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Pipeline Firms, Steelmakers Clash Over Tariffs

Tuesday, July 31, 2018

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The battle over steel import tariffs in the U.S. is continuing to heat up, as an executive behind the Cactus II pipeline told Congress last week that the measures amounted to a “$40 million tax” on the project, and others in related industries accused the American steel industry of misleading the Commerce Department.

Willie Chiang, chief operating officer of Plains All-American Pipeline LP, told the House Ways and Means Committee that the tariffs had added $40 million to the price of the Cactus II project—an oil pipeline set to run from the Permian basin to the Gulf of Mexico.

Pipes
© iStock.com / firmafotografen

The battle over steel import tariffs in the U.S. is continuing to heat up, as an executive behind the Cactus II pipeline told Congress last week that the measures amounted to a “$40 million tax” on the project, and others in related industries accused the American steel industry of misleading the Commerce Department.

Plains’ request for an exemption to the tariffs, based on the company’s argument that the steel it needs can only be made overseas, was rejected earlier this month, in part because Florida steel manufacturer Berg Steel entered an objection claiming it could make the product to the specification required.

Plains argued that it needs 26-inch outside diameter pipe made using the high-frequency welded technique, and that only overseas manufacturers could supply it. Berg objected, agreeing that no U.S. producer makes HFW pipe, but countered that pipe made using the double-submerged arc-welded techniques is “fully substitutable and equal or better in quality” than HFW pipe.

Berg said in its objection that during the request-for-qualifications process, Plains engaged Berg on the topic of using DASW pipe for Cactus II, and argued that the rationale for the ultimate decision to go with the Greek product was not safety or the superiority of the HSW process, but price.

Plains has said it still plans to get the steel pipe from the Greek supplier it had already contracted, in part because its says the deal was made before the tariffs went into effect—another reason it says it should be exempt.

Objecting to the Objections

According to CBS News, Robert Miller, the president and CEO of NLMK USA, a company that imports slab steel from Russia and produces various rolled steel products, said U.S.-based steelmakers U.S. Steel and Nucor raised objections to his waiver requests that were “literal untruths.” Miller says the tariffs are threatening to put NLMK out of business.

The argument between NLMK and the steelmakers centers on the availability of slab steel in the U.S.; the steelmakers say the material is readily available, while NLMK argues it’s in short supply and relying on American slab steel would hinder production.

The waiver process has generally involved the word of one company—the one requesting a waiver—against the word of another, the one raising an objection, if one is raised. Chiang told Congress there were inaccuracies in objections to Plains’ request, though he did not specify what those were.

   

Tagged categories: Economy; EU; Europe; Government; NA; North America; Pipelines; Program/Project Management; Steel

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