Free market best for steel

April 29, 2002
I am writing in regards to the recent antidumping action taken by the administration on steel imports and the several editorials in OGJ on this subject (Mar. 18, 2002, p. 21, "A risky move with steel," and Mar. 25, 2002, p. 37,"New steel tariff could trigger like action on OCTG").

I am writing in regards to the recent antidumping action taken by the administration on steel imports and the several editorials in OGJ on this subject (Mar. 18, 2002, p. 21, "A risky move with steel," and Mar. 25, 2002, p. 37,"New steel tariff could trigger like action on OCTG").

I have been a metallurgical consultant to the oil and gas industry both domestically and internationally now for 30 years. In my role as a consultant, I specify OCTG and line pipe for oil and gas projects and recommend the steel mills with which the pipe orders should be placed.

This requires mill visits around the world and working with third-party inspection during the production of these pipe orders. Therefore, I am very familiar with the capabilities and quality of products from many of the steel mills here in the US and around the world. I can say as an expert in this area that the whole idea of tariffs and antidumping on steel products is flawed from the very beginning because it assumes that all steel OCTG and line pipe are commodity products and that the quality from every mill, including US mills, is equal.

This concept is entirely wrong and demonstrates again that economists, lawyers, lobbyists, and others don’t really understand what is happening to the steel industry in the US. Many of the US mills have not improved their steel making processes or quality programs over the last 25 years, so in order to obtain the necessary high-quality steel OCTG and line pipe for critical projects-such as deep water Gulf of Mexico fields and HPHT wells onshore-oil and gas companies must rely on foreign steel producers that have continued to innovate and improve their products. It is not about price; it is about quality!

Therefore, antidumping legislation only serves to delay the inevitable demise of those poor-quality steel producers in the US, but in the interim leads to unnecessarily high costs to the oil and gas industry for poor-quality products.

A free market is the only way that the US steel industry will be forced to innovate or fail. We should expect nothing less for the global oil and gas industry that must compete on this basis everyday.

Bruce Craig
MetCorr Metallugy & Corrosion Consulting
Denver