Higher US Import Duty On Pipes To Impact India’s Exports

On Mar 25, 2012, the US Department of Commerce announced the imposition of a preliminary import duty of close to 285% on non-API (American Petroleum Institute) circular welded standard pipes of diameter of 16 inches and below exported from India and other countries like Vietnam, Oman and UAE. The same duty has been imposed by 8% on Vietnam for the same product. The imposition of the 286% import duty has come after the detailed investigation carried out by the US Department of Commerce stating that Indian exporters were receiving various countervailing subsidies of up to 285% on the pipes. The final decision on this will be announced by August.

According to a report by the International Trade Administration under the US Department of Commerce Zenith Birla (India) and Lloyds Metals and Engineers had both received preliminary net subsidy rates of 285.95%. There are also some other Indian steel pipe producers/exporters who received the same subsidy rate, but these names were not revealed in the report.

The increase in import duty will impact the exports of Indian steel pipe producers and exporters, especially those who are mainly into exports to the US. In 2011, Indian manufacturers exported 65,000 tonnes of such pipes worth USD 64.57 million. Companies like Jindal Saw, PSL, Maharashtra Seamless and Welspun Corp produce these type of steel pipes in India.

PSL is a major steel pipe producing company that is mainly into the production of HSAW (Helically Submerged Arc Welded) pipes with a diameter of 18- 120 inch and LSAW (Longitudinal Submerged Arc Welded) pipes with a diameter of 16-56 inch. Another steel pipe producing company, Welspun Corp, said in the media that the US department’s decision will not impact the company’s operations, as it is not exporting any product under the category mentioned and the enhanced duty is applicable only on non-API circular welded standard pipes of a diameter of 16 inches and below. Further, the company has planned to set up an Electrical Resistance Wire (ERW) plant of 175,000 MTPA (6-20 inches) as well as a coating plant in the US to service its clients in North America. PSL also has a pipe plant in USA. Therefore, both these companies will benefit from the hike which is meant to protect domestic companies in the US.