For the past few years, rumors of a new antidumping duty case against Korean oil country tubular goods (OCTG) have circulated within the industry. But each time, no new petition was filed. In January of this year, the rumor mill heated up again, with industry publications reporting that a case against Korean OCTG as being “imminent.”

While the rumors may once again end up as empty threats, all the signs may indeed be pointing to a new case being filed as early as the end of this month. In our experience, a new antidumping case is often presaged by a number of “clues” that relate to import trends and industry performance.

In the case of Korean OCTG, the “clues” include:

• Increasing imports of OCTG by Korea. As shown below, Korean imports account for the largest source of imports. Moreover, Korean imports have grown significantly for the past three years both in absolute quantity and as a share of all imports.

Source: Steel Import Monitoring and Analysis (SIMA), US Department of Commerce

• Falling prices of Korean OCTG. Prices of OCTG imported from Korea have been falling steadily. While the decreasing prices do reflect the overall market trend, the prices of Korean OCTG are much lower than imports from many other countries. For example, the average import value for Korean OCTG was $967 per MT, compared to $1667 per MT for Canadian imports and $1344 per MT for average of all imports. See below graph for a depiction of the falling trend.

• Losses by the U.S. industry. The major U.S. producers of OCTG, such as United States Steel, continue to report losses. For example, United States Steel reported a net loss of $124 million for 2012, and fourth quarter 2012 net loss of $50 million. Revenue fell by 6.9% for United States Steel.

Of course, these indicators do not guarantee that a new antidumping petition will be filed. However, they do reflect several of the major factors of a successful antidumping duty petition. Moreover, the rumors also imply that the countervailing duty petition may be filed along with an antidumping duty petition. Given this, exporters, importers and purchasers of OCTG from Korea should take these signs seriously and start preparing for the possible case. Some of the steps that exporters may take in preparation include:

1. Review and analyze all sales of OCTG to the United States and to Korea;
2. Review and analyze cost of producing OCTG;
3. Conduct an antidumping and countervailing “audit” to determine potential dumping margins and subsidy rates;
4. Identify potential issues and strategies;
5. Collect and organize all relevant records and data that will be requested in an investigation.

In our experience, early preparation has often been the key to a successful outcome in an antidumping or countervailing case.