raise steel prices that could eventually be passed on to consumers.

The energy market - the key end market for tubular steel pipe - is critical to steelmakers because it tends to be more resilient in downturns compared to auto and appliance markets, which are hurt when labor and job markets are weak and consumers cut back spending. Drillers use "tubular goods" to line wells and carry oil and natural gas from wells to consumers.

New duties on imported pipe "could tighten up a highly oversupplied market," said Joe Hill, a vice president of Houston energy investment bank Tudor Pickering Holt. While he expects that it will become more expensive to drill wells, tubular goods are a small percentage of well-drilling costs.

Roger Schagrin, counsel for the United Steelworkers and five steel manufacturers, said the decision could enable the U.S. steel industry to ramp up production and re-hire workers by the second half of the year, once current inventories of steel pipe are sold off.  The U.S. steel industry, backed by organized labor, is known for filing trade cases against competitors involving several different types of products from wire hangers to steel grates.

Chinese steel exporter's lawyer, Daniel Porter, said the US steel industry was harmed by a boom-and-bust cycle that resulted when the price of oil rose to about $140 a barrel in the summer of 2008, then dropped below $50 less than a year later.  "Higher oil prices spurred more drilling, which caused oil companies to order more of the pipes. Those orders dried up when prices fell," Porter said.  "If demand collapses, that affects everyone.  It has nothing to do with imports."

Text in part, courtesy of Kris Maher at kris.maher@wsj.com and Henry J. Pulizzi at henry.pulizzi@dowjones.com

Did You Know. . .
-- The construction industry
is one of the largest sectors employing large number of people, providing work to significant proportion of the labor market and providing significant share of the world Gross Domestic Product (GDP).

-- Several researches have found that money has never been considered as the major criteria to retain the labor force in the ensuing projects.

-- In day-to-day operations, there is a need for an organization to take great care to balance company and individual needs of the employees' in-order to successfully fulfill the strategic needs.

-- Human Resource Planning in Construction Industry will work if implemented and supported by upper management.