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Some US OCTG Line Pipe Distributors In Tough Position

Many have hailed the recent ruling against foreign OCTG dumping as a big win for domestic steel distributors. The taxes placed on foreign product have effectively forced many to buy from US mills, thus stimulating and sustaining growth of the nation’s steel industry. However, not all have been happy with the recent changes, thanks to some disagreements among certain distributors and mills.

In a trend that has affected more than one OCTG line pipe distributor, domestic mills are either charging a premium on their goods, or just flat out refusing to sell outside their current circle of contacts. In the past, this practice has forced distributors to buy abroad. However, this has become a much tougher proposition since the recent trade ruling. Resorting to foreign suppliers put US-based businesses at risk, as lead times are pushed out, and profits are marginalized.

“…Domestic producers have their own distributors and do not want to supply steel to other distributors outside of their networks. That, of course, is their choice, but the fact is that I try to purchase from U.S. mills and I can’t because they will not supply me,” explained Hope Snow, VP of Line Pipe at US distributor, Trident.

Snow went on to say that some US mills do supply their requests on a spot basis, but there is an obvious up-charge associated with it. The U.S. line pipe market is currently quite robust, with mills churning out product to meet an increased demand. The economic climate associated with such production and demand is good news for the industry, yet may further negatively contribute to Trident’s, and distributors in a similar position’s, problems. The coming months will likely continue to bring new fallout from the landmark decision.

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