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October 9, 2009

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Chinese steel pipes focus of dumping probe

THE United States has initiated anti-dumping and anti-subsidy investigations into Chinese-made steel pipes that could lead to duties exceeding 100 percent.

The move could increase trade tensions between the two countries as it comes less than a month after US President Barack Obama decided to slap punitive tariffs on Chinese tires. The US also imposed preliminary duties on Chinese-made steel pipes used to transport oil last month.

The US Commerce Department said late on Wednesday that the investigation stemmed from a petition from companies including United States Steel Corp, V&M Star LP, TMK IPSCO and the United Steelworkers union.

The petitioners asked for a 98.37 percent anti-dumping duty to counter competition from China's steel pipes, alleging the products are sold in the US at unfairly low prices. They also requested additional countervailing tariffs to offset alleged Chinese government subsidies.

Dumping occurs when a company sells its products in another country for below the cost of production.

The products involved in the latest case include seamless carbon and alloy steel pipes used to carry water, steam, oil products and natural gas.

Pipes have been the main targets of foreign investigations into Chinese steel products. Early this week in a final ruling, the Europe Union imposed anti-dumping tariffs on some Chinese seamless steel pipes after concluding that these imports might cause material injury or threat to local industry.

The China Iron and Steel Association, which represents domestic mills, said exports of Chinese-made seamless steel pipes to the EU fell sharply since the EU's investigation, decreasing 71 percent in volume in the January-August period from a year earlier and down 65 percent in value.

"It's unlikely that China sells pipe products below cost," said Mi Yunji, an analyst at Mysteel consultancy. "Prices are higher for exports than for the domestic market. Overseas demand is also not good right now."

"I think the main pressure for these anti-dumping and anti-subsidy charges comes from labor unions in those foreign companies."

These new challenges will weigh heavily on Chinese manufacturers, which already suffer from overcapacity. Steel pipes generate higher value than other steel products and account for a big portion of exports, said a domestic steel official.

The latest US investigation will have to win support from the US International Trade Commission by early November to proceed. If the commission approves it, the Commerce Department will make a preliminary decision on anti-dumping duties in December and countervailing duties in February.

Wang Feng, an analyst at Guotai Jun'an Securities Co, said cases of this kind will dampen business confidence among Chinese traders and foreign investors.


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