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With the boom in Pa.'s shale gas industry, the state's steel producers have a golden opportunity - but they're being undercut by illegally-subsidized imports.
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By Robert F. Powelson
Pennsylvania’s booming Marcellus Shale gas production has great potential to benefit the state’s manufacturing sector, especially the steel industry. Perhaps the single most important product used to ensure the safe development of this abundant natural resource is high-quality steel pipe.
Although the demand for drilling-related steel products has risen dramatically over the last several years, U.S. steel mills, including those in Pennsylvania, have been unable to fully capitalize on this opportunity.
The problem is an oversupply of the steel products known as Oil Country Tubular Goods. The oversupply is caused by a surge of what appears to be illegal “dumping” of imports from foreign countries, chiefly South Korea. (“Dumping” is when manufactured products are brought into the United States and sold at a price below the cost of production.)
Combatting this phenomenon is one reason the Pennsylvania Public Utility Commission pushed for the state law that requires companies to report the country of manufacture of the steel pipe used to transport natural gas from unconventional wells in the Commonwealth. The PUC believes this reporting requirement will encourage companies to use domestically produced steel.
However, the primary way to prevent the illegal dumping of steel is strong federal enforcement of U.S. trade laws. Unfortunately, many foreign competitors do not adhere to U.S. trade laws, and in fact, some go to great lengths to circumvent them.
In an effort to stop these illegal “dumping" practices, in July 2013, several domestic steel producers filed a critical trade case against nine countries (India, Philippines, Saudi Arabia, Taiwan, Thailand, Turkey, Ukraine, Vietnam, and South Korea). In February of this year, the U.S. Department of Commerce announced preliminary findings on the case. Unfortunately, those findings did not support imposing duties against South Korea – by far the largest source of imported oil country tubular goods. In fact, South Korea exports 98 percent of its production of that kind of steel pipe to the United States.
As the U.S. Department of Commerce handles the final phase of the case, it is important that all of the facts are uncovered. Our elected leaders in Washington, D.C. need to make certain that the Commerce Department uses all of tools at its disposal during its final phase of the investigation to expose the truth about this dumping and render a fair, well-reasoned decision, so that steelworkers in Pennsylvania and across the country can compete on a level playing field. Enforcing our trade laws forces foreign producers to compete fairly, import their products legally, and create true market competition.
The Department of Commerce will make its final determination on the pending steel case July 8, 2014. The final outcome is critical for the future of Pennsylvania’s steel industry and the future of steel manufacturing in the United States. I am confident that given a level playing field, Pennsylvania steel companies and steelworkers will thrive, sharing in the benefits of our energy revolution. This is a battle that our state and our nation cannot afford to lose.
By Robert F. Powelson is Chairman of the Pennsylvania Public Utility Commission.