U.S. International Trade Commission

Publication 4127 March 2010

Washington, DC 20436

Drill Pipe and Drill Collars from China

Investigation Nos. 701-TA-474 and 731-TA-1176 (Preliminary)
U.S. International Trade Commission

COMMISSIONERS 

 

Shara L. Aranoff, Chairman 

Daniel R. Pearson, Vice Chairman 

Deanna Tanner Okun 

Charlotte R. Lane 

Irving A. Williamson 

Dean A. Pinkert

Robert A. Rogowsky

Staff assigned

Address all communications to 

Secretary to the Commission 

United States International Trade Commission 

Washington, DC 20436

Director of Operations

Angela M.W. Newell, Investigator 

Norman VanToai, Industry Analyst 

Nancy Bryan, Economist 

David Boyland, Accountant 

Elizabeth Duall, Attorney 

Douglas Corkran, Supervisory Investigator

Special assistance from

Steven Hudgens, Senior Statistician 

Mary Jane Alves, Attorney
U.S. International Trade Commission

Washington, DC 20436 

www.usitc.gov

Publication 4127 March 2010

Drill Pipe and Drill Collars from China

Investigation Nos. 701-TA-474 and 731-TA-1176 (Preliminary)
 
CONTENTS

Page

Determination .................................................................. 1

Views of the Commission ......................................................... 3

Dissenting views of Chairman Shara L. Aranoff, Vice Chairman Daniel R. Pearson, and

Commissioner Deanna Tanner Okun . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Part I: Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Statutory criteria and organization of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Statutory criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-1

Organization of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

U.S.market summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

Summary data and data sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Previous and related investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

Nature and extent of alleged subsidies and sales at LTFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Alleged subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Alleged sales at LTFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

The subject merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Commerce’s scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-5

Tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

The domestic like product . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I- 7

Description and applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-10

Manufacturing processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11

Domestic like product issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16

Physical characteristics and uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-16

Manufacturing facilities and employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-17

Interchangeability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18

Customer and producer perceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18

Channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18

Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19

Intermediate products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20

Uses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-20

Markets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21

Characteristics and functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21

Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-21

Transformation processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-22

i
CONTENTS

Page

Part II: Conditions of competition in the U.S. market ................................ II-1

U.S. Market characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Supply and demand considerations ................................................ II-2

Supply ................................................................... II-2

Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-6

Substitutability issues .......................................................... II-10

Comparison of U.S.-produced and imported products .............................. II-10

Other country comparisons ................................................... II-12

Part III: U.S. producers’ production, shipments, and employment ...................... III-1

U.S. producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-1

U.S. capacity, production, and capacity utilization ................................... III-4

U.S. producers’ shipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-6

U.S. producers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-9

U.S. producers’ imports and purchases ............................................. III-10

U.S. employment, wages, and productivity ......................................... III-11

Part IV: U.S. imports, apparent U.S. consumption, and market shares . . . . . . . . . . . . . . . . . . IV-1

U.S. importers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-1

U.S. imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-4

Negligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-5

Apparent U.S. consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-5

U.S. market shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-7

Ratio of imports to U.S. production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-7

Part V: Pricing and related information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Factors affecting pricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

Raw material costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-1

U.S. inland transportation costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Pricing practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Price methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Sales terms and discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-2

Price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Price trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Price comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Lost revenues and lost sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-6

Part VI: Financial condition of U.S. producers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-1

Operations on drill pipe and drill collars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-2

Unfinished and finished drill pipe operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-2

Unfinished and finished drill collar operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-3

Capital expenditures, research and development expenses, assets, and return on investment . . . VI-13

Capital and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-13

Drill pipe - actual negative effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-13

Drill pipe - anticipated negative effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-14

Drill collars - actual negative effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-14

Drill collars - anticipated negative effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-14

ii
CONTENTS

Page

Part VII: Threat considerations and information on nonsubject countries ............... VII-1

The industry in China .......................................................... VII-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-1

Operations on drill pipe and drill collars ......................................... VII-3

U.S. importers’ inventories of drill pipe and drill collars from China ..................... VII-4

U.S. importers’ current orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-5

Antidumping in third-country markets ............................................. VII-5

Information on nonsubject sources ................................................ VII-5

Supply considerations ....................................................... VII-5

Demand considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-6

Leading nonsubject countries ................................................. VII-7

Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-8

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-9

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-9

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-10

Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-10

Appendixes

A. Federal Register notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1

B. Calendar of public conference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

C. Summary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

D. Supplemental like product information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

E. Nonsubject prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1

Note.–Information that would reveal confidential operations of individual concerns may not be

published and therefore has been deleted from this report. Such deletions are indicated by

astericks.

iii
 
UNITED STATES INTERNATIONAL TRADE COMMISSION

Investigation Nos. 701-TA-474 and 731-TA-1176 (Preliminary)

DRILL PIPE AND DRILL COLLARS FROM CHINA

DETERMINATIONS

On the basis of the record1

 developed in the subject investigations, the United States International

Trade Commission (Commission) determines, pursuant to sections 703(a) and 733(a) of the Tariff Act of

1930 (19 U.S.C. §§ 1671b(a) and 1673b(a)) (the Act), that there is a reasonable indication that an industry

in the United States is threatened with material injury by reason of imports from China of drill pipe and

drill collars, provided for in subheadings 7304.22.00, 7304.23.30, 7304.23.60, and 8431.43.80 of the

Harmonized Tariff Schedule of the United States, that are alleged to be sold in the United States at less

than fair value (LTFV) and subsidized by the Government of China.2

Pursuant to section 207.18 of the Commission’s rules, the Commission also gives notice of the

commencement of the final phase of its investigations. The Commission will issue a final phase notice of

scheduling, which will be published in the Federal Register as provided in section 207.21 of the

Commission’s rules, upon notice from the Department of Commerce (Commerce) of affirmative

preliminary determinations in the investigations under sections 703(b) or 733(b) of the Act, or, if the

preliminary determinations are negative, upon notice of affirmative final determinations in those

investigations under sections 705(a) or 735(a) of the Act. Parties that filed entries of appearance in the

preliminary phase of the investigations need not enter a separate appearance for the final phase of the

investigations. Industrial users, and, if the merchandise under investigation is sold at the retail level,

representative consumer organizations have the right to appear as parties in Commission antidumping and

countervailing duty investigations. The Secretary will prepare a public service list containing the names

and addresses of all persons, or their representatives, who are parties to the investigations.

BACKGROUND

Effective December 31, 2009, a petition was filed with the Commission and Commerce by VAM

Drilling USA Inc., Houston, TX; Rotary Drilling Tools, Beasley, TX; Texas Steel Conversions, Inc.,

Houston, TX; TMK IPSCO, Downers Grove, IL; and the United Steel, Paper and Forestry, Rubber,

Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC,

Pittsburgh, PA, alleging that an industry in the United States is threatened with material injury by reason

of LTFV and subsidized imports of drill pipe and drill collars from China. Accordingly, effective

December 31, 2009, the Commission instituted countervailing duty investigation No. 701-TA-474 and

antidumping duty investigation No. 731-TA-1176 (Preliminary).

Notice of the institution of the Commission’s investigations and of a public conference to be held

in connection therewith was given by posting copies of the notice in the Office of the Secretary, U.S.

International Trade Commission, Washington, DC, and by publishing the notice in the Federal Register

of January 6, 2010 (75 FR 877). The conference was held in Washington, DC, on January 21, 2010, and

all persons who requested the opportunity were permitted to appear in person or by counsel.

 1 The record is defined in sec. 207.2(f) of the Commission’s Rules of Practice and Procedure (19 CFR § 207.2(f)).

 2

 Chairman Shara L. Aranoff, Vice Chairman Daniel R. Pearson, and Commissioner Deanna Tanner Okun

dissenting.
 
VIEWS OF THE COMMISSION

Based on the record in the preliminary phase of these investigations, we find that there is a

reasonable indication that an industry in the United States is threatened with material injury by reason of

imports of certain drill pipe and drill collars from China that are allegedly sold in the United States at less

than fair value and subsidized by the Government of China.1

I. THE LEGAL STANDARD FOR PRELIMINARY DETERMINATIONS

The legal standard for preliminary antidumping and countervailing duty determinations requires

the Commission to determine, based upon the information available at the time of the preliminary

determination, whether there is a reasonable indication that a domestic industry is materially injured or

threatened with material injury, or that the establishment of an industry is materially retarded, by reason

of the allegedly unfairly traded imports.2

 In applying this standard, the Commission weighs the evidence

before it and determines whether “(1) the record as a whole contains clear and convincing evidence that

there is no material injury or threat of such injury; and (2) no likelihood exists that contrary evidence will

arise in a final investigation.”3

II. BACKGROUND

The petitions in these investigations were filed effective December 31, 2009, by domestic

producers VAM Drilling USA, Inc. (“VAM”), Texas Steel Conversions, Inc. (“Texas Steel”), Rotary

Drilling Tools (“RDT”), and TMK IPSCO (“TMK”), as well as the United Steel, Paper and Forestry,

Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIOCLC (collectively, “Petitioners”). Petitioners appeared at the staff conference and filed a postconference

brief. Eight firms accounting for almost all U.S. production of the product under investigation submitted

usable questionnaire responses.4

Witnesses for two respondent importers appeared at the preliminary staff conference: Command

Energy Services, Ltd. (“Command”) and Downhole Pipe and Equipment, L.P. (“Downhole”). These two

respondent importers also filed a joint postconference brief (“Respondents’ Postconf. Br.”). Weatherford

International, Inc. (“Weatherford”), an importer of subject merchandise that did not appear at the staff

conference, also filed a postconference brief (“Weatherford’s Postconf. Br.”). Twenty-two companies

that are believed to account for more than 80 percent of U.S. imports of drill pipe and drill collars

 1 Chairman Aranoff, Vice Chairman Pearson, and Commissioner Okun find no reasonable indication that the

domestic industry is materially injured or threatened with material injury by reason of subject imports from China. 

They join sections I-V.B of these views.

 2

 19 U.S.C. §§ 1671b(a), 1673b(a) (2000); see also American Lamb Co. v. United States, 785 F.2d 994, 1001-04

(Fed. Cir. 1986); Aristech Chem. Corp. v. United States, 20 CIT 353, 354-55 (1996).

 3

 American Lamb Co., 785 F.2d at 1001; see also Texas Crushed Stone Co. v. United States, 35 F.3d 1535, 1543

(Fed. Cir. 1994).

 4

 See, e.g., Confidential Staff Report, Memorandum INV-HH-011 (Feb. 12, 2010) (“CR”) at I-5; Public Staff

Report, Drill Pipe and Drill Collars from China, Invs. Nos. 701-TA-474 and 731-TA-1176 (Prelim.), USITC Pub.

4127 (Feb. 2010) (“PR”) at I-3. These firms are RDT, Texas Steel, National Oilwell Varco Grant Prideco (“NOV

Grant Prideco”), The Timken Company (“Timken”), U.S. Steel Corporation (“U.S. Steel”), Smith International, Inc.

(“Smith”), VAM, and TMK. See, e.g., CR/PR at Table III-1. ***. See, e.g., CR at I-4, n.3; PR at I-3, n.3.

3
submitted usable questionnaire responses.5

 The Commission also received usable questionnaire responses

from five manufacturers/exporters in China.6

III. DOMESTIC LIKE PRODUCT

A. In General

In determining whether an industry in the United States is materially injured or threatened with

material injury by reason of imports of the subject merchandise, the Commission first defines the

“domestic like product” and the “industry.”7

 Section 771(4)(A) of the Tariff Act of 1930, as amended

(“the Tariff Act”), defines the relevant domestic industry as the “producers as a whole of a domestic like

product, or those producers whose collective output of a domestic like product constitutes a major

proportion of the total domestic production of the product.”8

 In turn, the Tariff Act defines “domestic like

product” as “a product which is like, or in the absence of like, most similar in characteristics and uses

with, the article subject to an investigation ... .”9

The decision regarding the appropriate domestic like product(s) in an investigation is a factual

determination, and the Commission has applied the statutory standard of “like” or “most similar in

characteristics and uses” on a case-by-case basis.10 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.11 The

Commission looks for clear dividing lines among possible like products and disregards minor variations.12

Although the Commission must accept the U.S. Department of Commerce’s (“Commerce”) 

determination as to the scope of the imported merchandise that is subsidized or sold at less than fair

value,13 the Commission determines what domestic product is like the imported articles Commerce has

 5 See, e.g., CR at IV-1; PR at IV-1; CR/PR at Table IV-1.

 6 See, e.g., CR/PR at Table VII-2. *** also submitted a questionnaire response; however it did not provide

usable data. See, e.g., CR/PR at Table VII-2, note.

 7

 19 U.S.C. § 1677(4)(A).

 8 19 U.S.C. § 1677(4)(A).

 9

 19 U.S.C. § 1677(10).

 10 See, e.g., Cleo, Inc. v. United States, 501 F.3d 1291, 1299 (Fed. Cir. 2007); NEC Corp. v. Department of

Commerce, 36 F. Supp. 2d 380, 383 (Ct. Int’l Trade 1998); Nippon Steel Corp. v. United States, 19 CIT 450, 455

(1995); Torrington Co. v. United States, 747 F. Supp. 744, 749 n.3 (Ct. Int’l Trade 1990), aff’d, 938 F.2d 1278 (Fed.

Cir. 1991) (“every like product determination ‘must be made on the particular record at issue’ and the ‘unique facts

of each case’”). The Commission generally considers a number of factors including the following: (1) physical

characteristics and uses; (2) interchangeability; (3) channels of distribution; (4) customer and producer perceptions

of the products; (5) common manufacturing facilities, production processes, and production employees; and, where

appropriate, (6) price. See Nippon, 19 CIT at 455 n.4; Timken Co. v. United States, 913 F. Supp. 580, 584 (Ct. Int’l

Trade 1996).

 11 See, e.g., S. Rep. No. 96-249 at 90-91 (1979).

 12 Nippon, 19 CIT at 455; Torrington, 747 F. Supp. at 748-49; see also S. Rep. No. 96-249 at 90-91 (1979)

(Congress has indicated that the like product standard should not be interpreted in “such a narrow fashion as to

permit minor differences in physical characteristics or uses to lead to the conclusion that the product and article are

not ‘like’ each other, nor should the definition of ‘like product’ be interpreted in such a fashion as to prevent

consideration of an industry adversely affected by the imports under consideration.”).

 13 See, e.g., USEC, Inc. v. United States, 34 Fed. Appx. 725, 730 (Fed. Cir. 2002) (“The ITC may not modify the

class or kind of imported merchandise examined by Commerce.”); Algoma Steel Corp. v. United States, 688 F.

Supp. 639, 644 (Ct. Int’l Trade 1988), aff’d, 865 F.3d 240 (Fed. Cir.), cert. denied, 492 U.S. 919 (1989).

4
identified.14 The Commission must base its domestic like product determination on the record in these

investigations. The Commission is not bound by prior determinations, even those pertaining to the same

imported products, but may draw upon previous determinations in addressing pertinent domestic like

product issues.15

B. Product Description and Comparison to Scope of Other Investigations

Oil country tubular goods (“OCTG”) is one of six steel pipe and tube end-use categories defined

by the American Iron and Steel Institute (“AISI”). OCTG encompasses steel pipes and tubes used to drill

oil and gas wells in addition to steel pipes and tubes used to convey oil and gas.16 Whereas casing and

tubing products are used to convey oil and gas from within the well to ground level, various components

comprising a drill string are used to drill oil and gas wells.17 The drill string is used to transmit power

from the drilling motor above ground to the drill bit, and to conduct drilling fluid (mud) down to the drill

bit to flush drill cuttings to the surface for removal.18 The majority of the drill string consists of standardweight drill pipe.19 Normally, a drill string has drill collars at the bottom that are connected to heavyweight drill pipe and then standard-weight drill pipe at the upper end.20 These investigations

predominantly concern drill pipe (both heavy-weight and standard-weight) and drill collars. 

Commerce’s notices of initiation define the imported merchandise within the scope of these

investigations as follows:

steel drill pipe, and steel drill collars, whether or not conforming to American Petroleum

Institute (API) or non-API specifications, whether finished or unfinished (including green

tubes suitable for drill pipe), without regard to the specific chemistry of the steel (i.e.,

carbon, stainless steel, or other alloy steel), and without regard to length or outer

diameter. The scope does not include tool joints not attached to the drill pipe, nor does it

include unfinished tubes for casing or tubing covered by any other antidumping or

countervailing duty order.21

 14 Hosiden Corp. v. Advanced Display Mfrs., 85 F.3d 1561, 1568 (Fed. Cir. 1996) (the Commission may find a

single like product corresponding to several different classes or kinds defined by Commerce); Cleo, 501 F.3d at 1298

n.1 (“Commerce’s {scope} finding does not control the Commission’s {like product} determination.”); Torrington,

747 F. Supp. at 748-52 (affirming the Commission’s determination defining six like products in investigations where

Commerce found five classes or kinds).

 15 See, e.g., Acciai Speciali Terni S.p.A. v. United States, 118 F. Supp. 2d 1298, 1304-05 (Ct. Int’l Trade 2000);

Nippon, 19 CIT at 455; Asociacion Colombiana de Exportadores de Flores v. United States, 693 F. Supp. 1165,

1169 n.5 (Ct. Int’l Trade 1988); Citrosuco Paulista, S.A. v. United States, 704 F. Supp. 1075, 1087-88 (Ct. Int’l

Trade 1988).

 16 See, e.g., CR at I-9 to I-10 & n.14; PR at I-7 & n.14.

 17 See, e.g., CR/PR at Figures I-1 and I-2.

 18 See, e.g., CR at I-10; PR at I-7.

 19 See, e.g., Petitions, Vol. I, at 8.

 20 See, e.g., Petitions, Vol. I, at 8. Other elements of a drill string include pup joints, reamers, stabilizers, shock

subs, crossover subs, and other accessories that are attached to the drill string. See, e.g., CR at I-10, n.17; PR at I-7,

n.17.

 21 See 75 Fed. Reg. 4531 (Jan. 28, 2010). 

5
The Commission has conducted several prior investigations of OCTG products, most recently on the basis

of a petition filed in April 2009, but these are the first that have this precise scope (i.e., they do not

include casing and tubing and they include drill collars).22

C. The Inclusion of Green Tubes in the Scope of These Investigations

Respondents Downhole and Command argue that the scope of these investigations wrongly

includes green tubes, which are intermediate products from which finished drill pipe is manufactured.

According to them, green tubes used to make drill pipe are indistinguishable from those used to make

casing/tubing.23 Downhole and Command ask the Commission to disregard imports of green tubes from

China when evaluating injury in these investigations; they allege that the Commission already considered

the effect of these imports on U.S. firms in the context of the recent and ongoing investigations of

casing/tubing from China.24

The Commission must accept Commerce’s determination as to the scope of the imported

merchandise alleged to be subsidized or sold at less than fair value.25 Commerce’s definition of the scope

in its notices initiating these investigations includes “green tubes suitable for drill pipe,” but expressly

does not include “unfinished tubes for casing or tubing covered by any other antidumping or

countervailing duty order.” Thus, based on the language of Commerce’s scope, green tubes suitable for

drill pipe that are imported from China are included in these investigations.

 22 Certain OCTG from China, Inv. No. 701-TA-463 (Final), USITC Pub. 4124 (Jan. 2010). See also, OCTG

from Brazil, Korea, and Spain, Invs. Nos. 701-TA-215 to 217 (Final), USITC Pub. 1633 at 3-10 (Jan. 1985)

(separately analyzing the casing/tubing and drill pipe industries); OCTG from Austria, Romania and Venezuela,

Invs. Nos. 701-TA-240 and 241 and 731-TA-249-251, USITC Pub.1679 (Prelim.) at 4-5 (Apr. 1985) (finding drill

pipe to be separate domestic like product from casing/tubing, but analyzing single industry because the majority of

domestic producers could not break out drill pipe data); OCTG from Argentina and Spain, Invs. Nos. 731-TA-191

and 195 (Final), USITC Pub. 1694 at 3-6 (May 1985) (finding drill pipe and casing/tubing were separate like

products but examining data for a single OCTG industry because the majority of the domestic industry did not

submit separate drill pipe data); OCTG from Canada and Taiwan, Invs. Nos. 701-TA-255 and 731-TA-276-277

(Final), USITC Pub. 1865 at 3-5 (June 1986); OCTG from Israel, Inv. No. 701-TA-271 (Final), USITC Pub. 1952 at

4-5 (Feb. 1987) (even though drill pipe was not in the scope of these investigations, two Commissioners found drill

pipe and casing/tubing were separate like products, two found a single domestic like product that included both, and

one did not participate): OCTG from Argentina, Austria, Italy, Japan, Korea, Mexico, and Spain, Invs. Nos. 701-TA363 to 364 and 731-TA-711 to 717 (Final), USITC Pub. 2911 at I-7 to I-10 (Aug. 1995); OCTG from Argentina,

Italy, Japan, Korea, and Mexico, Invs. Nos. 701-TA-364, 731-TA-711, 713-716 (Review), USITC Pub. 3434 (June

2001); OCTG from Argentina, Italy, Japan, Korea, and Mexico, Invs. Nos. 731-TA-711 and 713-716 (Second

Review), USITC Pub. 3923 (June 2007); OCTG from Austria, Brazil, China, France, Germany, India, Indonesia,

Romania, South Africa, Spain, Turkey, Ukraine, and Venezuela, Invs. Nos. 701-TA-428 and 731-TA-992 to 994 and

996-1005 (Prelim.), USITC Pub. 3511 (May 2002) (the Commission defined a single domestic like product

coextensive with the scope that included both casing/tubing and drill pipe (but not finished drill pipe with tool joints

attached), although it recognized “some merit” to arguments that casing/tubing and drill pipe were separate like

products).

 23 See, e.g., Postconference Brief of Downhole and Command (“Respondents’ Postconf. Br.”) at 5-7.

 24 See, e.g., Respondents’ Postconf. Br. at 4-10; Confer. Tr. at 11-12 (Chen).

 25 See, e.g., USEC, Inc. v. United States, 34 Fed. Appx. 725, 730 (Fed. Cir. Apr. 25, 2005) (“The ITC may not

modify the class or kind of imported merchandise examined by Commerce.”); Softwood Lumber from Canada, Invs.

Nos. 701-TA-414 and 731-TA-928 (Final), USITC Pub. 3509 at 28-29 (May 2002) (the Commission cannot alter the

scope of investigation determined by Commerce, citing, inter alia, Algoma Steel Corp. v. United States, 688 F. Supp.

639, 644 (Ct. Int’l Trade 1988), aff’d, 865 F.3d 240 (Fed. Cir.), cert. denied, 492 US. 919 (1989); Sandvik Steel Co.

v. United States, 164 F.3d 595, 600 (Fed. Cir. 1998); Mitsubishi Elec. Corp. v. United States, 898 F.2d 1577, 1582

(Fed. Cir. 1990).

6
D. Domestic Like Product Issues in These Investigations

In these investigations, there are two issues concerning the definition of the domestic like

product: first, whether green tubes are a separate domestic like product from finished drill pipe, and

second, whether the Commission should find that drill collars are a separate domestic like product from

drill pipe.

1. Whether Green Tubes are a Separate Domestic Like Product

Respondents Downhole and Command ask the Commission to find that green tubes are a separate

domestic like product.26 They apply the Commission’s traditional six-factor like product analysis to argue

that green tubes and finished drill pipe are wholly different products.27 Petitioners disagree, asserting that

unfinished drill pipe (green tubes) and finished drill pipe are part of a continuum and should be part of a

single domestic like product.28

Unlike Respondents, we have analyzed this issue using our semi-finished product analysis.29

Because green tubes and finished drill pipe are articles at different stages of processing, with green tubes

being upstream products that are further processed into downstream finished drill pipe, use of the semifinished product analysis is more appropriate than application of the Commission’s six-factor analysis.30

Significance and extent of the processes used to transform the upstream into the downstream

articles. In the United States, green tubes are formed from round or square solid steel billets or bars in

seamless pipe mills.31 These mills use either rotary piercing or hot extrusion to form a central cavity and

then roll the hollow shell with either a fixed plug or a continuous mandrel to reduce the wall thickness

and thereby increase the length.32 Finally, they roll the shell to size in a sizing or stretch-reducing mill.33

Processors making drill pipe take the formed product, heat the ends of the green tubes, and send the pipe

through a special forging press or upsetter to form a thicker wall at the end of the pipe in order to attach a

 26 See, e.g., Respondents’ Postconf. Br. at 10-15.

 27 See, e.g., Respondents’ Postconf. Br. at 10-15.

 28 See, e.g., Petitioners’ Postconf. Br. at 6-12.

 29 In a semi-finished products analysis, the Commission examines the following: (1) the significance and extent

of the processes used to transform the upstream into the downstream articles; (2) whether the upstream article is

dedicated to the production of the downstream article or has independent uses; (3) differences in the physical

characteristics and functions of the upstream and downstream articles; (4) whether there are perceived to be separate

markets for the upstream and downstream articles; and (5) differences in the costs or value of the vertically

differentiated articles. See, e.g., Glycine from India, Japan, and Korea, Invs. Nos. 731-TA-1111 to 1113 (Prelim.),

USITC Pub. 3921 at 7 (May 2007); Artists’ Canvas from China, Inv. No. 731-TA-1091 (Final), USITC Pub. 3853 at

6 (May 2006); Live Swine from Canada, Inv. No. 731-TA-1076 (Final), USITC Pub. 3766 at 8, n.40 (Apr. 2005);

Certain Frozen Fish Fillets from Vietnam, Inv. No. 731-TA-1012 (Prelim.), USITC Pub. 3533 at 7 (Aug. 2002).

 30 See, e.g., Carbazole Violet Pigment 23 from China and India, Invs. Nos. 701-TA-437 and 731-TA-1060 and

1061 (Final), USITC Pub. 3744 (Dec. 2004); see also Outboard Engines from Japan, Inv. No. 731-TA-1069 (Final),

USITC Pub. 3752 at 7 (Feb. 2005); Mussels from Canada, Inv. No. 731-TA-924 (Prelim.), USITC Pub. 3416 (May

2001) (“In considering whether to expand the domestic like product to include an upstream product such as

unprocessed mussels, the Commission generally utilizes the finished/semifinished product analysis.”).

 31 See, e.g., CR at I-14 to I-15; PR at I-11; Petitions, Vol. I at 9. U.S. producer *** reports hot-piercing bars to

produce both green tubes and drill collar blanks using the same equipment. See, e.g., CR at App. D-6; PR at App.

D-3.

 32 See, e.g., CR at I-15; PR at I-11.

 33 See, e.g., CR at I-15; PR at I-11.

7
tool joint.34 After being heat treated by one of several possible methods to meet the desired API grade,35

the pipes go through a finishing phase, in which they are heat-treated, inspected, and straightened.36

Processors next weld separately manufactured tool joints to each end of the pipes by rotational friction or

friction welding.37 Drill pipe (with tool joints attached) subsequently will undergo an additional heat

treatment with a polymer quenching agent so that it cools gradually.38 The pipe then undergoes an

additional finishing process where it is machined smooth and inspected.39 As a share of the finished drill

pipe by weight, the unfinished product accounts for approximately two-thirds of the weight, with the tool

joints accounting for approximately one-third of the weight.40

Drill collars are manufactured using a somewhat different process. They are produced from drill

collar “blanks,” which are solid round steel bars that undergo a heat treatment process before being bored

or trepanned.41 No tool joints are attached to the ends of drill collars to attach them to other drill string

components. Instead, because the wall of the collar is very thick, threads are cut directly into each end of

the drill collar so that it can be connected to other collars.42

Whether the upstream article is dedicated to the production of the downstream article. The

parties disagree as to whether green tubes suitable for drill pipe are used to produce products other than

drill pipe, such as casing/tubing.43 The current record contains limited direct information on the extent to

which green tubes suitable for drill pipe are used only for that purpose.

At present, three U.S. mills produce unfinished drill pipe domestically. U.S. producers do report

using some of the same equipment to produce green tubes used for both drill pipe and for casing/tubing,

and they acknowledge that the chemistries do overlap slightly.44 Timken, the ***, is not believed to

 34 See, e.g., Petitions, Vol. I, at 10; USITC Pub. 3434 at I-19. The various pipe sizes and upset configurations

are subject to specific API dimensional tolerances. See, e.g., Petitions, Vol. I, at 10.

 35 See, e.g., Petitions, Vol. I, at 10.

 36 See, e.g., CR at I-15; PR at I-11.

 37 See, e.g., CR at I-15 to I-16; PR at I-11 to I-12; Petitions, Vol. I, at 10-11. Tool joints are heavy coupling steel

components with robust tapered threads and a rotary shoulder connection. Tool joints are designed to sustain the

weight of the drill stem, withstand the strain of repeated connection and disconnection, and provide a leak-proof

seal. The male tool joint section (or pin, with threads cut on the outside) is attached to one end of the length of drill

pipe and the female tool joint section (or box, with threads cut on the inside) is attached to the other end. See, e.g.,

CR at I-15; PR at I-11; Petitions, Vol. I, at 10. Tool joints usually are permanently welded to the pipe, but may also

be screwed onto the pipe or a combination of screwed on and welded. See, e.g., Petitions, Vol. I, at 11.

 38 See, e.g., CR at I-16; PR at I-12.

 39 See, e.g., CR at I-16; PR at I-12; CR/PR at Figure I-3.

 40 See, e.g., Conf. Tr. at 101 (Schagrin).

 41 See, e.g., CR at I-17; PR at I-12; Email from *** (Jan. 25, 2010).

 42 See, e.g., CR at I-17; PR at I-12.

 43 Downhole and Command assert that green tubes can be used to produce either drill pipe or OCTG

casing/tubing based on testimony by U.S. Steel officials at the staff conference in the 2002 OCTG casing/tubing

investigations. See, e.g., Respondents’ Postconf. Br. at 8, citing, OCTG from Austria, Brazil, China, Colombia,

France, Germany, India, Indonesia, Romania, South Africa, Spain, Turkey, Ukraine, and Venezuela, Invs. Nos. 701-

TA-428 and 731-TA-992 to 994 and 996-1005 (Prelim.), USITC Pub. 3511 (May 2002). Petitioners argue that there

is no use for unfinished drill pipe, defined as green tubes suitable for manufacture of drill pipe, other than to produce

finished drill pipe. They further assert that there is no method of producing finished drill pipe that does not begin

with unfinished drill pipe. See, e.g., Petitioners’ Postconf. Br. at 7. 

 44 See, e.g., Confer. Tr. at 28-29 (Ramsey), 198 (Schagrin).

8
produce casing or tubing, while TMK and U.S. Steel do produce these products.45 TMK distinguishes

among drill pipe, casing, tubing, and coupling stock, indicating on its website that “{s}emifinished drill

pipe is available in carbon and alloy grades ... Our seamless drill pipe can be ordered as green tube or as

upset and heat-treated to API 5D grades.”46 From the perspective of at least two leading processors, the

green tubes they use are dedicated to finished drill pipe. VAM Drilling, for example, states that “{b}y

controlling quality at all stages of product manufacture, from the seamless green tube to finished drill pipe

and drill stem components, VAM Drilling ensures a superior product.”47 Similarly, Grant Prideco (prior

to its merger with NOV), indicated that it “controlled each facet of the drill pipe process,” manufacturing

(through Voest-Alpine Tubulars) “the green tube (drill pipe tube that has not been heat-treated or

processed), the tool joint, and {itself performing} the finishing and welding operations.”48

The record in previous investigations contained conflicting evidence on the degree to which

casing/tubing and drill pipe green tubes were sufficiently similar as to be interchangeable by end-users.49

On the one hand, green tubes for drill pipe and green tubes for casing/tubing may share similar chemical

compositions, meet overlapping API diameter and wall-thickness requirements, have largely identical

dimension and weight tolerances for certain size ranges, and have overlapping mechanical strength

requirements.50 On the other hand, most drill pipe is made of low-alloy steel whereas casing/tubing is

primarily made of carbon steel.51 Drill pipe requires heavier walls and generally shorter lengths than

casing/tubing, and the average tensile-strength specifications for drill pipe green tubes are higher than

those for casing and tubing.52 Some of these differences are more noticeable after processing than at the

green tube stage.53 In one prior proceeding, the Commission observed that two U.S. mills reported that

unfinished tubing could be used interchangeably with unfinished drill pipe, but found very little record

evidence of actual interchangeable use by purchasers.54

Differences in physical characteristics and functions of the upstream and downstream articles.

To make specific grades of drill pipe, processors need seamless green tubes typically made from lowalloy steel that meet specific requirements (such as chemistries, tensile strength, wall thickness, and

length).55 Thus, the upstream products necessarily impart certain characteristics to the downstream drill

pipe. Specifically, unfinished drill pipe in its green stage is produced to the chemistry and dimensional

specifications that permit processors to heat treat, upset, and join the tube body with the tool joints. By

heat-treating and other such operations, processors do not change the appearance of the product, but they

do alter the green tubes’ microstructure or mechanical properties to yield finished drill pipe of a specific

 45 Certain OCTG from China, Inv. No. 701-TA-463 (Final), USITC Pub. 4124 at Table III-1 (Jan. 2010).

 46 Found at http://www.tmk-group.com/ipsco_seamless.php, presented in Respondents’ Postconf. Br., Exh. 9.

 47 See, e.g., CR at I-28; PR at I-20.

 48 See, e.g., CR at I-28 to I-29; PR at I-20 citing Grant Prideco, Form 10-k for the year ended December 31,

2007, pp. 1-2 (found at Petition, exhibit 3). The company went on to note that “(W)e are able to meet our customers’

demanding product specifications, particularly with respect to the green drill pipe tubes with body wall thickness,

wall uniformity, and other features that exceed minimum API standards and are not readily available from thirdparty mills.” Id.

 49 See, e.g., USITC Pub. 3511 at 7-9, II-8.

 50 See, e.g., USITC Pub. 3511 at 7.

 51 See, e.g., USITC Pub. 2911 at I-8.

 52 See, e.g., USITC Pub. 3511 at 7-9; USITC Pub. 2911 at I-8 to I-9.

 53 See, e.g., USITC Pub. 3511 at 7.

 54 See, e.g., USITC Pub. 2911 at I-9 & n.23.

 55 See, e.g., USITC Pub. 3511 at 5, 7-9, II-8; USITC Pub. 2911 at I-8 to I-9, II-7; Petitions, Vol. I, at 10; USITC

Pub. 3434 at I-18; USITC Pub. 3923 at I-31.

9
grade.56 Prior to these operations, however, unfinished drill pipe cannot be connected to other drill pipe

and thus cannot function as a component of a drill string for use in oil and gas drilling. The addition of

tool joints alters the appearance of the pipes and provides functionality that green tubes do not possess;

finished drill pipe with tool joints can be connected to other drill pipe to form a drill string for use in oil

and gas drilling applications.57

Whether there are perceived to be separate markets for the upstream and downstream articles. 

Green tubes are manufactured by seamless tube mills and then manufactured into finished products by

processors.58 No U.S. mills that produce green tubes for drill pipe manufacture finished drill pipe. No

U.S. processors that make drill pipe manufacture green tubes for drill pipe, although at least one drill pipe

processor, ***, occasionally produces and sells drill pipe that has been upset and heat treated, but not tool

joined.59 Whereas *** unfinished drill pipe was sold to processors to be manufactured into finished

products, during the period examined processors sold *** percent of their finished drill pipe to end users

and the remainder to distributors.60 

Differences in costs or value of the vertically differentiated articles. Respondents testified that

the attachment of tool joints accounts for approximately 30 percent of the cost of the finished drill pipe.61

U.S. producers reported average unit values for unfinished drill pipe that ranged from a low of $*** per

short ton in 2006 to a peak of $*** per short ton in 2008 whereas reported average unit values for

finished drill pipe ranged from a low of $4,686 per short ton in 2006 to a peak of $6,232 per short ton in

interim 2009.62

Conclusion: We find that the available information on this issue is mixed. Although the

processes used to manufacture green tubes are fairly extensive, transforming them into finished drill pipe

requires multiple additional processes (such as heat treating, upsetting, and tool joint attaching) that are

performed by entirely different U.S. producers. Heat-treating, upsetting, and adding tool joints to green

tubes change the overall appearance of the tubes, alter the microstructure and mechanical properties of the

end products, and give finished drill pipe the characteristics needed to function as drill string components

for use in oil and gas applications. Some green tubes that are produced from the same equipment and

have similar chemistries, API minimum diameter and wall thicknesses, could be used to produce either

drill pipe or casing/tubing products. The Commission, however, did not previously find much evidence

that drill pipe green tubes were used to make casing/tubing products. There is no overlap among seamless

tube mills that manufacture green tubes and processors that finish the green tubes into finished drill pipe. 

Whereas *** unfinished drill pipe was sold to processors to be manufactured into finished products, ***

percent of finished drill pipe was sold to end users and the remainder to distributors. Despite differences

in their selling prices and the fact that tool joints account for about 30 percent of the cost of the finished

products, green tubes account for a not-insubstantial portion of the final weight and cost of the finished

drill pipe.63

 56 See, e.g., USITC Pub. 2911 at I-12, II-11.

 57 See, e.g., CR at I-22 to I-23; PR at I-17; CR/PR at Figure I-3 (showing physical attributes of green tubes

versus finished drill pipe).

 58 See, e.g., Petitions, Vol. I, at 9; CR at I-23; PR at I-17.

 59 See, e.g., CR at I-24; PR at I-17; CR/PR at Table III-1; Petitions, Vol. I at 9, 10.

 60 See, e.g., CR/PR at Table I-3.

 61 See, e.g., Conf. Tr. at 134 (Garvey), 160 (Chen).

 62 See, e.g., CR/PR at Table I-4.

 63 Finally, as discussed below, the scope of these investigations also includes finished and unfinished drill

collars, which have some similarities to drill pipe and also some similarities to green tubes, including the fact that

(continued...)

10
For purposes of the preliminary phase of these investigations, we do not find that green tubes as

defined in the scope are a separate domestic like product for the reasons discussed above. We intend to

reexamine this issue in any final phase investigations after seeking more information on the relevant

factors, as well as comments on whether this issue is affected by the inclusion of drill collars in the scope

of these investigations.

2. Whether Drill Collars are a Separate Domestic Like Product

Although no party raised this issue,64 we also consider whether drill collars are a separate

domestic like product, in part because these are the first investigations in which drill collars were included

in the scope.65 A drill string typically includes, among other features, standard-weight drill pipe, heavyweight drill pipe, and drill collars. The drill string transmits rotational power to the drill bit and conducts

fluids downward that flush drill cuttings to the surface. Drill collars are designed to guide, stabilize,

provide stiffness, and add weight to the drill bit in order to drill a more vertical hole.66 A drill string

usually contains standard-weight drill pipe in the upper portion, drill collars at the bottom, and heavyweight drill pipe in between as a transition from standard-weight drill pipe to drill collars.67

Consistent with their common roles but the specific additional purpose of drill collars, drill pipe

and drill collars have similarities and differences in physical characteristics. Drill pipe and drill collars

are both hollow, seamless, heat-treated, and generally of circular cross-section.68 Drill collars are thicker

than heavy-weight drill pipe, which in turn is thicker than standard-weight drill pipe.69 Lengths of

standard- and heavy-weight drill pipe are connected by threaded tool joints, whereas the thickness of drill

collars is such that connecting threads are cut directly into the body of the collars.70 Drill pipe and drill

collars are produced to API specifications, although the specifications for standard-weight drill pipe are

generally different from the usual specification for both heavy-weight drill pipe and drill collars.71

 63 (...continued)

they are hollow OCTG products, with drill collars often being produced by hot piercing bars just as green tubes are

produced by hot piercing billets.

 64 Petitioners request that the Commission find one domestic like product that includes drill collars, coextensive

with the scope of these investigations. See, e.g., Petitioners’ Postconf. Br. at 8-9. Downhole and Command do not

ask the Commission to treat drill collars as a separate domestic like product. See, e.g., Confer. Tr. at 157 (Chen).

 65 As indicated above, the Commission generally considers a number of factors, including the following: (1)

physical characteristics and uses; (2) interchangeability; (3) channels of distribution; (4) customer and producer

perceptions of the products; (5) common manufacturing facilities, production processes, and production employees;

and, where appropriate, (6) price. See Nippon, 19 CIT at 455 n.4; Timken, 913 F. Supp. at 584.

 66 See, e.g., CR at I-14, I-22; PR at I-10, I-16; Confer. Tr. at 51-52 (Morris) (describing how drill collars

sometimes are used in place of heavy-weight drill pipe in unconventional set-ups).

 67 See, e.g., CR at I-13-14; PR at I-10. The transition help reduce drill pipe stress and permits higher-speed

drilling operations.

 68 Drill collars may also be produced in a square cross section.

 69 The typical wall thicknesses of drill pipe is are less than 1 inch. CR-at I-13, PR at I-10. The wall thickness of

drill collars generally is greater than the wall thickness of drill pipe. The outside diameter (“OD”) of drill pipe

ranges from 2.375 to 6.625 inches. For drill collars, the inside diameter ranges from 2 to 3 inches and the OD ranges

from 4 to 11 inches.

 70 Heavy-weight drill pipe has an integral wear pad in the middle and longer tool joints than standard-weight drill

pipe. Drill collars’ surface may be spirally grooved.

 71 Standard-weight drill pipe is generally produced to API specification 5D, 5DP, or BSEN ISO 11961. Heavyweight drill pipe and drill collars are normally produced to API specification 7. See, e.g., Petitions, Vol. I, at 8. 

(continued...)

11
Although they are not interchangeable,72 drill pipe and drill collars are used in a complementary manner

in the drill string and both are necessary components of the drill string.73

Companies that produce drill pipe often produce drill collars. Some of the same employees are

involved in producing drill pipe and drill collars.74 Both products undergo certain similar manufacturing

processes, although tool joints are attached only to drill pipe and not drill collars.75 Heavy-weight drill

pipe can be made either in the same manner as standard-weight drill pipe or in the same manner as drill

collar.76

U.S. producers report little or no difference in the sales or marketing of finished drill pipe and

drill collars, with the same marketing personnel typically handling sales of both products to the same

types of customers. The two products are typically marketed and sold as part of a drilling package,

although priced separately.77 Drill pipe and drill collars are distributed through identical channels of

distribution to drilling contractors and rental companies.78 According to questionnaire respondents,

finished drill pipe was priced 50-100 percent higher than finished drill collars during the period

examined. In contrast, one producer reported that drill pipe is slightly higher priced per ton than drill

collars79 and some questionnaire respondents reported that any price differentials may be attributable to

the fact that drill collars are sold in much smaller quantities than drill pipe.

Based on the evidence on this record showing some overlapping physical characteristics and

similar uses (but not interchangeability), overlapping channels of distribution, some commonality in

 71 (...continued)

Producers may also manufacture drill pipes to non-API or ISO specifications for certain applications, such as sourservice applications. In addition, producers may manufacture proprietary grades that meet or exceed API

specifications. See, e.g., Petitions, Vol. I, at 8-9.

 72 See, e.g., CR at I-24, App. D-4 to D-5; PR at I-18, App. D-3.

 73 See, e.g., Petitioners’ Postconf. Br. at 8-9; Petitions, Vol. I at 13.

 74 See, e.g., Petitioners’ Postconf. Br. at 9; Confer. Tr. at 15, 43 (Fields), 53-54 (Williamson).

 75 Timken produces pierced tubes for drill pipe and drill collars on the same equipment but uses certain boring

equipment only for drill collars, whereas TMK and U.S. Steel, which also produce unfinished drill pipe, do not

produce drill collars. See, e.g., CR at I-23; PR at I-17. Timken reported that it ***. See, e.g., Email from ***,

January 25, 2010. Timken ***. Whereas U.S. processors generally purchase green tubes to produce drill pipe but

trepan or drill their own drill collars from bar, some produce heavy-weight drill pipe from drill collar material. Some

processors use common processes (such as heat treating, machining, threading, hardbanding, and inspection) on both

drill pipe and drill collar products, but they need to use specialized welding equipment to attach tool joints to drill

pipe. See, e.g., CR at I-23, App. D-5 to D-6; PR at I-17, App. D-3; Confer. Tr. at 53 (Williamson), 56 (Schagrin).

 76 Drill pipe generally is manufactured from seamless green tubes that are produced by hot-piercing round or

square solid steel billets, although some heavy-weight drill pipe may be produced from drill collars, and drill collars

may also be used to produce other drill string components, such as pup joints. See, e.g., Confer. Tr. at 46 (Morris),

55-56 (Williamson). Drill collars typically are manufactured from solid round steel bars that are hot-pierced, bored,

or trepanned into a continuous seamless product. See, e.g., CR at I-17, App. D-5 to D-6; PR at I-12, App. D-3. Both

drill pipe and drill collars undergo special heat-treating operations, but tool joints are only attached to drill pipe to

enable them to connect to other components of the drill string. See, e.g., CR at I-14 to I-17, App. D-5 to D-6; PR at

I-11 to I-12, App D-3. In addition, spiral grooves may be formed and hardbanding applied onto the outside of the

drill collars; since the wall of the collar is very thick, treads are cut directly into each end of the drill collar so that it

can be connected to other collars. See, e.g., CR at I-17; PR at I-12. Occasionally, heavy-weight drill pipe is also

spiraled. See, e.g., Confer. Tr. at 54-55 (Williamson).

 77 See, e.g., CR at I-24, App. D-8; PR at I-18; Confer. Tr. at 50 (Schagrin), 68-69 (Parks); Petitioners’ Postconf.

Br. at 11.

 78 See, e.g., CR/PR at Table I-3; CR at App. D-7; PR at App. D-3; Petitioners’ Postconf. Br. at 10; Confer Tr. at

39-41 (Schagrin).

 79 See, e.g., CR/PR at Table I-4; CR at App. D-9 to D-10; PR at App. D-3.

12
manufacturers, manufacturing processes, and labor -- but differences in prices -- we do not find that drill

collars are a separate domestic like product.80

E. Conclusion

For all of these reasons, we define a single domestic like product that includes drill pipe and drill

collars, whether in finished or unfinished forms, including green tubes, in a manner that is coextensive

with the scope of these investigations.

IV. DOMESTIC INDUSTRY

A. In General

The domestic industry is defined as the domestic “producers as a whole of a domestic like

product, or those producers whose collective output of a domestic like product constitutes a major

proportion of the total domestic production of the product.”81 In defining the domestic industry, the

Commission’s general practice has been to include in the industry producers of all domestic production of

the like product, whether toll-produced, captively consumed, or sold in the domestic merchant market.

There are two sets of domestic industry issues in these preliminary phase investigations: (1)

whether U.S. processors that manufacture finished drill pipe from unfinished drill pipe or green tubes

engage in sufficient production-related activities to be considered domestic producers, and (2) whether

appropriate circumstances exist pursuant to the related parties provision of the statute to exclude from the

domestic industry producers that are related to foreign producers and that import and/or purchase subject

merchandise.

B. Sufficient Production-Related Activities

Parties appear to agree that U.S. operations turning green tubes into finished drill pipe constitute

sufficient production-related activities to treat those engaging in these finishing operations as part of the

domestic industry.82 In deciding whether a firm qualifies as a domestic producer, the Commission

generally has analyzed the overall nature of a firm’s production-related activities in the United States,

although production-related activity at minimum levels could be insufficient to constitute domestic

production. The Commission generally considers six factors: (1) source and extent of the firm’s capital

investment; (2) technical expertise involved in U.S. production activities; (3) value added to the product

in the United States; (4) employment levels; (5) quantity and type of parts sourced in the United States;

and (6) any other costs and activities in the United States directly leading to production of the like

product. No single factor is determinative and the Commission may consider any other factors it deems

relevant in light of the specific facts of any investigation.83

 80 In joining the majority in defining a single domestic like product, Chairman Aranoff, Vice Chairman Pearson,

and Commissioner Okun note that the record as a whole contains clear and convincing evidence that there are no

clear dividing lines between the types and forms of drill pipes/collars and no likelihood exists that contrary evidence

will arise in a final investigation. 

 81 19 U.S.C. § 1677(4)(A).

 82 See, e.g., Petitioners’ Postconf. Br. at 2-6; Confer. Tr. at 100-103 (Schagrin), 160 (Chen). The parties did not

discuss the issue of finishing operations on unfinished drill collars.

 83 See, e.g., Diamond Sawblades and Parts Thereof from China and Korea, Invs. Nos. 731-TA-1092-1093

(Final), USITC Pub. 3862 at 8-11 (July 2006) (assemblers included in the industry); Artists’ Canvas from China,

(continued...)

13
Source and extent of the firm’s capital investment. Domestic producers of finished drill pipe

reported capital expenditures of $*** in 2006, $*** in 2007, $*** in 2008, $*** in interim 2008, and

$*** in interim 2009.84 These expenditures *** expenditures by domestic producers of unfinished drill

pipe products.85

Technical expertise involved in U.S. production activities. According to Petitioners, ***.86 In

addition, Petitioners identify elements of the ***.87

Value added to the product in the United States. Petitioners contend that drill pipe finishing,

which involves numerous steps, is generally more than double the cost of the green tube.88 Questionnaire

respondents reported average U.S. commercial shipment unit values for unfinished drill pipe that ranged

from a low of $*** per short ton in 2006 to a peak of $*** per short ton in 2008, whereas reported

average U.S. commercial shipment unit values for finished drill pipe ranged from a low of $4,686 per

short ton in 2006 to a peak of $6,232 per short ton in interim 2009.89 Likewise, average cost of goods

sold for unfinished drill pipe ranged from a low of $*** per short ton in 2006 to a peak of $*** per short

ton in interim 2009,90 whereas average cost of goods sold for finished drill pipe ranged from a low of

$3,189 per short ton in 2006 to a high of $5,368 per short ton in interim 2009.91

Employment levels. Questionnaire responses reflect that producers of finished drill pipe employ

*** production and related workers than producers of unfinished drill pipe.92

Quantity and type of parts sourced in the United States. Petitioners allege that most equipment

used in the production of finished drill pipe is sourced in the United States.93 On the other hand, *** of

unfinished pipe used to make finished drill pipe in the United States was produced in the United States;

*** of unfinished pipe consumed in the United States during the period examined was imported from

nonsubject countries, and the remainder was imported from China.94

Conclusion: Based on the record evidence, we find that U.S. operations turning green tubes into

finished drill pipe constitute sufficient production-related activities to treat those engaging in these

finishing operations as part of the domestic industry (and their finished products as shipments of the

domestic like product). Drill pipe finishers have substantial capital investments and use significant

technical expertise and a large number of employees in the production of drill pipe. Moreover, parties

agree that finishing operations add significant value to green tubes processed into drill pipe.

 83 (...continued)

Inv. No. 731-TA-1091 (Final), USITC Pub. 3853 at 13, n.85 (May 2006) (value added not determinative); DRAMs

and DRAM Modules from Korea, Inv. No. 701-TA-431 (Final), USITC Pub. 3616 at 11 (Aug. 2003) (“The

Commission has never given determinative weight to an individual factor”) (assembly operations were production in

that case); see also, e.g., International Imaging Materials, Inc. v. United States, 30 CIT 1181, 1188-89 (2006)

(affirming the Commission’s finding that “slitters” engaged in sufficient product-related activities in transforming

jumbo rolls into finished thermal transfer ribbons to constitute domestic production).

 84 See, e.g., CR/PR at Table VI-4.

 85 See, e.g., CR/PR at Table VI-4.

 86 See, e.g., Petitioners’ Postconf. Br. at 4.

 87 See, e.g., Petitioners’ Postconf. Br. at 4.

 88 See, e.g., Petitioners’ Postconf. Br. at 4-5.

 89 See, e.g., CR/PR at Table I-4.

 90 See, e.g., CR/PR at Table VI-1a.

 91 See, e.g., CR/PR at Table VI-1b.

 92 See, e.g., CR/PR at Table III-8a (unfinished drill pipe), Table III-8b (finished drill pipe).

 93 See, e.g., Petitioners’ Postconf. Br. at 5.

 94 See, e.g., CR/PR at Table C-1.

14
C. Related Parties

We must determine whether any producer of the domestic like product should be excluded from

the domestic industry pursuant to section 19 U.S.C. § 1677(4)(B). Subsection 1677(4)(B) allows the

Commission, if appropriate circumstances exist, to exclude from the domestic industry producers that are

related to an exporter or importer of subject merchandise or which are themselves importers.95 Exclusion

of such a producer is within the Commission’s discretion based upon the facts presented in each

investigation.96 97

1. Parties’ Arguments

Petitioners argue that the Commission ***.98 They assert that ***.99 Petitioners also argue that

***.100 Respondents Downhole and Command make no arguments concerning related party issues.

 95 19 U.S.C. § 1677(4)(B). 

 96 The primary factors the Commission has examined in deciding whether appropriate circumstances exist to

exclude a related party are as follows: (1) the percentage of domestic production attributable to the importing

producer; (2) the reason the U.S. producer has decided to import the product subject to investigation, i.e., whether

the firm benefits from the LTFV sales or subsidies or whether the firm must import in order to enable it to continue

production and compete in the U.S. market, and (3) the position of the related producer vis-a-vis the rest of the

industry, i.e., whether inclusion or exclusion of the related party will skew the data for the rest of the industry. See,

e.g., Torrington Co. v. United States, 790 F. Supp. 1161 (Ct. Int’l Trade 1992), aff’d mem., 991 F.2d 809 (Fed. Cir.

1993). The Commission has also considered the ratio of import shipments to U.S. production for related producers

and whether the primary interest of the related producer lies in domestic production or importation. These latter two

considerations were cited as appropriate factors in Allied Mineral Products, Inc. v. United States, 28 CIT 1861, 1862

(2004) (“The most significant factor considered by the Commission in making the ‘appropriate circumstances’

determination is whether the domestic producer accrued a substantial benefit from its importation of the subject

merchandise.”); USEC, Inc. v. United States, 132 F. Supp. 2d 1, 12 (Ct. Int’l Trade 2001) (“the provision’s purpose

is to exclude from the industry headcount domestic producers substantially benefitting from their relationships with

foreign exporters.”), aff’d, 34 Fed. Appx. 725 (Fed. Cir. Apr. 25, 2002); S. Rep. No. 249, 96th Cong. 1st Sess. at 83

(1979) (“where a U.S. producer is related to a foreign exporter and the foreign exporter directs his exports to the

United States so as not to compete with his related U.S. producer, this should be a case where the ITC would not

consider the related U.S. producer to be a part of the domestic industry”).

 97 The Commission has concluded that a domestic producer that does not itself import subject merchandise, or

does not share corporate affiliation with an importer, may nonetheless be deemed a related party if it controls large

volumes of imports. The Commission has found such control to exist where the domestic producer was responsible

for a predominant proportion of an importer’s purchases and the importer’s purchases were substantial. See, e.g.,

Electrolytic Manganese Dioxide from Australia and China, Inv. Nos. 731-TA-1124-1125 (Final), USITC Pub. 4036

(September 2008) at 6, fn.26 (finding the firm’s purchases not to be sufficient for it to be considered a related party);

Foundry Coke from China, Inv. No. 731-TA-891 (Final), USITC Pub. 3449 (September 2001) at 8-9. See also SAA

at 858.

 98 See, e.g., Petitioners’ Postconf. Br. at 12-16.

 99 See, e.g., Petitioners’ Postconf. Br. at 12.

 100 See, e.g., Petitioners’ Postconf. Br. at 12.

15
2. Analysis

We find that *** is a related party,101 because ***.102 While it is unclear whether these corporate

relationships amount to direct or indirect control on the part of ***, we need not decide that issue because

***’s status as an importer of subject merchandise is sufficient to warrant treating it as a related party. 

The company ***.103 

*** reported importing *** from China in order to ***.104 It also imports *** that it sells to its

customers.105 Its imports of the subject merchandise from China were equivalent to *** percent of its

domestic production in 2006, *** percent in 2007, *** percent in 2008, and *** percent in interim 2009

compared to *** percent in interim 2008.106 The ***.107 *** is *** producer of finished drill pipe in the

United States, accounting for *** percent of domestic production in 2008.108 It is the ***, accounting for

*** percent of reported *** in 2008.109 The company *** in the United States.110 The record does not

show that the domestic operations of *** derive a significant benefit from its importation of relatively

limited quantities of subject merchandise from China.111 112

We do not exclude *** from the domestic industry as a related party because its ***, and its

imports of subject merchandise ***.

D. Conclusion

Based on the reasons discussed above and consistent with our definition of the domestic like

product, we define the domestic industry as all domestic producers of the domestic like product.

 101 The record also reflects that two U.S. producers purchased subject merchandise imported from China during

the period examined, ***. See, e.g., CR at III-15; PR at III-10. The purchases made by *** were quite small

relative to its U.S. production, equivalent to *** percent of its production in the one year in which they occurred. 

See, e.g., CR/PR at Table III-7a. The purchases made by *** were larger relative to its U.S. production, equivalent

to *** percent of its U.S. production in 2007 and *** percent of its U.S. production in 2008. See, e.g., CR/PR at

Table III-7a. There is no information on the current record concerning the identity of the firm from which *** made

its purchases or the identity of the manufacturer of the subject merchandise in China. We do not find that either ***

or *** is a related party in the absence of any indication that either firm controls large volumes of subject imports

via its purchases.

 102 See, e.g., CR at III-3; PR at III-2; CR/PR at Table III-1, n.1.

 103 See, e.g., CR/PR at Table III-1.

 104 See, e.g., CR at III-15; PR at III-10.

 105 See, e.g., CR at III-15; PR at III-10.

 106 See, e.g., CR/PR at Table III-7a.

 107 See, e.g., CR/PR at Table III-7a.

 108 See, e.g., CR/PR at Table III-1.

 109 See, e.g., CR/PR at Table III-1.

 110 See, e.g., CR/PR at Table III-1.

 111 See, e.g., CR at VI-2 & n.5; PR at V-1 & n.5 (noting that a number of U.S. producers reported input purchases

from related parties). ***.

 112 Consistent with her practice in past investigations and reviews, Chairman Aranoff does not rely on individualcompany operating income margins, which reflect a domestic producer’s financial operations related to production

of the domestic like product, in assessing whether a related party has benefitted from importation of subject

merchandise. Rather, she determines whether to exclude a related party based principally on its ratio of subject

imports to domestic production and whether its primary interests lie in domestic production or importation.

16
V. REASONABLE INDICATION OF MATERIAL INJURY OR THREAT OF MATERIAL

INJURY BY REASON OF SUBJECT IMPORTS FROM CHINA113

A. Legal Standards

In the preliminary phase of antidumping or countervailing duty investigations, the Commission

determines whether there is a reasonable indication that an industry in the United States is materially

injured or threatened with material injury by reason of the imports under investigation.114 In making this

determination, the Commission must consider the volume of subject imports, their effect on prices for the

domestic like product, and their impact on domestic producers of the domestic like product, but only in

the context of U.S. production operations.115 The statute defines “material injury” as “harm which is not

inconsequential, immaterial, or unimportant.”116 In assessing whether there is a reasonable indication that

the domestic industry is materially injured or threatened with material injury by reason of subject imports,

we consider all relevant economic factors that bear on the state of the industry in the United States.117 No

single factor is dispositive, and all relevant factors are considered “within the context of the business

cycle and conditions of competition that are distinctive to the affected industry.”118

Although the statute requires the Commission to determine whether there is a reasonable

indication that the domestic industry is materially injured or threatened with material injury “by reason

of” unfairly traded imports,119 it does not define the phrase “by reason of,” indicating that this aspect of

the injury analysis is left to the Commission’s reasonable exercise of its discretion.120 In identifying a

causal link, if any, between subject imports and material injury to the domestic industry, the Commission

examines the facts of record that relate to the significance of the volume and price effects of the subject

imports and any impact of those imports on the condition of the domestic industry. This evaluation under

the “by reason of” standard must ensure that subject imports are more than a minimal or tangential cause

of injury and that there is a sufficient causal, not merely a temporal, nexus between subject imports and

material injury.121

 113 Negligibility under 19 U.S.C. § 1677(24) is not an issue in these investigations. During the most recent 12-

month period preceding the filing of the petition for which data are available, subject imports from China accounted

for 42.8 percent by quantity of total imports of drill pipe and drill collars. See, e.g., CR at IV-8; PR at IV-5. The

volume of subject imports is thus well above the statute’s three percent negligibility level. 

 114 19 U.S.C. §§ 1671b(a), 1673b(a).

 115 19 U.S.C. § 1677(7)(B)( i). The Commission “may consider such other economic factors as are relevant to the

determination” but shall “identify each {such} factor ... {a}nd explain in full its relevance to the determination.” 

19 U.S.C. § 1677(7)(B).

 116 19 U.S.C. § 1677(7)(A).

 117 19 U.S.C. § 1677(7)(C)(iii).

 118 19 U.S.C. § 1677(7)(C)(iii).

 119 19 U.S.C. §§ 1671b(a), 1673b(a).

 120 Angus Chemical Co. v. United States, 140 F.3d 1478, 1484-85 (Fed. Cir. 1998) (“{T}he statute does not

‘compel the commissioners’ to employ {a particular methodology}.”), aff’g 944 F. Supp. 943, 951 (Ct. Int’l Trade

1996).

 121 The Federal Circuit, in addressing the causation standard of the statute, observed that “{a}s long as its effects

are not merely incidental, tangential, or trivial, the foreign product sold at less than fair value meets the causation

requirement.” Nippon Steel Corp. v. USITC, 345 F.3d 1379, 1384 (Fed. Cir. 2003). This was further ratified in

Mittal Steel Point Lisas Ltd. v. United States, 542 F.3d 867, 873 (Fed. Cir. 2008), where the Federal Circuit, quoting

Gerald Metals, Inc. v. United States, 132 F.3d 716, 722 (Fed. Cir. 1997), stated that “this court requires evidence in

the record ‘to show that the harm occurred “by reason of” the LTFV imports, not by reason of a minimal or

(continued...)

17
In many investigations, there are other economic factors at work, some or all of which may also

be having adverse effects on the domestic industry. Such economic factors might include nonsubject

imports; changes in technology, demand, or consumer tastes; competition among domestic producers; or

management decisions by domestic producers. The legislative history explains that the Commission must

examine factors other than subject imports to ensure that it is not attributing injury from other factors to

the subject imports, thereby inflating an otherwise tangential cause of injury into one that satisfies the

statutory material injury threshold.122 In performing its examination, however, the Commission need not

isolate the injury caused by other factors from injury caused by unfairly traded imports.123 Nor does the

“by reason of” standard require that unfairly traded imports be the “principal” cause of injury or

contemplate that injury from unfairly traded imports be weighed against other factors, such as nonsubject

imports, which may be contributing to overall injury to an industry.124 It is clear that the existence of

injury caused by other factors does not compel a negative determination.125

Assessment of whether material injury or threat of material injury to the domestic industry is “by

reason of” subject imports “does not require the Commission to address the causation issue in any

particular way” as long as “the injury to the domestic industry can reasonably be attributed to the subject

imports” and the Commission “ensure{s} that it is not attributing injury from other sources to the subject

 121 (...continued)

tangential contribution to material harm caused by LTFV goods.’” See also Nippon Steel Corp. v. United States, 458

F.3d 1345, 1357 (Fed. Cir. 2006); Taiwan Semiconductor Industry Ass’n v. USITC, 266 F.3d 1339, 1345 (Fed. Cir.

2001).

 122 Statement of Administrative Action (“SAA”) on Uruguay Round Agreements Act (“URAA”), H.R. Rep. 103-

316, Vol. I at 851-52 (1994) (“{T}he Commission must examine other factors to ensure that it is not attributing

injury from other sources to the subject imports.”); S. Rep. 96-249 at 75 (1979) (the Commission “will consider

information which indicates that harm is caused by factors other than less-than-fair-value imports.”); H.R. Rep. 96-

317 at 47 (1979) (“in examining the overall injury being experienced by a domestic industry, the ITC will take into

account evidence presented to it which demonstrates that the harm attributed by the petitioner to the subsidized or

dumped imports is attributable to such other factors;” those factors include “the volume and prices of nonsubsidized

imports or imports sold at fair value, contraction in demand or changes in patterns of consumption, trade restrictive

practices of and competition between the foreign and domestic producers, developments in technology and the

export performance and productivity of the domestic industry”); accord Mittal Steel, 542 F.3d at 877.

 123 SAA at 851-52 (“{T}he Commission need not isolate the injury caused by other factors from injury caused by

unfair imports.”); Taiwan Semiconductor Industry Ass’n v. USITC, 266 F.3d 1339, 1345 (Fed. Cir. 2001) (“{T}he

Commission need not isolate the injury caused by other factors from injury caused by unfair imports ... . Rather, the

Commission must examine other factors to ensure that it is not attributing injury from other sources to the subject

imports.” (emphasis in original)); Asociacion de Productores de Salmon y Trucha de Chile AG v. United States, 180

F. Supp. 2d 1360, 1375 (Ct. Int’l Trade 2002) (“{t}he Commission is not required to isolate the effects of subject

imports from other factors contributing to injury” or make “bright-line distinctions” between the effects of subject

imports and other causes.); see also Softwood Lumber from Canada, Inv. Nos. 701-TA-414 and 731-TA-928

(Remand), USITC Pub. 3658 at 100-01 (Dec. 2003) (Commission recognized that “{i}f an alleged other factor is

found not to have or threaten to have injurious effects to the domestic industry, i.e., it is not an ‘other causal factor,’

then there is nothing to further examine regarding attribution to injury”), citing Gerald Metals, Inc. v. United States,

132 F.3d 716, 722 (Fed. Cir. 1997) (the statute “does not suggest that an importer of LTFV goods can escape

countervailing duties by finding some tangential or minor cause unrelated to the LTFV goods that contributed to the

harmful effects on domestic market prices.”).

 124 S. Rep. 96-249 at 74-75; H.R. Rep. 96-317 at 47.

 125 See Nippon Steel Corp., 345 F.3d at 1381 (“an affirmative material-injury determination under the statute

requires no more than a substantial-factor showing. That is, the ‘dumping’ need not be the sole or principal cause of

injury.”).

18
imports.”126 127 Indeed, the Federal Circuit has examined and affirmed various Commission

methodologies and has disavowed “rigid adherence to a specific formula.”128

The Federal Circuit’s decisions in Gerald Metals, Bratsk, and Mittal Steel all involved cases

where the relevant “other” factor was the presence in the market of significant volumes of pricecompetitive nonsubject imports. The Commission interpreted the Federal Circuit’s guidance in Bratsk as

requiring it to apply a particular additional methodology following its finding of material injury in cases

involving commodity products and a significant market presence of price-competitive nonsubject

imports.129 The additional “replacement/benefit” test looked at whether nonsubject imports might have

replaced subject imports without any benefit to the U.S. industry. The Commission applied that specific

additional test in subsequent cases, including the Carbon and Certain Alloy Steel Wire Rod from Trinidad

and Tobago determination that underlies the Mittal Steel litigation.

Mittal Steel clarifies that the Commission’s interpretation of Bratsk was too rigid and makes clear

that the Federal Circuit does not require the Commission to apply an additional test nor any one specific

methodology; instead, the court requires the Commission to have “evidence in the record ‘to show that

the harm occurred ‘by reason of’ the LTFV imports,’” and requires that the Commission not attribute

injury from nonsubject imports or other factors to subject imports.130 Accordingly, we do not consider

ourselves required to apply the replacement/benefit test that was included in Commission opinions

subsequent to Bratsk.

The progression of Gerald Metals, Bratsk, and Mittal Steel clarifies that, in cases involving

commodity products where price-competitive nonsubject imports are a significant factor in the U.S.

 126 Mittal Steel, 542 F.3d at 877-78; see also id. at 873 (“While the Commission may not enter an affirmative

determination unless it finds that a domestic industry is materially injured ‘by reason of’ subject imports, the

Commission is not required to follow a single methodology for making that determination ... . {and has} broad

discretion with respect to its choice of methodology.”) citing United States Steel Group v. United States, 96 F.3d

1352, 1362 (Fed. Cir. 1996) and S. Rep. 96-249 at 75.

 127 Commissioner Pinkert does not join this paragraph or the following four paragraphs. He points out that the

Federal Circuit, in Bratsk, 444 F.3d 1369, and Mittal, held that the Commission is required, in certain circumstances

relating to present material injury, to undertake a particular kind of analysis of nonsubject imports. Mittal explains

as follows:

What Bratsk held is that “where commodity products are at issue and fairly traded, price-competitive, nonsubject imports are in the market,” the Commission would not fulfill its obligation to consider an important

aspect of the problem if it failed to consider whether non-subject or non-LTFV imports would have

replaced LTFV subject imports during the period of investigation without a continuing benefit to the

domestic industry. 444 F.3d at 1369. Under those circumstances, Bratsk requires the Commission to

consider whether replacement of the LTFV subject imports might have occurred during the period of

investigation, and it requires the Commission to provide an explanation of its conclusion with respect to

that factor.

542 F.3d at 878.

 128 Nucor Corp. v. United States, 414 F.3d 1331, 1336, 1341 (Fed. Cir. 2005); see also Mittal Steel, 542 F.3d at

879 (“Bratsk did not read into the antidumping statute a Procrustean formula for determining whether a domestic

injury was ‘by reason’ of subject imports.”).

 129 Mittal Steel, 542 F.3d at 875-79.

 130 Mittal Steel, 542 F.3d at 873 (quoting from Gerald Metals, 132 F.3d at 722), 875-79 & n.2 (recognizing the

Commission’s alternative interpretation of Bratsk as a reminder to conduct a non-attribution analysis).

19
market, the Court will require the Commission to give full consideration, with adequate explanation, to

non-attribution issues when it performs its causation analysis.131 132

The question of whether the material injury threshold for subject imports is satisfied

notwithstanding any injury from other factors is factual, subject to review under the substantial evidence

standard. Congress has delegated this factual finding to the Commission because of the agency’s

institutional expertise in resolving injury issues.133 134

Section 771(7)(F) of the Tariff Act directs the Commission to determine whether the U.S.

industry is threatened with material injury by reason of the subject imports by analyzing whether “further

dumped or subsidized imports are imminent and whether material injury by reason of imports would

occur unless an order is issued or a suspension agreement is accepted.”135 The Commission may not make

such a determination “on the basis of mere conjecture or supposition,” and considers the threat factors “as

a whole” in making its determination whether dumped or subsidized imports are imminent and whether

material injury by reason of subject imports would occur unless an order is issued.136 In making our

determination, we consider all statutory threat factors that are relevant to these investigations.137

 131 Commissioner Lane also refers to her dissenting views in Polyethylene Terephthalate Film, Sheet, and Strip

from Brazil, China, Thailand, and the United Arab Emirates, Inv. Nos. 731-TA-1131-1134 (Final), USITC Pub.

4040 (Oct. 2008), for further discussion of Mittal Steel.

 132 To that end, after the Federal Circuit issued its decision in Bratsk, the Commission began to present published

information or send out information requests in final phase investigations to producers in nonsubject countries that

accounted for substantial shares of U.S. imports of subject merchandise (if, in fact, there were large nonsubject

import suppliers). In order to provide a more complete record for the Commission’s causation analysis, these

requests typically seek information on capacity, production, and shipments of the product under investigation in the

major source countries that export to the United States. The Commission plans to continue utilizing published or

requested information in final phase investigations in which there are substantial levels of nonsubject imports.

 133 Mittal Steel, 542 F.3d at 873; Nippon Steel Corp., 458 F.3d at 1350, citing U.S. Steel Group, 96 F.3d at 1357;

S. Rep. 96-249 at 75 (“The determination of the ITC with respect to causation is ... complex and difficult, and is a

matter for the judgment of the ITC.”).

 134 We provide in the discussion of impact in section V.E. below an analysis of other factors alleged to cause any

threat of material injury that likely would be experienced by the domestic industry.

 135 19 U.S.C. § 1677(7)(F)(ii).

 136 19 U.S.C. § 1677(7)(F)(ii).

 137 These factors are as follows:

(I) if a countervailable subsidy is involved, such information as may be presented to it by the administering

authority as to the nature of the subsidy (particularly as to whether the countervailable subsidy is a subsidy

described in Article 3 or 6.1 of the Subsidies Agreement) and whether imports of the subject merchandise

are likely to increase,

(II) any existing unused production capacity or imminent, substantial increase in production capacity in the

exporting country indicating the likelihood of substantially increased imports of the subject merchandise

into the United States, taking into account the availability of other export markets to absorb any additional

exports,

(III) a significant rate of increase of the volume or market penetration of imports of the subject merchandise

indicating the likelihood of substantially increased imports,

(IV) whether imports of the subject merchandise are entering at prices that are likely to have a significant

depressing or suppressing effect on domestic prices and are likely to increase demand for further imports,

(continued...)

20
B. Conditions of Competition and the Business Cycle

The following conditions of competition inform our analysis of whether there is a reasonable

indication of material injury or threat of material injury by reason of subject imports.

1. Data Considerations

According to Customs data and official import statistics, certain importers accounting for a large

portion of imports did not submit importer questionnaire responses or reported data that were inconsistent

with the import statistics. In response to further inquiries by Commission staff, these importers certified

that they did not import as much, and in some cases, any, drill pipe as reported in the official import

statistics.138 Because of these inconsistencies, which resulted in an overstatement of the volume of

imports captured by the official import statistics, the Commission determined that the questionnaire

responses were a more accurate reflection of the volume of imports and therefore relied on importer

questionnaire responses to measure imports.139

 137 (...continued)

(V) inventories of the subject merchandise,

(VI) the potential for product-shifting if production facilities in the foreign country, which can be used to

produce the subject merchandise, are currently being used to produce other products.

* * *

(IX) any other demonstrable adverse trends that indicate the probability that there is likely to be material

injury by reason of imports (or sale for importation) of the subject merchandise (whether or not it is actually

being imported at the time).

19 U.S.C. § 1677(7)(F)(i). To organize our analysis, we discuss the applicable statutory threat factors using the

same volume/price/impact framework that applies to our material injury analysis. Statutory threat factors (I), (II),

(III), (V), and (VI) are discussed in the analysis of subject import volume. Statutory threat factor (IV) is discussed in

the price effects analysis, and statutory threat factor (IX) is discussed in the impact analysis. Statutory threat factor

(VII) is inapplicable, as no imports of agricultural products are involved in these investigations. No argument was

made that the domestic industry is currently engaging or will imminently engage in any efforts to develop a

derivative or more advanced version of the domestic like product, which would implicate statutory threat factor

(VIII).

 138 See, e.g., CR at I-5, n.6; PR at I-3, n.6.

 139 Because the domestic like product includes both unfinished and finished articles, we are mindful that simply

aggregating data in a single table would result in some double-counting. Accordingly, most of our data compilations

are limited to either finished or unfinished product. In our analysis, we rely mainly on Table C-5, which contains

aggregate data for finished drill pipe and drill collars. Table C-5 treats all drill pipe and drill collar products finished

in the United States by processors as shipments of the domestic like product rather than as shipments from the

country where the upstream product was produced. We have also considered other data compilations to ensure that

we have considered the entire U.S. industry. These include Table C-6, which contains data for both finished and

unfinished product with respect to those factors for which double-counting is not a concern, Table C-1, which

contains data for unfinished drill pipe, and Table C-3, which contains data for unfinished drill collars.

21
2. Demand Conditions

Because drill pipe and drill collars are used in the extraction of oil and natural gas, U.S. demand

for drill pipe is closely linked to demand for those products.140 Industry participants reported tracking

demand using the number of active rigs drilling for oil and natural gas in the United States and the

footage being drilled.141 Demand for drill pipe and drill collars, like demand for other OCTG products, is

cyclical and has experienced sharp and frequent fluctuations over the past two decades.142 Consistent

with trends reported in questionnaire responses, demand for drill pipe and drill collars has fluctuated since

January 2006, increasing from 2006 to mid-2008, and decreasing sharply thereafter.143 During the period

examined in the preliminary phase of these investigations, the number of operating rigs increased steadily

from about 1,500 rigs at the beginning of 2006 to a peak of about 2,000 rigs in mid-2008.144 Rig count

thereafter declined steeply, to about 1,100 rigs in March 2009.145 Even though rig count has increased in

12 of the last 13 weeks for which data are available, the rig count in the United States at the end of the

period was still lower than it was at the same time last year and 783 rigs less than its peak in August

2008.146

Oil prices, which are another indicator of demand, increased from $60 per barrel at the beginning

of the period examined to $130 per barrel in July 2008, before falling to $70 per barrel by September 30,

2009.147

Another factor influencing demand is the long useful life of drill pipe and drill collars. Drill pipe

has an average useful life of three to five years and can often be refurbished and reused.148 Drill collars

typically last five to seven years and can also be repaired or refurbished unless they become too short

after the connections are re-cut or they are lost downhole, in which case they must be replaced.149

Moreover, drill pipe and drill collars on idled rigs can be transferred to active rigs.150 Thus, when rig

activity declines, large contractors and rental companies end up with large inventories of drill pipe, thus

lowering their demand for replacement drill pipe.151 In part reflecting the long useful life of drill pipe and

drill collars, U.S. producers’ order books, which are a sign of the domestic industry’s health and future

activity, peaked in the second and third quarters of 2008, before falling to their lowest point in the third

and fourth quarters of 2009.152

 140 See, e.g., CR at II-10 to II-12; PR at II-6.

 141 See, e.g., Confer. Tr. at 106-107 (Fields, Morris, Williamson)

 142 See, e.g., CR at II-15; PR at II-9; CR/PR at Figure II-6.

 143 See, e.g., CR at II-14; PR at II-9.

 144 See, e.g., CR at II-12; PR at II-9; CR/PR at Figures II-3, II-4, and II-6; see also CR/PR at Table VII-6.

 145 See, e.g., CR/PR at Figures II-3, II-4, and II-6.

 146 See, e.g., Confer. Tr. at 143 (Lesco).

 147 See, e.g., Confer. Tr. at 150-151 (Malashevich); see also, e.g., CR/PR at Figure II-3.

 148 See, e.g., Confer. Tr. at 65-66 (Schagrin). Petitioners also contend that the trend towards horizontal drilling in

shale areas has increased demand for drill pipe, and drilling in difficult environments has meant that drill pipe will

wear out faster than in the traditional vertical drilling. See, e.g., Confer. Tr. at 22-23 (Morris).

 149 See, e.g., Confer. Tr. at 104 (Williamson, Morris).

 150 See, e.g., Confer. Tr. at 66-67 (Schagrin, Fields).

 151 See, e.g., Confer. Tr. at 67 (Fields), 73-74 (Morris), 110-112 (Schagrin, Brand, and Morris), 124 (Chen), and

146-147 (Lesco).

 152 See, e.g., CR at II-12; PR at II-6; CR/PR at Table III-5; Confer. Tr. at 16 (Fields), 20 (Brand), and 28

(Ramsey).

22
When measured by apparent U.S. consumption, U.S. demand for finished drill pipe and drill

collars, by quantity, increased from 186,777 short tons in 2006 to 239,484 short tons in 2007, before

decreasing to 185,561 in 2008 for an overall decrease of 0.7 percent between 2006 and 2008.153

Consumption was 22.5 percent lower in 2008 than in 2007.154 Apparent U.S. consumption was 80,419

short tons in interim (January - September) 2009, 37.5 percent lower than in interim 2008.155 Although

record evidence suggests that demand in the imminent future is not likely to continue to deteriorate,

demand remains lower than it was a year ago.156 In any final phase investigations, we intend to further

examine demand conditions and projections.

3. Supply Conditions

During the period examined, the U.S. market was supplied by the domestic industry, subject

imports from China, and imports from nonsubject sources. *** imports from China and nonsubject

countries of unfinished drill pipe, finished drill pipe, and finished drill collars, but there are believed to

have been *** imports of unfinished drill collars.157 Nonsubject imports of finished drill pipe and drill

collars were not a significant factor during the period examined,158 but the volume of nonsubject imports

of unfinished drill pipe was quite large in the U.S. market throughout the period examined.159

The leading U.S. producer of finished drill pipe is NOV Grant Prideco, followed by Smith, Texas

Steel, and VAM. The leading U.S. producer of finished drill collars is Smith followed by NOV Grant

Prideco. The leading U.S. producer of unfinished drill pipe is Timken, followed by U.S. Steel and TMK. 

The only U.S. producer of unfinished drill collars is Timken.160

Evidence on the record shows that U.S. producers generally produce drill pipe to order.161

Chinese imports, in contrast, are sold both to order and from inventories held by importers and

distributors in the United States.162

 153 See, e.g., CR/PR at Table C-5.

 154 See, e.g., CR/PR at Table C-5.

 155 See, e.g., CR/PR at Table C-5.

 156 See, e.g., CR at II-10 to II-15; PR at II-6 to II-10; CR/PR at Figures II-1 to II-6.

 157 See, e.g., CR/PR at Table IV-2a, Table IV-2b, and Table IV-2d.

 158 See, e.g., CR/PR at Table C-5. The market share of nonsubject imports of finished drill pipe and drill collars

fell from 2.1 percent of apparent U.S. consumption in 2006 to 1.5 percent in 2008.

 159 See, e.g., CR/PR at Table C-1. The market share of nonsubject imports of unfinished drill pipe was ***

percent of apparent U.S. consumption in 2006, *** percent in 2007, and *** percent in 2008.

 160 See, e.g., CR at I-3; PR at I-3; CR/PR at Table III-1.

 161 Seven of nine responding U.S. mills and processors producing drill pipe reported that all of their drill pipe is

produced to order, with lead times ranging from four weeks to over seven months. Four of six responding U.S. mills

and processors producing drill collar reported that all of their drill collar is produced to order, with lead times

ranging from four weeks to over five months. See, e.g., CR at II-1; PR at II-1.

 162 Six of twelve responding importers of drill pipe from China reported that all or virtually all of their drill pipe

is produced to order, with lead times ranging from four weeks to over seven months. Four importers reported that all

or nearly all of their drill pipe is sold from inventory, with lead times ranging from immediate delivery to 15 days. 

Two importers reported a mixture of sales produced to order and sales from inventory. Four of 10 responding

importers of drill collar from China reported that all or nearly all of their drill collar is produced to order, with lead

times ranging from four weeks to six months. Four importers reported that all of their drill collar is sold from

inventory, with lead times ranging from immediate delivery to six months. Two importers reported a mixture of

sales of product produced to order and sales from inventory. See, e.g., CR at II-1; PR at II-1.

23
Conditions in the industry changed over the period examined. As explained above, demand for

drill pipe and drill collars increased from 2006 to mid-2008, but decreased sharply thereafter. Following

the decrease in demand, U.S. producers’ inventories of drill pipe and drill collars have been building,

increasing from an ending inventory quantity of 27,813 short tons in 2006 to an ending inventory of

44,132 short tons in 2008.163 In interim 2009, inventories were equivalent to 36.1 percent of total

shipments.164 Domestic producers’ shipments by quantity also fluctuated during the period examined,

reflecting changes in demand, and declined by 10.7 percent between 2006 and 2008.165 Domestic

producers’ shipments in interim 2009 were 43.6 percent lower than in interim 2008.166

Parties differ with respect to whether U.S. producers were able to meet demand at its peak in

2008. Respondent importers, Downhole and Command, assert that, as demand rose, U.S. producers’

production capacity reached its limit and U.S. producers could no longer supply the needs of drilling

companies.167 They argue that they sold primarily to small drilling contractors, and sourced product from

China because of U.S. producers’ price increases and long delivery times (up to 15 months).168

Petitioners contend, however, that even during the period of high demand in 2008, U.S. producers were

able to supply the needs of the domestic industry.169 We intend to explore this issue further in any final

phase investigations.

Throughout the period examined, domestic production capacity for finished drill pipe and drill

collars exceeded apparent U.S. consumption.170 Domestic production capacity increased by 27.2 percent

from 2006 to 2008, and was slightly higher (by 2.0 percent) in interim 2009 than in interim 2008.171 The

domestic industry’s capacity utilization decreased from 93.2 percent in 2006 to 79.6 percent in 2008, and

was 75.2 percent in interim 2008 and 45.9 percent in interim 2009.172

4. Raw Material Costs

Raw materials constitute a significant share of industry costs. Raw materials (as a share of cost of

goods sold) for domestic producers of drill pipe and drill collars increased from *** percent in 2006 to

*** percent in 2008, and were *** percent in interim 2008 and *** percent in interim 2009.173

There is mixed evidence on the extent to which prices of drill pipe track the prices of the raw

materials used to produce drill pipe.174 One producer reported that the sales prices of drill pipe and drill

collars are not set by raw material costs, but instead are set by supply and demand in the market.175 Other

 163 See, e.g., CR/PR at Table C-5.

 164 See, e.g., CR/PR at Table C-5.

 165 See, e.g. CR/PR at Table C-5.

 166 See, e.g. CR/PR at Table C-5.

 167 See, e.g., Confer. Tr. at 131 (Garvey).

 168 See, e.g., Confer. Tr. at 132 (Garvey).

 169 See, e.g., Confer. Tr. at 94-96 (Brand, Fields, Schagrin).

 170 See, e.g., CR/PR at Table C-5.

 171 See, e.g., CR/PR at Table C-5.

 172 See, e.g., CR/PR at Table C-5.

 173 See, e.g., CR at V-1, PR at V-1 (derived from Table 6-1(b) and 6-1(d)).

 174 See, e.g., CR at V-1, n.1; PR at V-1, n.1; Confer. Tr. at 68 (Fields).

 175 See, e.g., CR at V-1, n.1; PR at V-1, n.1.

24
producer representatives reported that, prior to the collapse in demand in 2009, raw material costs

affected their final input costs and prices.176

5. Interchangeability

There is a high degree of interchangeability among the domestic like product, subject imports,

and nonsubject imports for products of the same type. Six of nine U.S. producers (when comparing drill

pipe) and three of six producers (when comparing drill collars) reported that U.S.-produced drill pipe and

drill collars and imports from China are always interchangeable.177 A majority of importers that

compared drill pipe and drill collars from China with those from the United States reported that they are

always or frequently interchangeable.178

There is evidence on the record that most drill pipe imported from China is finished drill pipe

manufactured to API specifications that competes directly with drill pipe produced in the United States,

which is most commonly produced to API specifications, but is also sold in other grades for specific

applications.179 Evidence also indicates that U.S. producers’ product mix has shifted toward a higher

share of premium grades since 2006.180 Petitioners testified at the staff conference that premium grades of

drill pipe account for approximately 15 percent of the total U.S. market for drill pipe and that Chinese

producers currently do not produce many premium or patented products, but are increasing their efforts to

do so.181

C. Likely Volume of Subject Imports from China182 183

In considering the likely volume of cumulated subject imports, we first examined volume trends

during the period examined. In absolute terms, the volume of subject imports of finished drill pipe and

drill collars increased from 21,561 short tons in 2006 to 27,773 short tons in 2007, and then to 38,694

 176 See, e.g., Confer. Tr. at 78 (Fields, Brand).

 177 See, e.g., CR at II-16; PR at II-10; CR/PR at Table II-2.

 178 See, e.g., CR at II-17; PR at II-10; CR/PR at Table II-2.

 179 See, e.g., Petitions, Vol. I, at 17.

 180 See, e.g., Confer. Tr. at 78 (Schagrin).

 181 See, e.g., CR at II-18; PR at II-11 to II-12; Confer. Tr. at 8 (Schagrin), 59 (Parks), and 61-62 (Schagrin).

 182 Relevant to the likely volume of subject imports (19 U.S.C. § 1677(7)(F)(i)(I)), Commerce initiated its

countervailing duty investigation on subject imports from China and indicated its intention to investigate six

preferential loan and interest-rate programs, two programs of debt-to-equity swaps and loan forgiveness, eight

programs of government provision of goods or services for less than adequate remuneration, two income and other

direct tax benefit programs, three indirect tax and tariff exemption programs, four preferential income tax subsidies

for foreign-invested enterprises, five direct grant programs, and four programs of subsidies to producers located in

Economic Development Zones. See, e.g., 75 Fed. Reg. 4345, 4347 (Jan. 27, 2010); CR at I-7; PR at I-5.

 183 For purposes of these preliminary determinations, we cumulate the allegedly dumped subject imports from

China with the allegedly subsidized imports of subject merchandise from China. Cross cumulation is the cumulation

of subsidized imports with dumped imports and includes the situation in which the dumped and subsidized imports

are one and the same as well as situations in which they differ to some extent. See, e.g., Bingham & Taylor v.

United States, 815 F.2d 1482 (Fed. Cir. 1987); Softwood Lumber from Canada, Invs. Nos. 701-TA-414 (Final) and

731-TA-928 (Final), USITC Pub. 3509 at 29 (May 2002); Circular Welded Carbon Quality Steel Line Pipe from

China, Inv. No. 731-TA-1149 (Final), USITC Pub. 4075 at 4 (May 2009). We note that the cumulated subject

imports alleged to be subsidized and sold at less than fair value are the subject of investigations that resulted from

petitions filed the same day, none of the exceptions to cumulation apply, and there is no dispute that the identical

dumped and subsidized imports compete with each other and the domestic like product.

25
short tons in 2008, an increase of 79.5 percent from 2006-2008.184 Subject imports of finished goods

were 11.2 percent lower in interim 2009, at 18,434 short tons, than in interim 2008, at 20,750 short

tons.185 

From 2006 to 2007, the rate of increase of imports of finished drill pipe and drill collars (28.8

percent) was slightly higher than the increase in apparent U.S. consumption (28.2 percent).186 From 2007

to 2008, however, the absolute volume of subject merchandise imported from China increased by 39.3

percent, while apparent U.S. consumption decreased by 22.5 percent in this same period.187 Apparent

U.S. consumption was 37.5 percent lower in interim 2009 than in interim 2008, but the absolute volume

of subject imports of finished drill pipe and drill collars from China was only 11.2 percent lower in

interim 2009 than in interim 2008.188

Imports of finished drill pipe and drill collars from China increased their market share throughout

the period examined, from 11.5 percent in 2006 to 20.9 percent in 2008.189 It was higher at 22.9 percent

in interim 2009 than it was in interim 2008 at 16.1 percent.190 As the market share for subject imports of

finished drill pipe and drill collars rose, U.S. producers’ market share declined overall from 86.4 percent

in 2006 to 77.7 percent in 2008.191 Domestic producers’ market share in interim 2009 (74.4 percent) was

also lower than their share in interim 2008 (82.3 percent).192

 In absolute terms, the volume of subject unfinished drill pipe increased from *** short tons in

2006 to *** short tons in 2007, and then decreased to *** short tons in 2008.193 Imports of unfinished

drill pipe were *** percent lower in interim 2009, at *** short tons, than in interim 2008, at *** short

tons.194 As was the case for finished drill pipe and drill collars, the market share for Chinese imports of

unfinished drill pipe increased over the period examined, from *** percent in 2006 to *** percent in

2008.195 It was *** percent in interim 2008 and *** percent in interim 2009.196 197 Domestic producers’

market share in interim 2009 (***) was considerably lower than in interim 2008 (*** percent).198

Thus, despite their relatively recent entry into the U.S. market, subject imports from China

obtained a fairly secure foothold in the U.S. market, and continued to increase their presence even when

demand, as measured by apparent U.S. consumption, declined. The combination of increased volume of

subject imports and decreased demand led to higher inventories held by importers. Subject inventories of

 184 See, e.g., CR/PR at Table C-5.

 185 See, e.g., CR/PR at Table C-5.

 186 See, e.g., CR/PR at Table C-5.

 187 See, e.g., CR/PR at Table C-5.

 188 See, e.g., CR/PR at Table C-5.

 189 See, e.g., CR/PR at Table C-5.

 190 See, e.g., CR/PR at Table C-5.

 191 See, e.g., CR/PR at Table C-5.

 192 See, e.g., CR/PR at Table C-5.

 193 See, e.g., CR/PR at Table C-1.

 194 See, e.g., CR/PR at Table C-1.

 195 See, e.g., CR/PR at Table C-1.

 196 See, e.g., CR/PR at Table C-1.

 197 Commissioner Pinkert notes that, when the domestic industry’s production of unfinished drill pipe ***

between interim 2008 and interim 2009, the volume of subject imports of unfinished drill pipe expressed as a ratio to

U.S. production *** from *** percent in interim 2008 to *** percent in interim 2009. See, e.g., CR/PR at Table IV5a.

 198 See, e.g., CR/PR at Table C-1.

26
finished drill pipe and drill collars increased by 149.7 percent from 2006 to 2008.199 In addition, despite

lower subject import volumes of finished drill pipe and drill collars in interim 2009 than in interim 2008,

importers’ inventories were 183.3 percent higher at the end of interim 2009 at 15,414 short tons.200

The industry in China is large and growing. The limited data reported in questionnaire responses

by subject producers/exporters in China indicate that capacity to produce drill pipe in China increased by

*** percent from *** short tons in 2006 to *** short tons in 2008.201 Responding producers of drill pipe

in China operated at fairly high but declining capacity utilization levels from 2006 (*** percent) through

2008 (*** percent).202 In interim 2009, however, reported capacity utilization was only *** percent,

compared to *** percent in interim 2008.203 Reported unused capacity in interim 2009 is *** the volume

of total subject drill pipe imports in 2008.204 Thus, even the limited reported data suggest large drill pipe

production capacity and large available unused capacity in China in the imminent future.205

Questionnaire data likely understate significantly the total available Chinese capacity to produce

and export drill pipe and drill collars to the United States. Although the response by Chinese producers

was not insubstantial, the responding producers nevertheless accounted for *** of subject imports during

the period examined.206 Thus, there appears to be a very large additional segment of the Chinese industry

that participates in the U.S. market, but is unaccounted for in the data that we have before us in these

preliminary phase investigations. We conclude that available capacity in China is large and supports a

finding that the likely imminent volume of subject imports will be significant.207

 199 See, e.g., CR/PR at Table C-5.

 200 See, e.g., CR/PR at Table C-5. In any final phase investigations, we intend to seek information regarding

inventories of finished drill pipe and drill collars held by contractors and rental companies, which the parties

believed to be at relatively high levels given recent declines in rig activity. We also intend to seek additional

information concerning the market for used/refurbished products, as both of these are factors that are relevant to our

analysis of this issue.

 201 See, e.g., CR/PR at Table VII-3a. Chinese producers/exporters project *** production capacity for full-year

2009 (*** short tons) and 2010 (*** short tons). In the absence of an explanation for the future decline, which is an

abrupt departure from recent trends, we do not place much weight on these projections.

 202 See, e.g., CR/PR at Table VII-3a. 

 203 See, e.g., CR/PR at Table VII-3a. Reporting drill pipe producers in China projected operating at *** percent

capacity utilization in full-year 2009 and *** percent capacity utilization in 2010.

 204 Compare CR/PR at Table VII-3a (*** tons available capacity in interim 2009) with CR/PR at Table IV-2a,

IV-2b (subject drill pipe imports of *** tons in 2008).

 205 Responding producers/exporters of drill collars in China also reported increasing drill collar production

capacity during the period examined from a *** and project further increases in 2009 and 2010. See, e.g., CR/PR at

Table VII-3b. Their capacity utilization for drill collars increased from *** percent in 2007 to *** percent in 2008,

but was *** percent in interim 2009 compared to *** percent in interim 2008. They project increasing full-year

capacity utilization from *** percent in 2009 to *** percent in 2010. See, e.g., CR/PR at Table VII-3b.

 206 Compare CR/PR at Table VII-3a (reported Chinese exports of *** short tons in 2006, *** short tons in 2007,

*** short tons in 2008, and *** short tons in interim 2009) with CR/PR at Tables IV-2a, IV-2b (subject imports of

*** short tons in 2006, *** short tons in 2007, *** short tons in 2008, and *** short tons in interim 2009).

 207 Petitioners provide some information tending to indicate that uncaptured capacity may be even larger. 

Petitioners report that producers in China have excess capacity to produce seamless pipe products, a category that

includes unfinished drill pipe. We intend to seek more information on the Chinese production and shipments of

unfinished drill pipe in any final phase investigations. Petitioners further report that *** catalogues the existence of

*** producers with at least *** friction welding lines (each with a capacity of *** tons). See, e.g., CR at VII-4; PR

at VII-3; Petitions, Vol. I, at 21; Petitioners’ Postconf. Br. at 41. Despite these estimates, only five

manufacturers/exporters of drill pipe and/or drill collars in China submitted questionnaire response to the

Commission in the preliminary phase of these investigations. Estimates provided in the questionnaire responses of

(continued...)

27
The parties disagree about the size of the home market in China for drill pipe and drill collars.208

In any final phase investigations, we intend to seek more information on this issue. The current record

indicates that Chinese producers are export-oriented. For example, the responding Chinese

manufacturers/exporters’ total exports of drill pipe, as a percent of their total shipments, increased from

*** percent in 2006 to *** percent in 2007 and *** percent in 2008.209 The percentage of their total

shipments that was exported was higher in interim 2009 (*** percent) than in interim 2008 (***

percent).210 Exports to the United States, as a percent of their total shipments, followed similar trends

during the period examined, increasing from *** percent in 2006 to *** percent in 2008 and were ***

percent in interim 2008 and *** percent in interim 2009.211 212 The responding Chinese

manufacturers’/exporters’ inventories of drill pipe, which could be utilized for exports of subject

merchandise to the United States, increased from *** short tons in 2006, to *** short tons in 2007, and to

*** short tons in 2008.213

As discussed above, some of the same equipment and facilities used to produce drill pipe and drill

collars (particularly unfinished drill pipe and unfinished drill collars) may also be used to produce other

products. The ability of Chinese producers to shift their equipment and facilities from other products to

the subject merchandise becomes particularly relevant to our analysis when the existing orders and

pending trade relief investigations worldwide are taken into account. The United States recently imposed

a countervailing duty order on imports of other OCTG products (i.e., casing and tubing) from China214

and a companion antidumping duty investigation is nearing completion. The tonnage of imports of

Chinese seamless casing and tubing affected by those proceedings is many times greater than the total

tons of drill pipe sold in the U.S. market. The current order and pending investigation provide an

incentive for Chinese seamless pipe producers to shift to greater production of unfinished drill pipe,

which they could then export to the United States or provide at favorable terms to Chinese drill pipe

processors for conversion into finished drill pipe.

Additionally, antidumping duty orders have been imposed or proposed on seamless pipe products

in some of China’s other major export markets. In October 2009, the European Union imposed definitive

antidumping duties ranging from 17 to 39 percent on seamless pipe (including drill pipe) from China.215

Russian authorities reportedly proposed antidumping duty measures on seamless steel pipe from China,

also in October 2009.216 These prior and ongoing orders and investigations involving the same and

related products encourage Chinese producers to shift production from other products to the subject

 207 (...continued)

the responding manufacturers/exporters in China also indicate substantial unreported capacity to make the subject

product. See, e .g., CR/PR at Table VII-2, nn.1-5.

 208 See, e.g., CR at VII-4; PR at VII-3.

 209 See, e.g., CR/PR at Table VII-3a.

 210 See, e.g., CR/PR at Table VII-3a. Responding producers project high percentages of exports in full-year 2009

(*** percent) and 2010 (*** percent). 

 211 See, e.g., CR/PR at Table VII-3a. Responding Chinese manufacturers/exporters projected declines in the

percentage of their shipments destined to the U.S. market in full-year 2009 (*** percent) and 2010 (*** percent).

 212 See, e.g., CR/PR at Table VII-3a. Responding producers/exporters of drill collars in China reported exporting

*** of their drill collar production, but exports to the United States accounted for ***. See, e.g., CR/PR at Table

VII-3b.

 213 See, e.g., CR at VII-6; PR at VII-4; CR/PR at Table VII-3a.

 214 See 74 Fed. Reg. 64045 (Nov. 24, 2009) (countervailing duty order on certain OCTG from China). 

 215 See. e.g., CR at VII-10 to VII-11; PR at VII-5 to VII-6.

 216 See, e.g., CR at VII-11; PR at VII-5.

28
merchandise and/or to shift their exports of drill pipe and/or drill collars from other countries to the U.S.

market.

We also analyzed the likely future volume of imports in the context of expected U.S. market

demand for the imminent future. As noted previously, demand for drill pipe and drill collars fell abruptly

late in the period examined. Rig activity is projected to increase gradually in the coming months, but is

unlikely to return to recent robust levels. This means that U.S. market demand for drill pipe and drill

collars likely will remain at lower levels for the imminent future. Thus, despite the large and increasing

supply of subject merchandise and Chinese producers’ incentive and ability to ship larger quantities, due

to lower demand and high inventory levels in the U.S. market the likely absolute volume of subject

imports from China in the imminent future will be lower than the peak levels recorded during the period

examined. Nonetheless, relative to domestic consumption and production, subject imports likely will

increase substantially in the imminent future. 

Thus, for purposes of the preliminary phase of these investigations, we find a reasonable

indication that subject imports from China have had and will likely continue to have a substantial

presence in the U.S. market. We further find that the volume of subject imports will be significant in the

imminent future, particularly relative to consumption in the United States.

D. Likely Price Effects of the Subject Imports

In assessing the likely price effects of the subject imports, we consider pricing developments

during the period examined and likely developments in the imminent future in light of key conditions of

competition in the U.S. market.

Drill pipe and drill collars are used as components of drill strings in oil and gas drilling

applications, as indicated above, but they represent a relatively low share of overall drilling costs.217

Questionnaire respondents reported only limited, if any, ability to substitute other products for the

products under investigation.218 These factors indicate that changes in the price of drill pipe and drill

collars do not significantly affect overall demand for these products.

A majority of questionnaire respondents reported drill pipe and drill collars produced in China

and in the United States are highly interchangeable among products of the same type.219 There is mixed

evidence on the degree to which factors other than price are important in purchasing decisions for drill

pipe and drill collars.220 We intend to further investigate any non-price differences between subject

imports from China and the domestic like product in any final phase investigations.

*** the U.S. producers reported setting prices through transaction-by-transaction negotiations,

*** reported also using contracts, and one reported also using price lists.221 Virtually all responding

importers of drill pipe and drill collars from China reported using transaction-by-transaction negotiations,

 217 See, e.g., CR at II-10, II-15; PR at II-6, II-10.

 218 See, e.g., CR II-15; PR at II-10.

 219 See, e.g., CR/PR at Table II-2.

 220 Roughly half of responding U.S. producers reported that differences other than price between drill pipe

produced in the United States and drill pipe produced in China are frequently or sometimes a significant factor in

their sales, while the other half reported that they are never a significant factor. A majority of responding importers

reported that differences other than price between U.S.-produced drill pipe and subject imports are always or

frequently a significant factor. With respect to drill collars, a majority of producers reported that differences other

than price between U.S.-produced drill collars and subject imports are sometimes a significant factor in their sales,

while a majority of importers reported that such differences are at least sometimes a significant factor. See, e.g.,

CR/PR at Table II-3.

 221 See, e.g., CR/PR at V-2 to V-3; PR at V-2.

29
although two reported using contracts, and one reported also using price lists.222 Most importers of

subject merchandise from China reported making sales on a spot basis,223 whereas U.S. producers’ sales

were more mixed.224

Although there are some differences in lead times between subject imports from China and the

domestic like product, discussed above, products from both sources are sold in overlapping geographical

regions.225 The record contains conflicting information regarding the extent to which subject imports

from China are sold in the same channels of distribution and/or to the same customers as drill pipe and

drill collar products manufactured in the United States.226 We intend to explore this question further in

any final phase investigations, including whether and how differences between domestic producers and

importers in terms of transaction quantities should be taken into account in evaluating price comparisons. 

The Commission collected quarterly pricing data for four products for the period January 2006

through September 2009.227 Usable pricing data were provided by *** domestic producers and ***

importers of products from China.228 Overall, subject imports undersold the domestic like product in only

 222 See, e.g., CR at V-3; PR at V-2.

 223 Among the importers that reported sales of drill pipe from China, all but one reported that all of their sales are

made on a spot basis. All but one of the responding importers of drill collars from China reported that their sales are

made on a spot basis. See, e.g., CR at V-3; PR at V-3.

 224 Six of nine U.S. drill pipe producers reported that all of their sales of drill pipe were spot sales; two reported

that *** of their sales are on a short-term contract basis, with the remainder being spot sales, and one reported an

even split between short-term contracts and spot sales. Three of six U.S. producers of drill collars reported that all of

their sales are spot sales; two reported that *** of their sales are on a short-term contract basis, with the remainder

being spot sales; and one reported the slight majority of short-term contracts relative to spot sales. These producers’

short-term contracts typically last from one month up to one year, may or may not fix price, and mostly contain

meet-or-release provisions. See, e.g., CR at V-3; PR at V-3.

 225 See, e.g., CR at II-1 to II-2; PR at II-1.

 226 Respondents Downhole and Command argue that the domestic industry dominates sales to the five or six

large drilling contractors that account for about three-quarters of the U.S. market. They assert that these sales are

tied up under long-term contracts with beneficial pricing, the flexibility to adjust terms monthly, and preferred

delivery terms that subject producers cannot meet. Instead, Respondents contend, subject imports were sold to

smaller drilling contractors that did not have the resources to carry extensive inventories and that had short-term

needs due to booming demand that the domestic industry was incapable of supplying beginning as early as 2005,

unless customers were willing to wait as long as fifteen months for delivery. See, e.g., Confer. Tr. at 125-26 (Chen),

129-133 (Garvey), 136-139 (Mostoway), 141-143 (Lesco), 166, 172-173 (Garvey). Petitioners assert that any

imports of subject merchandise from China by “distributors” still compete against the domestic industry for sales to

the same drilling contractors, rental companies, and national oil companies. See, e.g., Confer. Tr. at 15 (Fields), 22

(Morris), 40-41 (Schagrin), 74-75 (Schagrin). Respondents report that the importers of subject merchandise do act

as distributors of these products, and acknowledge that they do sell products to rental companies and small quantities

to large contractors, in addition to small contractors. See, e.g., Confer. Tr. at 168-69 (Mostoway), 171-73 (Garvey,

Lesco).

 227 These products were as follows: (1) drill pipe, finished, 5" (.D., 19.5 lbs/ft., grade G-105 with tool joints

attached; (2) drill pipe, finished, 4 1⁄2" O.D., 16.6 obs./ft., grade G-105 with tool joints attached; (3) heavy-weight

drill pipe, 5" O.D., 50.1 lbs./ft., with tool joints attached; (4) drill collars, 6 1⁄2" O.D., x 2 13/16" ID with connections

attached. See, e.g., CR at V-4; PR at V-3. In any final phase investigations, we also intend to collect pricing data on

an unfinished product such as unfinished drill pipe.

 228 See, e.g., CR at V-4; PR at V-3. Pricing data on drill pipe products (products 1-3) reported by these firms

accounted for approximately *** percent of the quantity of U.S. shipments of drill pipe and *** percent of the

quantity of U.S. imports of drill pipe from China. Pricing data on the drill collar product (product 4) reported by

these firms accounted for approximately *** percent of the quantity of U.S. producers’ U.S. shipments of drill

collars and *** percent of the quantity of U.S. imports of drill collars from China during the reporting period. See,

(continued...)

30
16 out of 51 quarterly comparisons, by margins ranging from 0.1 percent to 49.3 percent.229 The prices of

imports from China were higher than U.S. producers’ prices in 35 quarterly comparisons, by margins

ranging from 0.1 to 103.3 percent.230 However, while subject imports undersold the domestic like product

in only 24 percent of quarterly comparisons in 2006 and 2007, in 2008 and interim 2009 – the periods in

which virtually all of the subject imports’ increase in U.S. market share took place – underselling

occurred in 33 percent and 45 percent of quarterly comparisons, respectively.231 Thus, while subject

imports oversold the domestic like product in the majority of comparisons, subject imports did begin

underselling more frequently in the second half of the period examined.

For each of the three drill pipe products, the prices of both the Chinese and domestic products

fluctuated and were higher at the end of the period examined than at the beginning.232 The prices of U.S.-

produced product 4 decreased over the same period and Chinese prices for product 4 increased, although

there were limited reported sales of product 4 imported from China.233 Thus, domestic prices have not

been depressed over the period examined.

The domestic industry’s cost of goods sold (“COGS”) as a ratio to net sales decreased from 66.7

percent in 2006 to 61.2 percent in 2007 before increasing somewhat to 61.6 percent in 2008. The COGSto-net-sales ratio was considerably higher (79.0 percent) in interim 2009 than in interim 2008 (59.1

percent).234 Accordingly, there are some indications from data later in the period examined that a

cost/price squeeze may be beginning. We intend to examine this issue further in any final phase

investigations. 

Thus, notwithstanding significant volumes and significant increases in the volume of subject

imports from China, U.S. sales prices generally increased and prices of Chinese producers were more

often than not higher than prices of the U.S. producers. This would tend to support Respondents’ claim

 228 (...continued)

e.g., CR at V-5, PR at V-3.

 229 See, e.g., CR/PR at Tables V-2 to V-6.

 230 See, e.g., CR/PR at Tables V-2 to V-6.

 231 See, e.g., CR/PR at Tables V-2 to V-6.

 232 See, e.g., CR/PR at Tables V-2 to V-5. The weighted-average sales prices of U.S.-produced product 1

increased overall by *** percent, fluctuating but generally increasing over the entire period and increasing

dramatically at the end of the period, by *** percent from the first quarter of 2009 to the third quarter of 2009. The

weighted-average sales prices of Chinese-produced product 1 increased overall by *** percent, fluctuating but

generally increasing over the entire period and increasing dramatically at the end of the period, by *** percent from

the first quarter of 2009 to the third quarter of 2009. See, e.g., CR/PR at Table V-2; CR at V-14; PR at V-5. 

The weighted-average sales prices of U.S. produced product 2 increased overall by *** percent between

January 2006 and September 2009, fluctuating over the entire period to their lowest point in the *** quarter of ***,

after which they increased by *** percent to the third quarter of 2009. The weighted-average sales prices of Chinese

produced product 2 increased overall by *** percent between January 2006 and September 2009, fluctuating but

remaining stable over the entire period. See, e.g., CR/PR at Table V-3; CR at V-14; PR at V-5.

The weighted-average sales prices of U.S. produced product 3 increased overall by *** percent between

January 2006 and September 2009, with most of the increase being accounted for by an increase of *** percent from

*** quarter of *** to the *** quarter of ***,after which prices remained relatively flat ***. The weighted-average

sales prices of Chinese produced product 3 increased overall by *** percent over the entire period, remaining

relatively stable ***, when ***. See, e.g., CR/PR at Table V-4; CR at V-14; PR at V-5.

 233 See, e.g., CR/PR at Table V-5; CR at V-14; PR at V-5. The weighted-average sales prices of U.S.-produced

product 4 decreased overall by *** percent from January 2006 to September 2009, fluctuating but remaining

relatively flat over most of the period before decreasing by *** percent in ***. The weighted-average sales prices

of Chinese produced product 4 increased overall by *** percent from the *** (the first period for which data were

reported) to the ***. See, e.g., CR/PR at Table V-5; CR at V-14; PR at V-5.

 234 See, e.g., CR/PR at Table C-5.

31
that subject imports captured sales on the basis of non-price factors such as shorter lead times or greater

willingness to accommodate how purchasers wish to structure the transactions.235

In contrast to the pricing data, lost sales and revenues information provides some support for the

importance of price in sales of Chinese drill pipe and drill collars. Several purchasers indicated that they

purchased subject imports instead of domestic product because of lower prices, and that domestic

producers reduced prices in the face of subject import competition.236

In any final phase investigations, we intend to explore the extent to which subject imports from

China have achieved, or are likely to achieve, higher sales volumes at the expense of the domestic

industry through lower prices, or through other factors such as more flexible sales terms or shorter lead

times. 

In sum, we do not find significant current price effects by subject imports from China. We also

find that there are issues regarding the price competition of Chinese producers in the U.S. market that

warrant closer examination in any final phase investigations.

E. Likely Impact Of The Subject Imports On The Domestic Industry237

Between 2006 and 2008, the domestic drill pipe and drill collars industry registered strong

performance in many indicators, including production, financial data, and employment.238 Production

was 220,666 short tons in 2006, 267,930 short tons in 2007, and 238,002 short tons in 2008.239

Production-related workers totaled 1,300 in 2006, 1,539 in 2007, and 1,584 in 2008. Hours worked

totaled 3.4 million in 2006, 4.1 million in 2007, and 4.1 million in 2008. Wages paid were 55.4 million in

2006, 70.9 million in 2007, and 76.5 million in 2008. Productivity (tons per 1,000 hours) was 64.4 in

2006, 65.2 in 2007, and 57.4 in 2008. The domestic industry’s net sales by quantity increased 6.7 percent

from 2006 to 2008,240 capital expenditures increased from $*** in 2006 to $*** in 2007, but declined to

$*** in 2008.241 The industry was profitable in each year from 2006 to 2008.242

Although the domestic industry generally performed very well through 2008, many key

indicators indicated that it is unlikely to return to such a strong performance in the imminent future. As

described above, U.S. market demand for drill pipe and drill collars declined steeply in the latter part of

2008, and remained weak through interim 2009. After increasing 28.2 percent between 2006 and 2007,

apparent U.S. consumption decreased 22.5 percent between 2007 and 2008, for an overall decline of 0.7

 235 See, e.g., Confer. Tr. at 131-132, 133 (Garvey), 138-139 (Mostoway), 173, 176 (Garvey); Respondents’

Postconf. Br. at 17; CR at V-20 to V-21, PR at V-7.

 236 See, e.g., CR/PR at Table V-8; CR at V-19 to V-21; PR at V-7. For example, *** reported that U.S.

producers have reduced their prices in order to compete with subject imports. Domestic producer *** reported that

it ***. ***. 

 237 Commerce initiated its antidumping duty investigations based on estimated dumping margins ranging from

429.53 percent to 496.93 percent for subject imports from China. See, e.g., CR at I-7; PR at I-5. 

 238 See, e.g., CR/PR at Table C-5.

 239 See, e.g., CR/PR at Table C-5.

 240 See, e.g., CR/PR at Table C-5. The domestic industry’s net sales increased from 212,442 short tons in 2006

to 263,383 short tons in 2007, and then decreased to 226,630 short tons in 2008. See, e.g., CR/PR at Table C-5. 

 241 See, e.g., CR/PR at Table C-5.

 242 The domestic industry reported operating income of 30.0 percent in 2006, 36.0 percent in 2007, and 34.4

percent in 2008. In interim 2009, the domestic industry’s operating income of 14.3 percent of sales was

considerably lower than in interim 2008 (37.0 percent). See, e.g., CR/PR at Table C-5.

32
percent from 2006 to 2008.243 Subject imports of finished drill pipe and drill collars increased their

presence dramatically, increasing their market share by 9.3 percentage points from 11.5 percent in 2006 to

20.9 percent in 2008, with virtually all of the increase occurring between 2007 and 2008.244 In interim

2009, despite the much lower apparent U.S. consumption, the U.S. market share of Chinese finished drill

pipe and drill collars was somewhat higher, at 22.9 percent.245 

The increase in market share of Chinese subject imports was accompanied by a parallel decline in

the domestic industry’s market share by 8.7 percentage points from 86.4 percent in 2006 to 77.7 percent

in 2008, with virtually all of the decrease occurring between 2007 and 2008. The domestic industry’s

74.4 percent market share in interim 2009 was 7.9 percentage points less than its 82.3 percent market

share in interim 2008.246 

The decline in domestic industry market share between the interim periods coincided with

declines in several domestic industry indicators. Domestic production by quantity was 37.7 percent

lower, capacity utilization was 29.3 percentage points lower, U.S. shipments by quantity were 43.6

percent lower, net sales by quantity were 38.0 percent lower, and productivity was 16.3 percent lower. 

Significantly, the number of production related workers was 23.2 percent lower, hours worked were 25.6

percent lower, and wages paid were 33.0 percent lower in interim 2009 than in interim 2008.247 248

Domestic industry operating profits were 75.3 percent lower in interim 2009 than in interim 2008,

although operating income as a percentage of sales was a positive 14.3 percent in interim 2009. 

Producers of unfinished drill pipe saw their operating income ratio fall from 26.9 percent in interim 2008

to a negative 23.3 percent in interim 2009, based on a much lower sales volume. The domestic industry’s

capital expenditures were $*** in interim 2008 and $*** in interim 2009.249

 243 See, e.g., CR/PR at Table C-5.

 244 See, e,g., CR/PR at Table C-5. The market share of Chinese imports of unfinished drill pipe increased from

*** percent to *** percent in 2007, and was *** percent in 2008. It was *** percent in interim 2008 and ***

percent in interim 2009. The domestic industry’s market share for unfinished drill pipe was *** percent in 2006,

*** percent in 2007, and *** percent in 2008. It was *** percent in interim 2008 and *** percent in interim 2009. 

See, e.g., CR/PR at Table C-1.

 245 See, e.g., CR/PR at Table C-5.

 246 See, e.g., CR/PR at Table C-5.

 247 Although we are mindful that the domestic industry’s performance indicators for unfinished drill collars,

where the current record shows that there were *** subject imports during the period examined, declined, we note

that the domestic industry’s performance with respect to unfinished drill pipe, finished drill pipe, and finished drill

collars, where *** subject import competition, declined even further. For example, for unfinished drill pipe, the

domestic industry’s operating income ratio was 24.0 percent in 2006, but was negative 23.3 percent in interim 2009. 

U.S. production quantity was 88,383 short tons in 2006, 75,724 short tons in 2007, and 90,830 short tons in 2008,

but was sharply lower in interim 2009, at 5,016 short tons. Capacity utilization was 53.0 percent in 2006, 44.0

percent in 2007, and 57.4 percent in 2008, but was considerably lower in interim 2009, at 4.8 percent. From interim

2008 to interim 2009, U.S. shipments by quantity were *** percent lower, net sales by quantity were *** percent

lower, the number of production-related workers was 78.4 percent lower, hours worked were 81.4 percent lower,

wages paid were 82.5 percent lower, and productivity was 61.2 percent lower. See, e.g., CR/PR at Table C-1.

 248 Table C-6 provides data for certain performance indicators for the whole domestic industry as defined in these

investigations (i.e., it includes drill pipe and drill collars, both unfinished and finished). For the domestic industry as

a whole, production related workers totaled *** in 2006, *** in 2007, *** in 2008, and *** for interim 2009, as

compared to *** in interim 2008. Hours worked totaled *** in 2006, *** in 2007, and *** in 2008. In interim

2008, hours worked were *** and in interim 2009 they were ***. Wages paid for the domestic industry as a whole

were *** in 2006, *** in 2007, and *** in 2008. In interim 2008, wages paid were *** and in interim 2009 they

were ***. See, e.g., CR/PR at Table C-6.

 249 See, e.g., CR/PR at Table C-5. See also CR/PR at Table C-1.

33
Most telling, the volume of drill pipe and drill collars on domestic producers’ order books fell to

its lowest level of the period examined in the third and fourth quarters of 2009. Order quantities in those

most recent quarters were less than *** as large as in any previous quarter from 2006 through 2008.250 

Given Petitioners’ testimony that their customers order their products as much as 12-18 months in

advance,251 it appears that the industry will have only limited near-term business regardless of any

increase in the presence of subject imports. Furthermore, U.S. producers’ inventories of finished drill

pipe and drill collars, as well as inventories of subject imports in the United States, were at their highest at

the end of the period examined.252

In sum, even though the domestic industry generally performed well through 2008, we find that

the domestic industry is in a weakened state and, therefore, is vulnerable based on these more recent

performance indicators and current and projected demand forecasts.253 254

For purposes of these preliminary phase investigations, we find that there is a causal nexus

between the subject imports and a likely imminent adverse impact on the domestic industry. This

conclusion is based mainly on the sharp declines in the industry’s trade, employment, and order book 

data, and our findings discussed above that the volume of subject imports is likely to increase

significantly in relative terms in an imminent time frame. 

We have considered whether there are other factors that likely will have an imminent impact on

the domestic industry. We recognize that the decline in demand for drill pipe and drill collars played a

role in the downturn of the domestic industry’s performance near the end of the period examined and that

demand is likely to remain at suppressed levels in the imminent future. We intend to explore this issue

further in any final phase investigations.

We also note that nonsubject imports of finished drill pipe and drill collars were not a significant

factor during the period examined. The volume of nonsubject imports was less than three percent during

the period examined, including interim 2009.255 In contrast, the volume of nonsubject imports of

unfinished drill pipe was quite large. Most of the imports of nonsubject unfinished drill pipe were

imported by ***. We note that such imports, ***.256 We intend to examine the effect of the domestic

 250 See, e.g., CR at III-12; PR at III-9. Petitioners also stated at the staff conference that their order books

plummeted over the last year. See, e.g., Confer. Tr. at 20 (Brand), 16 (Fields), and 28 (Ramsey). ***. See, e.g.,

CR/PR at Table III-5.

 251 See, e.g., CR at II-12; PR at II-6; Confer. Tr. at 71-72 (Schagrin).

 252 See, e.g., CR/PR at Table C-5.

 253 Commissioner Pinkert finds that the data are mixed regarding whether the domestic industry is currently

vulnerable. He notes that, although financial performance across the entire domestic industry -- as evidenced by

operating margins, operating income, and the ratio of COGs to sales -- deteriorated between the interim periods, the

interim 2009 financial data for the finished products show signs of both strength and weakness, which is in contrast

to clearly weak interim 2009 financial performance with respect to the unfinished products. See, e.g., CR/PR at

Tables C-1, C-3, and C-5. He notes also that, although production, shipments, and capacity utilization for finished

drill pipe/drill collars and unfinished drill pipe were lower in interim 2009 than in interim 2008, the decline between

the interim periods was much more dramatic for unfinished drill pipe than for the finished products. See, e.g.,

CR/PR at Tables C-1 and C-5.

 254 Respondents Downhole and Command argued that the Commission should weight-average the financial

performance of the industry over the period examined. Such an approach is inconsistent with the Commission’s

practice. Moreover, using an averaging methodology as requested by Downhole and Command would tend to

reduce the weight given to the most recent data which are often the most probative, particularly in considering threat

of material injury.

 255 See, e.g., CR at Table C-5.

 256 See, e.g., *** Questionnaire Response at 15 (response to question II-10a).

34
industry’s own imports of unfinished drill pipe on the overall U.S. industry in any final phase of these

investigations. 

Consequently, we conclude that the subject imports are likely to have an imminent adverse

impact on the domestic industry, which demonstrates a reasonable indication that the domestic industry is

threatened with material injury. 

CONCLUSION

For the foregoing reasons, we have determined, based on the record in the preliminary phase of

these investigations, that there is a reasonable indication that the domestic drill pipe and drill collar

industry is threatened with material injury by reason of subject imports from China.257

 257 Chairman Aranoff, Vice Chairman Pearson, and Commissioner Okun find no reasonable indication that the

domestic industry is materially injured or threatened with material injury by reason of subject imports from China. 

35
 
DISSENTING VIEWS OF CHAIRMAN SHARA L. ARANOFF, 

VICE CHAIRMAN DANIEL R. PEARSON, AND 

COMMISSIONER DEANNA TANNER OKUN

Based on the record in the preliminary phase of these investigations, we find that there is no

reasonable indication that an industry in the United States is materially injured or threatened with material

injury by reason of imports of drill pipe and drill collars from China that are allegedly subsidized by the

Government of China and sold in the United States at less than fair value (“LTFV”).1

We join the Commission’s Views with respect to background, domestic like product, domestic

industry, legal standards, and conditions of competition. We write separately, however, with respect to

our analysis of reasonable indication of material injury and threat of material injury by reason of the

subject imports. For the reasons discussed below, we find that there is no reasonable indication that an

industry in the United States producing drill pipe and drill collars is materially injured or threatened with

material injury by reason of subject imports from China.

I. NO REASONABLE INDICATION OF MATERIAL INJURY BY REASON OF SUBJECT

IMPORTS FROM CHINA2

A. Volume of Subject Imports 

In evaluating the volume of subject imports, section 771(7)(C)(I) of the Tariff Act provides that

the “Commission shall consider whether the volume of imports of the merchandise, or any increase in that

volume, either in absolute terms or relative to production or consumption in the United States, is

significant.”3

During a period of rising demand, aggregate subject import volume increased by *** percent

between 2006 and 2007, from *** short tons to *** short tons.4

 Because of a large increase in apparent

U.S. consumption of finished goods between 2006 and 2007 (28.2 percent), subject imports as a share of

apparent U.S. consumption of finished drill pipe and drill collars remained relatively flat at 11.5 percent

in 2006 and 11.6 percent in 2007.5

 Subject imports registered a smaller increase in volume between 2007

and 2008 (*** percent), from *** short tons in 2007 to *** short tons in 2008.6

 As apparent U.S.

consumption, however, declined by 22.5 percent from 2007 to 2008, subject imports increased their share

of the U.S. market to 20.9 percent in 2008.7

 1 Material retardation is not an issue in these investigations. 19 U.S.C. §§ 1671b(a), 1673b(a) (2000); see also

American Lamb Co. v. United States, 785 F.2d 994, 1001-04 (Fed. Cir. 1986); Chem. Corp. v. United States, 20 CIT

353, 354-55 (1996). 

 2

 Negligibility under 19 U.S.C. § 1677(24) is not an issue in these investigations. Questionnaire data indicate that

during the most recent 12-month period, imports from China accounted for *** percent of total U.S. imports of drill

pipe and drill collars by quantity. The volume of subject imports is thus well above the statute’s three percent

negligibility level. CR at IV-8, PR at IV-5. 

 3

 19 U.S.C. § 1677(7)(C)(i).

 4

 The value of these subject imports increased from $*** in 2006 to $*** in 2007. CR/PR at table C-6.

 5

 CR/PR at table C-5.

 6

 From 2007 to 2008, the value of these subject imports increased from $*** to $***. CR/PR at table C-6. 

 7

 CR/PR at table C-5.

37
Apparent U.S. consumption of drill pipe and drill collars began to cool in mid-2008 and

continued to decline in 2009.8

 Apparent U.S. consumption was 37.5 percent lower in interim 2009

compared with interim 2008.9

 While subject imports were *** percent lower in interim 2009 compared to

interim 2008, with the decline in apparent U.S. consumption subject import share of the U.S. market was

higher at 22.9 percent in interim 2009, compared with 16.1 percent in interim 2008.10 The ratio of subject

imports to domestic production also increased overall from 2006 to 2008 and was higher in interim 2009

compared to interim 2008.11 Throughout the period examined, nonsubject imports were the largest source

of import supply to the United States.12 The volume of nonsubject imports fluctuated but declined overall

as a share of the U.S. market. 

We find the increase in volume of the subject imports, both absolutely and relative to domestic

consumption, to be significant. This increase, however, must be viewed in the context of prevailing

market conditions. Subject imports began their increase during a period characterized by expanding

demand, high rates of capacity utilization for domestic producers,13 and long lead times for domestic

production.14 In light of these facts, coupled with our findings of a lack of significant adverse price

 8 This decline in apparent U.S. consumption was associated with the economic downturn in general and was tied

specifically to declines in both the price of oil and the rig count. Oil and gas prices and the number of operating oil

and gas rigs in the United States peaked in mid-2008 before declining steeply. The footage drilled of drill pipe and

drill collars increased year over year from 2006 to 2008 but was sharply lower in interim 2009 compared to interim

2008. U.S. gas rig permits began to climb in 2007, peaked in mid-2008, and then plummeted in the third quarter of

2008. CR/PR at figures II-2, II-3, II-4, and II-5. 

 9

 Apparent U.S. consumption was 80,419 short tons in interim 2009 compared with 128,773 short tons in interim

2008. CR/PR at table C-5.

 10 The quantity of subject imports was *** short tons in interim 2009 with a value of $***, compared to *** short

tons with a value of $*** in interim 2008. CR/PR at table C-6.

With regard to the trend in subject import market share when the interim periods are compared, we note

that, in part because of the elapsed time between orders of subject imports and their entry into the U.S. market, the

reaction of subject imports to the decline in demand was not immediate. In particular, importers of drill pipe from

China reported lead times ranging from 4 weeks to over 7 months and importers of drill collars from China reported

lead times of 4 weeks to 6 months. CR/PR at table C-5; CR/PR at II-1.

 11 The ratio of subject unfinished drill pipe imports to U.S. production increased from *** percent in 2006 to ***

percent in 2007, and then decreased to *** percent in 2008, and was *** percent in interim 2009 compared with ***

percent in interim 2008. The ratio of subject finished drill pipe imports to U.S. production increased from ***

percent in 2006 to *** percent in 2007, and to *** percent in 2008, and was *** percent in interim 2009 compared

with *** percent in interim 2008. The ratio of subject finished drill collar imports to U.S. production initially

decreased from *** percent in 2006 to *** percent in 2007, and then increased to *** percent in 2008, and was ***

percent in interim 2009 compared with *** percent in interim 2008. CR/PR at tables IV-5a, IV-5b, and IV-5d. 

 12 Nonsubject imports were predominantly of unfinished drill pipe. CR/PR at Tables C-1 and C-6. Nonsubject

imports totaled *** short tons in 2006, *** short tons in 2007, and *** short tons in 2008. The quantity of

nonsubject imports was *** percent lower in interim 2009 (*** short tons) compared to interim 2008 (*** short

tons). CR/PR at table C-6.

 13 From 2006 to 2007, demand, as measured by apparent U.S. consumption, increased by 28.2 percent from

186,777 short tons in 2006 to 239,484 short tons in 2007. In 2008, however, apparent U.S. consumption was

185,561 short tons, virtually returning to 2006 levels. CR/PR at table C-5. Domestic producers’ capacity utilization

for finished drill pipe was 96.4 percent in 2006, 90.7 percent in 2007, and 80.4 percent in 2008. CR/PR at table III3b. Domestic producers’ capacity utilization for finished drill collars was 83.7 percent in 2006, 96.0 percent in

2007, and 76.6 percent in 2008. CR/PR at Table III-3d. 

 14 Importer Command Energy Services reported that since 2006 it has experienced backlogs from U.S. producers

ranging from 15 to 18 months that peaked in mid-2008. *** other importers of drill pipe and drill collars from China

also reported experiencing long lead times and late deliveries during certain periods. Importer Weatherford reported

(continued...)

38
effects and impact, discussed infra, we do not find that the volume of subject imports or any increase in

that volume, either absolutely or relative to U.S. production or consumption, warrants an affirmative

determination of reasonable indication of material injury by reason of subject imports. 

B. Price Effects of the Subject Imports

In evaluating the price effects of the subject imports, section 771(7)(C)(ii) of the Tariff

Act provides that the Commission shall consider whether –

(I) there has been significant price underselling by the imported merchandise as

compared with the price of domestic like products of the United States, and

(II) the effect of imports of such merchandise otherwise depresses prices to a significant

degree or prevents price increases, which otherwise would have occurred, to a significant

degree.15

As noted by our colleagues, the domestic like product and subject imports are generally

interchangeable, although differences between products other than price may often be significant

considerations in sales of drill pipe and drill collars.16

The Commission collected quarterly pricing data on three finished drill pipe products, one of

which was heavy weight drill pipe, and one drill collar product.17 Pricing data accounted for *** percent

of domestic producers’ U.S. shipments of drill pipe and *** percent of U.S. imports of drill pipe from

January 2006 to September 2009.18 Pricing data were reported by four domestic producers and seven

importers.19

These data show a pattern of predominant overselling. For the four products collectively, subject

imports of drill pipe and drill collars oversold the domestic like product in 35 of 51 quarterly price

comparisons.20 In particular, with regard to product 3 (heavy weight drill pipe), subject imports

consistently oversold domestic product.21 For the other two drill pipe products, underselling margins,

when they occurred, tended to be quite low, particularly late in the period.22 In light of these

considerations, we do not find underselling to be significant. 

Moreover, we find no evidence of price depression. For the drill pipe products, domestic prices

increased markedly over the period examined. In fact, only for heavy weight drill pipe (product 3) was

there any softening of prices at the end of the period, despite the apparent collapse in demand in late

 14 (...continued)

that although ***. CR at II-6-7, PR at II-3-4. Three purchasers named in lost sales allegations explained that ***. 

CR at V-19-20, PR at V-7. One U.S. producer of drill pipe, ***, reported that it faced supply constraints in periods

of 2008, during which it limited volume to its customers. CR at II-6, PR at II-3.

 15 19 U.S.C. § 1677(7)(C)(ii).

 16 CR/PR at table II-3. 

 17 CR at V-4, PR at V-3. Pricing comparisons for product 4 (drill collars) were very limited.

 18 CR at V-4, PR at V-3.

 19 Id.

 20 CR/PR at table V-7.

 21 CR/PR at table V-4.

 22 CR/PR at tables V-2 & V-3.

39
2008.23 Specifically, the price of domestic producers’ shipments of product 1 (finished drill pipe)

increased from $*** per short ton in the first quarter of 2006 to $*** per short ton in the third quarter of

2009, and the price of domestic shipments of product 2 (finished drill pipe) increased from $*** per ton

in the first quarter of 2006 to $*** per ton in the third quarter of 2009.24 Indeed, prices for both these

products reached their highest levels in interim 2009 when subject import volumes attained their peak

market share.25 We are mindful that, after having increased during much of the period, prices for product

3 declined in the final quarter of the period examined (July-September 2009), but we note that in that

quarter, subject imports oversold the domestic like product by a considerable margin.

In addition, we do not find that subject imports suppressed prices for domestically produced drill

pipe and drill collars to a significant degree. Between 2006 and 2008, as noted, domestic prices increased

markedly, and those increased prices more than covered any increase in domestic producers' unit cost of

goods sold (COGS), as reflected in a decline in COGS as a share of net sales from 66.7 percent in 2006 to

61.6 percent in 2008.26 We acknowledge that trends in the interim period data may indicate the beginning

of a cost/price squeeze in interim 2009.27 Nevertheless, these trends coincided with, and appear to have

been caused by, a severe slump in demand that was a consequence of conditions in the overall economy. 

Thus, viewing the record as a whole, we do not find that the subject imports prevented price increases that

otherwise would have occurred to any significant degree.28

For all of these reasons, we do not find that the subject imports of drill pipe and drill collars had

significant adverse effects on prices for the domestic like product. 

C. Impact of the Subject Imports29

In examining the impact of subject imports, section 771(7)(C)(iii) of the Tariff Act provides that

the Commission “shall evaluate all relevant economic factors which have a bearing on the state of the

industry.”30 These factors include output, sales, inventories, ability to raise capital, research and

development, and factors affecting domestic prices. No single factor is dispositive and all relevant factors

 23 CR/PR at figures V-2 through V-4.

 24 CR/PR at tables V-2 & V-3.

 25 CR/PR at tables V-2, V-3, & C-5.

 26 CR/PR at table C-5.

 27 Unit COGS was $3,514 per ton in interim 2008 and $4,849 per ton in interim 2009; average unit sales value

was $5,945 per ton in interim 2008 and $6,139 per ton in interim 2009; unit COGS as a share of net sales was 59.1

percent in interim 2008 and 79.0 percent in interim 2009. CR/PR at table C-5.

 28 Petitioners alleged a number of lost sales and lost revenues due to subject imports of drill pipe over the period

examined. Some of these allegations were confirmed, but in light of the equally large number of purchasers that

cited availability as their reason for switching to Chinese product, we find that the lost sales and lost revenue data

are consistent with the data on underselling as demonstrating no widespread or consistent pattern of aggressive

pricing by importers of Chinese drill pipe. CR/PR at tables V-8 and V-9. Accordingly, we find the evidence

concerning confirmed lost sales and revenues to be insufficient to establish significant price effects. 

 29 Commerce initiated an antidumping duty investigation on drill pipe and drill collars based on estimated

dumping margins ranging from 429.53 percent to 496.93 percent. Commerce also initiated a countervailing duty

investigation on the subject merchandise. CR at I-7; PR at I-5 (citing 75 Fed. Reg. at 4,531 and 75 Fed. Reg. at

4,345, Jan. 28 and Jan. 27, 2010, respectively).

 30 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851 and 885 (“In material injury determinations, the Commission

considers, in addition to imports, other factors that may be contributing to overall injury. While these factors, in

some cases, may account for the injury to the domestic industry, they also may demonstrate that an industry is facing

difficulties from a variety of sources and is vulnerable to dumped or subsidized imports.”). 

40
are considered “within the context of the business cycle and conditions of competition that are distinctive

to the affected industry.”31

The domestic industry’s production, capacity, sales, and employment all increased between 2006

and 2008, despite the industry’s losses in market share over that period.32 Moreover, the industry earned

extremely high profits each year from 2006 to 2008 as highly favorable demand conditions increased the

industry’s prices faster than the increase in its costs. Notably, the industry’s financial performance

continued to be very strong in 2008, when subject imports reached their peak volume.33 

As noted above, U.S. market demand for drill pipe and drill collars plunged starting in the latter

part of 2008 and remained weak through interim 2009. The industry’s production, shipments, and

employment levels were all significantly lower in interim 2009 than they were in interim 2008.34 In

addition, domestic producers’ market share was 7.9 percentage points lower in interim 2009, at 74.4

percent, then in interim 2008, at 82.3 percent.35

Nonetheless, we do not find a sufficient causal link between subject imports and the current

condition of the domestic industry. Given the fact that subject imports predominantly oversold the

domestic like product even in the interim 2009 period and that, for the most part, the industry was able to

maintain or actually increase its prices in that interim period, a more likely explanation for any volume

losses by the industry was the severe decline in demand that began in late 2008.36 In any event, the

industry’s performance over the entire period examined does not warrant a finding of present material

injury by reason of subject imports. In particular, despite the increased presence of subject imports,

favorable demand conditions permitted the industry to increase prices and profits very substantially in

2006 through 2008. During interim 2009, subject imports gained significant market share, but given that

(1) the absolute level of such imports was lower in interim 2009 compared to interim 2008, (2) subject

imports continued generally to oversell the domestic like product; and, (3) the interim 2009 data do not

reflect the trends during 2006-2008 (when subject imports increased), we cannot conclude that subject

imports had a significant adverse impact on the domestic industry. Rather, the data show that the industry

enjoyed very favorable financial returns during the three calendar years and that the industry’s prices

 31 19 U.S.C. § 1677(7)(C)(iii); see also SAA at 851, 885; Live Cattle from Canada and Mexico, Inv. Nos. 701-

TA-386, 731-TA-812-813 (Preliminary), USITC Publication 3155 at 25 n.148 (Feb. 1999).

 32 From 2006 to 2008, the domestic industry’s share of the finished drill pipe and drill collars market declined by

8.7 percentage points, from 86.4 percent in 2006 to 77.7 percent in 2008, yet its production of those products

increased by 7.9 percent, its production capacity increased by 27.2 percent, its sales quantity increased by 6.7

percent, and the number of production and related workers producing those products increased by 21.8 percent. 

CR/PR at table C-5. 

 33 Operating profit for the industry producing finished drill pipe and drill collars was $288 million in 2006, $504

million in 2007 and $469 million in 2008. The domestic industry’s ratio of operating income to net sales was 30.0

percent in 2006, 36.0 percent in 2007, and 34.4 percent in 2008. CR/PR at table C-5.

 34 Production of finished drill pipe and drill collars was 172,727 short tons in interim 2008 and 107,565 short tons

in interim 2009. U.S. shipments were 106,028 short tons in interim 2008 and 59,844 short tons in interim 2009. 

CR/PR at table C-5. The number of production and related workers for both unfinished and finished drill pipe and

drill collars was *** in interim 2008 and *** in interim 2009. CR/PR at table C-6. 

 35 The volume of subject imports of finished drill pipe and drill collars was 20,750 short tons in interim 2008 and

18,434 short tons in interim 2009, but subject import market share increased as domestic demand dropped. CR/PR

at table C-5.

 36 The Commission’s pricing data show that during interim 2009, prices of subject imports of product 1 were

virtually identical to the prices of the domestic like product, subject imports of product 2 undersold the domestic like

product, but by small margins, and subject imports of product 3 substantially oversold the domestic like product. 

Moreover, the unit value of domestic producers’ shipments of finished drill pipe and drill collars was $5,745 per ton

in interim 2009 compared with $5,597 per ton in interim 2008. CR/PR at tables V-2 through V-4; CR/PR at table C5.

41
more than held their own throughout the period, even after market conditions deteriorated in late 2008

and interim 2009. In considering the role of declining demand late in the period examined, we find that

these downward trends in demand have caused injury to the domestic industry. 

Moreover, we have considered the role of additional other factors, such as nonsubject imports, in

the market. Nonsubject imports were present in the market in significant quantities.37 On the other hand,

nonsubject imports were generally priced higher than similar merchandise from China.38

For the above reasons, we do not find that there is a reasonable indication that subject imports are

having an adverse impact on the domestic industry. We find that the record as a whole contains clear and

convincing evidence that there is no reasonable indication of material injury by reason of subject imports

of drill pipe and drill collars and no likelihood exists that contrary evidence will arise in a final

investigation.

II. NO REASONABLE INDICATION OF THREAT OF MATERIAL INJURY BY REASON

OF SUBJECT IMPORTS FROM CHINA

Section 771(F) of the Act directs the Commission to determine whether there is a reasonable

indication that an industry in the United States is threatened with material injury by reason of the subject

imports by analyzing whether “further dumped or subsidized imports are imminent and whether material

injury by reason of imports would occur unless an order is issued or a suspension agreement is

accepted.”39 The Commission may not make such a determination “on the basis of mere conjecture or

supposition,” and considers the threat factors “as a whole.”40 In making our determination, we have

considered all factors that are relevant to these investigations.41 Based on an evaluation of the relevant

 37 CR/PR at table C-6. We note that domestic producer *** nonsubject imports were *** percent of total reported

nonsubject imports of unfinished drill pipe in 2008. CR/PR at tables III-7a and IV-1. 

 38 CR/PR at appendix E.

 39 19 U.S.C. § 1677(7)(F)(ii).

 40 19 U.S.C. § 1677(7)(F)(ii). An affirmative threat determination must be based upon “positive evidence tending

to show an intention to increase the levels of importation.” Metallverken Nederland B.V. v. United States, 744 F.

Supp. 281, 287 (Ct. Int’l Trade 1990) (citing American Spring Wire Corp. v. United States, 590 F. Supp. 1273, 1280

(Ct. Int’l Trade 1984); see also Calabrian Corp. v. United States, 794 F. Supp. 377, 387-88 (Ct. Int’l Trade 1992)

citing H.R. Rep. No. 98-1156 at 174 (1984).

 41 These factors are as follows:

(I) if a countervailable subsidy is involved, such information as may be presented to it by the administering

authority as to the nature of the subsidy (particularly as to whether the countervailable subsidy is a subsidy

described in Article 3 or 6.1 of the Subsidies Agreement) and whether imports of the subject merchandise

are likely to increase,

(II) any existing unused production capacity or imminent, substantial increase in production capacity in the

exporting country indicating the likelihood of substantially increased imports of the subject merchandise

into the United States, taking into account the availability of other export markets to absorb any additional

exports,

(III) a significant rate of increase of the volume or market penetration of imports of the subject merchandise

indicating the likelihood of substantially increased imports,

(IV) whether imports of the subject merchandise are entering at prices that are likely to have a significant

depressing or suppressing effect on domestic prices and are likely to increase demand for further imports,

(continued...)

42
statutory factors, we find that there is no reasonable indication that an industry in the United States is

threatened with material injury by reason of subject imports of drill pipe and drill collars from China that

are allegedly sold in the United States at less than fair value and allegedly subsidized by the Government

of China. 

The Commission received questionnaire responses from five Chinese producers/exporters, and 22

U.S. importers accounting for more than 80 percent of U.S. imports of the subject merchandise, including

*** percent of U.S. imports of unfinished drill pipe, *** percent of U.S. imports of finished drill pipe,

and *** percent of U.S. imports of drill collars.42 *** was the *** Chinese producer of drill pipe that

submitted a questionnaire response and *** was the *** Chinese producer of drill collars that submitted a

questionnaire response.43

As an initial matter, for purposes of the preliminary phase of these investigations, we do not find

that the domestic industry producing drill pipe and drill collars is currently vulnerable. The operating

performance of the domestic industry during most of the period examined was extremely strong, and in

2007 the industry achieved period highs in production quantity, U.S. shipment quantity, U.S. shipment

value, and operating income (both absolutely and as a ratio to net sales), while experiencing, for the most

part, only modest declines from these highs in 2008.44 For example, despite the growing presence of

subject imports in the U.S. market, the industry’s operating margin increased from 30.0 percent in 2006 to

36.0 percent in 2007, before declining slightly to 34.4 percent in 2008. It is in the context of the

recessionary climate of late 2008 and the first three quarters of 2009, periods that were characterized by

rapidly declining demand for drill pipe and drill collars, that the U.S. industry’s performance declined. 

 41 (...continued)

(V) inventories of the subject merchandise,

(VI) the potential for product-shifting if production facilities in the foreign country, which can be used to

produce the subject merchandise, are currently being used to produce other products.

* * *

(IX) any other demonstrable adverse trends that indicate the probability that there is likely to be material

injury by reason of imports (or sale for importation) of the subject merchandise (whether or not it is actually

being imported at the time).

19 U.S.C. § 1677(7)(F)(I). Statutory threat factor (VII) is inapplicable, as no imports of agricultural products are

involved in these investigations. No argument was made that the domestic industry is currently engaging or will

imminently engage in any efforts to develop a derivative or more advanced version of the domestic like product,

which would implicate statutory threat factor (VIII).

 42 CR at I-5, PR at I-3-4; CR at IV-1; PR at IV-1. The five responding Chinese foreign producers/exporters of

drill pipe and drill collars are Baoshan, DP Master, Henan, Jiangsu and NOV Grant Prideco. ***. All foreign

producers *** reported production of drill pipe and three of the firms *** reported production of drill collars. CR at

VII-5-6, PR at VII-4. The record is not clear as to the precise percentage of overall Chinese subject exports to the

United States accounted for by these reporting producers, nor does the record indicate whether these producers have

a greater propensity to export their production compared with the Chinese industry as a whole. CR/PR at table VII2. 

 43 CR/PR at table IV-2.

 44 The domestic industry’s rate of capacity utilization was highest in 2006 at 93.9 percent. The industry increased

its production capacity by 27.2 percent from 2006 to 2008, explaining in part the slight reduction in capacity

utilization to a still high 91.6 percent in 2007 and 79.6 percent in 2008. It was not until interim 2009 that the

domestic industry’s capacity utilization fell below 75 percent, to a level of 45.9 percent. CR/PR at table C-5. 

43
According to the World Steel Association (WSA), China was the leading global producer of

seamless tubular products in 2007, accounting for nearly 62 percent of global production.45 With regard

to drill pipe specifically, in 2008 China was the largest global exporter of drill pipe.46 Reporting

producers of subject merchandise in China have some unused capacity and export a significant portion

(although generally a minority) of their shipments.47 Reporting producers also project operating at lower

capacity utilization levels in 2009 and 2010 than during the period examined.48 Although the record is

not comprehensive concerning the exact size of the Chinese industry (and more specifically as to the size

and capabilities of non-reporting producers), it does appear clear that Chinese producers have significant

production capacity and appear to be increasingly export-oriented.49 

Further, we note that in October 2009, as a result of an investigation of seamless pipe (including

drill pipe) from China, the European Union imposed antidumping duties on imports of drill pipe from

China. Russia has also proposed antidumping duties on steel pipe imported from China, including drill

pipe.50 We note also that certain production facilities in China that make drill pipe also make OCTG

casing and tubing, and can make unfinished drill pipe on the same production lines as seamless OCTG.51

Thus, there is a potential for product shifting, as OCTG from China is currently under a countervailing

duty order in the U.S. market and there are also preliminary antidumping duties in place.

Having thus considered China’s large seamless tubular production, the apparent moderate export

orientation of its industry, the existence of barriers to its drill pipe exports in third-country markets, and

the potential in the Chinese industry for product shifting, we nonetheless find that there is no reasonable

indication that an industry in the United States is threatened with material injury by reason of the subject

imports.

The record in these investigations does not indicate a significant rate of increase in either volume

and/or market penetration by subject imports into the United States such as would indicate the likelihood

of substantially increased imports in the imminent future. While the volume of subject imports increased

significantly during the period examined, and subject imports’ market share increased as demand declined

in late 2008 and 2009, these increases do not make future gains likely for several reasons. 

 45 CR/PR at VII-1. 

 46 CR/PR at VII-3, n. 6.

 47 Among reporting producers, combined capacity utilization for drill pipe decreased from *** percent in 2006 to

*** percent in 2007 and again to *** percent in 2008. Capacity utilization was *** percent in interim 2008 and ***

percent in interim 2009. CR/PR at Table VII-3a (also showing drill pipe exports accounting for *** percent of

subject producers’ shipments in 2006, *** percent in 2007, *** percent in 2008, *** percent in interim 2008, and

*** percent in interim 2009).

Combined capacity utilization for drill collars increased from *** percent in 2007 to *** percent in 2008

(data were not available for 2006). Capacity utilization was *** percent in interim 2008 and *** percent in interim

2009. CR/PR at Table VII-3b (also showing drill collar exports accounting for *** percent of subject producers’

shipments in 2007 (only *** percent of this to the United States), *** percent in 2008 (only *** percent of this to the

United States), *** percent in interim 2008 (only *** percent of this to the United States), and *** percent in interim

2009 (only *** percent of this to the United States). 

 48 CR/PR at Table VII-3a (projecting *** percent capacity utilization for drill pipe in 2009 and *** percent in

2010 and projecting *** percent capacity utilization for drill collars in 2009 and *** percent in 2010).

 49 Although export-oriented, reporting Chinese producers indicated that most of their exports of drill pipe and drill

collars are to markets other than the United States. Moreover, from 2006 through 2008 the absolute volume and rate

of increase of Chinese exports of drill pipe to non-U.S. markets were greater than the volume and rate of increase of

exports of drill pipe to the U.S. market. CR/PR at table VII-3a. 

 50 CR at VII-11, PR at VII-5. 

 51 Petitioners’ postconference brief at 43. 

44
First, the domestic drill pipe and drill collar industry is currently operating under different

demand conditions than during the period examined. Apparent U.S. consumption of finished drill pipe

and drill collars reached a peak of 239,484 short tons in 2007 before returning in 2008 to 185,561 short

tons, similar to the relatively high level of 2006. In line with the general economic downturn, U.S.

demand for drill pipe and drill collar was sharply lower in interim 2009, at 80,419 short tons, than its

level in interim 2008 (128,773 short tons).52 

 While subject import volume and market share increased significantly from 2006 to 2008 and

subject import market share was higher in interim 2009 than in interim 2008, the record depicts a U.S.

industry that during periods of high demand in 2006 to mid-2008 was increasingly unable to meet its

customers’ needs in a timely fashion.53 Importantly, it was this inability to satisfy customer demands and

not any widespread underselling on the part of subject imports (of which, as discussed below, there is no

evidence on the record), that best accounts for the shift of an increasing number of U.S. purchasers to

subject imports and the resulting decline in the market share of the U.S. industry in 2008.54 There are

several strong indications that domestic demand may be stabilizing, albeit at a level that is lower than the

peak of 2007 and higher than the interim 2009 level. For example, there have been steady increases in the

rig count and prices of oil and natural gas are forecast to remain relatively stable to slightly higher in

2010.55 Nonetheless, the U.S. industry will presumably not experience difficulty in satisfying customer

demand in the imminent future, as demand is not likely to return to the high levels experienced from 2006

to 2007, and to some degree in part of 2008, which the record shows adversely affected the industry’s

ability to meet its supply commitments. The lower level of demand renders a substantial increase in

either the volume or market share of subject imports into the United States in the imminent future very

unlikely. 

Second, a substantial imminent increase in imports is made less likely by several other factors. 

One is the existence of inventories of finished drill pipe and drill collars held in the United States at the

end of interim 2009 (15,414 short tons of U.S. imports from China and 48,673 short tons from U.S.

producers).56 Another is that that drill pipe, unlike other types of tubular products, has a useful life of

from three to five years and can be reused by moving it from idle rigs to operating rigs.57 This unique

characteristic of drill pipe will also work to dampen demand, and thus will inhibit a substantial increase in

the volume and market share of subject imports in the imminent future. A third factor is that, at the start

of the period examined, importers’ U.S. shipments of drill pipe from China were sold predominantly to

distributors, but over time the percentage sold to end users, including drilling contractors, increased

substantially.58 Indeed, by the end of the period examined, the majority of both U.S. producers’ and U.S.

importers’ U.S. shipments of drill pipe and drill collars were to end users.59 We find that in this market

 52 CR/PR at table C-5.

 53 Postconference brief of Weatherford International, Inc. (Weatherford postconference brief) at 2. ***. 

 54 As noted above, subject import market share continued to increase in interim 2009 in part due to a considerable

lag between order and delivery of subject imports. As Weatherford International explains, *** Weatherford

postconference brief at 4.

 55 CR/PR at figures II-3, II-4, and II-5; petitioners’ postconference brief at Exhibit 5; respondents’ postconference

brief at Exhibit 11.

 56 CR/PR at table C-5.

 57 Petitioners’ postconference brief at 39. 

 58 CR/PR at table II-1. 

 59 In January-September 2009, *** percent of U.S. producers’ U.S. shipments of drill pipe and *** percent of

U.S. producers’ shipments of drill collar were to end users, *** percent of U.S. importers’ U.S. shipments of drill

pipe from China and *** percent of U.S. importers’ U.S. shipments of drill collars from China were to end users,

(continued...)

45
that is currently characterized by a predominance of shipments to end users, rather than to distributors, a

rapid increase in subject imports is less likely, inasmuch as purchases by end users such as drilling

contractors are likely tied to individual projects and would not be made for speculative purposes.60

Third, U.S. prices generally increased during the period examined and were for the most part

significantly higher at the end of the period than at the beginning.61 In many instances U.S. prices

reached their peak and U.S. producers sold their greatest volumes during years when subject imports

achieved their highest market share.62 Although lower demand in interim 2009 did cause the average unit

values (AUVs) of U.S. shipments generally to decline, in interim 2009 the domestic industry was still

able to sell finished drill pipe at prices *** percent higher than in interim 2008, despite subject imports

achieving their highest market share during interim 2009.63 Between 2006 and 2008, generally high

prices were combined with an improving ratio of cost of goods sold to net sales, demonstrating that U.S.

producers were easily covering higher costs.64

Finally, subject imports demonstrated no significant underselling during the period examined.

Imports from China oversold the domestic like product in 35 of 51 quarterly comparisons (by margins

ranging from 0.1 percent to 103.3 percent).65 As gains in market share by subject imports during the

period examined were not due to aggressive pricing, but rather were due to shortages in domestic supply,

we find no basis for concluding that Chinese producers are likely to price aggressively to gain market

share in the future. Moreover, inasmuch as shortages in domestic supply have been alleviated, U.S.

purchasers do not have the same incentives to seek out Chinese supply as they did during the period

examined. Thus, we conclude that the subject imports are not entering the United States at prices that are

likely to have a significant depressing or suppressing effect on domestic prices and are likely to increase

demand for further imports. 

Therefore, we conclude that the record does not indicate a likelihood of a substantial increase in

either the volume or market share of subject imports into the United States in the imminent future.66 The

reduced level of demand coupled with the inventories of the subject merchandise (both domesticallyproduced and imported), ensures that Chinese producers will have substantially less opportunity and

incentive to ship drill pipe and drill collars into the U.S. market in the imminent future. Moreover, as

subject imports were not attractively priced during much of the period examined, it is unlikely that there

will be any substantial increases in subject import volume in the imminent future, as U.S. suppliers will

have a price advantage in securing whatever new business may be available.

 59 (...continued)

while *** percent of U.S. importers’ U.S. shipments of drill pipe from all other countries and *** percent of U.S.

importers’ U.S. shipments of drill collar from all other countries were to end users. CR/PR at table II-1. 

 60 We are mindful that, during the period examined, domestic producer ***. CR/PR at Table III-7a; CR at III-15,

PR at III-10. We note, however, that notwithstanding ***. CR/PR at table VII-2. 

 61 CR/PR at tables V-2-V-5. Moreover, the unit value of U.S. shipments went up consistently every year between

2006 and 2008, regardless of product category. CR/PR at tables C-1-C-4. 

 62 CR/PR at tables IV-4, V-3, & V-4.

 63 CR/PR at table C-2. 

 64 The ratio of cost of goods sold to net sales for finished drill pipe and drill collars decreased from 66.7 percent

in 2006 to 61.6 percent in 2008. CR/PR at table C-5.

 65 CR/PR at table V-7.

 66 We also note that the reporting subject producers project a decreased volume of exports to the United States in

2009 and 2010 compared with 2008. While we place limited weight on these projections, they appear credible in

light of subject import trends during the period examined. For example, for the most part, the reporting subject

producers intend to direct a relatively similar portion of their total shipments to the U.S. market in 2009 and 2010 as

in earlier periods. CR/PR at tables VII-3a and -3b.

46
In considering whether there are any other demonstrable adverse trends that indicate the

probability that there is likely to be material injury by reason of imports of the subject merchandise, we

note that, on the contrary, most trends point to a healthy industry that is simply going through a

temporary setback caused by the general economic recession. Indeed, throughout the period examined,

U.S. producers invested in greater production capacity, experienced high levels of profitability, and

currently remain in a strong position notwithstanding the current economic slowdown.67 

Accordingly, we find that the record as a whole contains clear and convincing evidence that there

is no reasonable indication of a threat of material injury by reason of subject imports from China, and no

likelihood exists that contrary evidence will arise in a final investigation. Hence, we determine that there

is no reasonable indication that an industry in the United States is materially injured or threatened with

material injury by reason of subject imports of drill pipe and drill collars from China that are allegedly

sold in the United States at less than fair value and allegedly subsidized by the Government of China.

III. CONCLUSION

For the reasons stated above, we find that there is no reasonable indication that the domestic

industry producing drill pipe and drill collars is materially injured or threatened with material injury by

reason of subject imports from China. 

 67 CR/PR at table C-5.

47
 
PART I: INTRODUCTION

BACKGROUND

These investigations result from a petition filed with the U.S. Department of Commerce

(“Commerce”) and the U.S. International Trade Commission (“USITC” or “Commission”) by VAM

Drilling USA Inc. (“VAM”), Houston, TX; Rotary Drilling Tools (“RDT”), Beasley, TX; Texas Steel

Conversions, Inc. (“TSC”), Houston, TX; TMK IPSCO (“TMK”), Downers Grove, IL; and the United

Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers

International Union, AFL-CIO-CLC (“Union”), Pittsburgh, PA, effective December 31, 2009, alleging

that an industry in the United States is materially injured and threatened with material injury by reason of

subsidized and less-than-fair-value (“LTFV”) imports of drill pipe and drill collars1

 from China. 

Information relating to the background of the investigation is provided below.2

Effective date Action

December 31, 2009 Petition filed with Commerce and the Commission; institution of Commission

investigations (75 FR 877, January 6, 2010)

January 21, 2010 Commission’s conference1

January 27, 2010 Commerce’s notice of initiation of countervailing duty investigations (75 FR

4345)

January 28, 2010 Commerce’s notice of initiation of antidumping duty investigations (75 FR

4531)

February 19, 2010 Commission’s vote2

February 22, 2010 Commission’s determination transmitted to Commerce2

March 1, 2010 Commission’s views transmitted to Commerce2

 1 A list of witnesses appearing at the conference is presented in app. B.

 2

 Postponed as a result of the closure of the Federal Government.

STATUTORY CRITERIA AND ORGANIZATION OF THE REPORT

Statutory Criteria

Section 771(7)(B) of the Tariff Act of 1930 (the “Act”) (19 U.S.C. § 1677(7)(B)) provides that in

making its determinations of injury to an industry in the United States, the Commission--

shall consider (I) the volume of imports of the subject merchandise, (II)

the effect of imports of that merchandise on prices in the United States

for domestic like products, and (III) the impact of imports of such

merchandise on domestic producers of domestic like products, but only

in the context of production operations within the United States; and . . .

may consider such other economic factors as are relevant to the

 1 See the section entitled “The Subject Merchandise” in Part I of this report for a complete description of the

merchandise subject to these investigations.

 2 Federal Register notices cited in the tabulation are presented in app. A.

I-1
determination regarding whether there is material injury by reason of

imports.

Section 771(7)(C) of the Act (19 U.S.C. § 1677(7)(C)) further provides that--

In evaluating the volume of imports of merchandise, the Commission

shall consider whether the volume of imports of the merchandise, or any

increase in that volume, either in absolute terms or relative to production

or consumption in the United States is significant.

. . .

In evaluating the effect of imports of such merchandise on prices, the

Commission shall consider whether . . . (I) there has been significant

price underselling by the imported merchandise as compared with the

price of domestic like products of the United States, and (II) the effect of

imports of such merchandise otherwise depresses prices to a significant

degree or prevents price increases, which otherwise would have

occurred, to a significant degree.

. . .

In examining the impact required to be considered under subparagraph

(B)(i)(III), the Commission shall evaluate (within the context of the

business cycle and conditions of competition that are distinctive to the

affected industry) all relevant economic factors which have a bearing on

the state of the industry in the United States, including, but not limited to

. . . 

(I) actual and potential declines in output, sales, market share, profits,

productivity, return on investments, and utilization of capacity, (II)

factors affecting domestic prices, (III) actual and potential negative

effects on cash flow, inventories, employment, wages, growth, ability to

raise capital, and investment, (IV) actual and potential negative effects

on the existing development and production efforts of the domestic

industry, including efforts to develop a derivative or more advanced

version of the domestic like product, and (V) in {an antidumping

investigation}, the magnitude of the margin of dumping.

Organization of the Report

Part I of this report presents information on the subject merchandise, alleged subsidies and

dumping margins, and domestic like product. Part II of this report presents information on conditions of

competition and other relevant economic factors. Part III presents information on the condition of the

U.S. industry, including data on capacity, production, shipments, inventories, and employment. Parts IV

and V present the volume of subject imports and pricing of domestic and imported products, respectively. 

Part VI presents information on the financial experience of U.S. producers. Part VII presents the

statutory requirements and information obtained for use in the Commission’s consideration of the

question of threat of material injury as well as information regarding nonsubject countries.

U.S. MARKET SUMMARY

Drill pipe and drill collars generally are components of a drill string. The drill string is used to

transmit power from the drilling motor above ground to the drill bit, and to conduct drilling mud down to

the drill bit to flush drill cuttings to the surface, allowing for the removal of oil and natural gas from the

I-2
earth. The leading U.S. producer of finished drill pipe is National Oilwell Varco Grant Prideco (“NOV

Grant Prideco”), followed by Smith International, Inc. (“Smith”), TSC, and VAM. The leading U.S.

producer of finished drill collars is Smith, followed by NOV Grant Prideco. The leading U.S. producer

of unfinished drill pipe is The Timken Company (“Timken”), followed by United States Steel

Corporation (“U.S. Steel”) and TMK. The only U.S. producer of unfinished drill collars is Timken. The

leading producers of drill pipe in China include *** while a leading producer of drill collars in China is

***. The leading U.S. importers of drill pipe from China are Command Energy Services International

Ltd. (“Command”) and Downhole Pipe & Equipment, L.P. (“Downhole”) (collectively referred to as

Respondents), while the leading importer of drill collars from China is Command. Leading importers of

unfinished drill pipe from nonsubject countries (primarily Austria, Germany, and France) include

Benteler Steel & Tube Corporation (“Benteler”), NOV Grant Prideco, and VAM, while the leading

importer of finished drill pipe is Soconord Corporation (“Soconord”) from ***. The leading importers of

drill collars include Schoeller-Bleckmann America, Inc. (“Schoeller-Bleckmann”) and VAM from ***.

Apparent U.S. consumption of finished drill pipe totaled approximately *** short tons with a

value of *** dollars in 2008. Apparent U.S. consumption of finished drill collars totaled approximately

*** short tons with a value of *** dollars in 2008. Currently, nine firms are known to produce drill pipe

and drill collars in the United States.3

 U.S. producers’ U.S. shipments of finished drill pipe totaled

121,092 short tons with a value of 738.7 million dollars in 2008, and accounted for 77.8 percent of

apparent U.S. consumption by quantity and 82.2 percent by value. U.S. producers’ U.S. shipments of

finished drill collars totaled 23,049 short tons with a value of 92.0 million dollars in 2008, and accounted

for 77.3 percent of apparent U.S. consumption by quantity and 74.3 percent by value. U.S. imports of

finished drill pipe from China totaled *** short tons with a value of *** dollars in 2008 and accounted for

*** percent of apparent U.S. consumption by quantity and *** percent by value. U.S. imports of finished

drill collars from China totaled *** short tons with a value of *** dollars in 2008 and accounted for

*** percent of apparent U.S. consumption by quantity and *** percent by value. U.S. imports of finished

drill pipe from nonsubject sources totaled *** short tons with a value of *** dollars in 2008 and

accounted for *** percent of apparent U.S. consumption by quantity and *** percent by value. U.S.

imports of finished drill collars from nonsubject sources totaled *** short tons with a value of *** dollars

in 2008 and accounted for *** percent of apparent U.S. consumption by quantity and *** percent by

value.4

SUMMARY DATA AND DATA SOURCES

A summary of data collected in these investigations is presented in appendix C, tables C-1, C-2,

C-3, C-4, C-5, and C-6. Except as noted, U.S. industry data are based on questionnaire responses of eight

firms that accounted for at least *** percent of U.S. production of drill pipe and drill collars during 2008.5

U.S. imports of unfinished drill pipe are based on 4 firms that accounted for *** percent of U.S. imports

of unfinished drill pipe in 2008 and *** percent in January-September 2009 from China.6

 U.S. imports of

finished drill pipe are based on 16 firms that accounted for *** percent of U.S. imports of finished drill

pipe in 2008 and *** percent in January-September 2009 from China. U.S. imports of drill collars are

 3 ***. 

 4

 Unfinished drill pipe consumption in 2008 was *** short tons with a value *** dollars and primarily consisted

of U.S. and Austrian origin product. Unfinished drill collar consumption in 2008 was *** short tons with a value of

*** dollars and consisted of *** unfinished drill collars.

 5

 See, e.g., Petitioners’ postconference brief, p. 22 n.21. 

 6

 Staff believes import customs data to be overstated and followed up with several importers that were shown to

be large importers under the HTS statistical reporting numbers for drill pipe. ***. ***’s importer questionnaire

responses and email from ***, January 26, 2010.

I-3
based on 16 firms that accounted for *** percent of imports of drill collars that entered into the United

States under HTS statistical reporting category 8431.43.8060 (a “basket” category) in 2008.7

PREVIOUS AND RELATED INVESTIGATIONS

The Commission has conducted numerous investigations concerning oil country tubular goods. 

However, the Commission has only been able to obtain separate data for drill pipe since the mid-1990s,

and has not previously obtained separate data for drill collars. Table I-1 presents information regarding

prior investigations in which the Commission has specifically considered the issue of drill pipe.

Table I-1

Drill pipe: Previous and related investigations, 1995-2010

Investigation

Numbers Countries Outcome Status

701-TA-363-364 (F)

731-TA-711-717 (F)

Argentina,

Austria, Italy,

Japan, Korea,

Mexico, Spain

Negative determination with respect to

Austria, Italy, Korea, and Spain;

affirmative determination with respect to

Argentina, Japan and Mexico (USITC

Pub. 2911, August 1995)

Antidumping duty

orders issued with

respect to drill pipe

from Argentina, Japan,

and Mexico.

731-TA-276-277 (1R) Canada, Taiwan Negative determination in first review

(USITC Pub. 3316, July 2000). In the

original investigations, the Commission

found drill pipe to be a distinct domestic

like product but available data did not

allow separate consideration.

Antidumping duty

orders revoked.

731-TA-711, 714, 716

(1R)

Argentina,

Japan, Mexico

Negative determination with respect to

Argentina and Mexico, affirmative

determination with respect to Japan

(USITC Pub. 3434, June 2001)

Antidumping duty

orders revoked with

respect to drill pipe

from Argentina and

Mexico, continued with

respect to Japan.

701-TA-428 (P)

731-TA-992-994,

996-1005 (P)

Austria, Brazil,

China, France,

Germany, India,

Indonesia,

Romania, South

Africa, Spain,

Turkey, Ukraine,

Venezuela

Negative determinations (USITC Pub.

3511, May 2002). The Commission

defined the domestic like product

consistent with Commerce’s scope

(including oil well casing, tubing, and drill

pipe, whether finished or unfinished, but

excluding finished drill pipes with tool

joints attached), but recognized the merits

of arguments in favor of two domestic like

products: (1) casing/tubing and (2) drill

pipe. 

No orders issued.

731-TA-714 (2R) Japan Negative determination in second review

(USITC Pub. 3923, June 2007)

Antidumping duty

order revoked.

Note.–In its most recent OCTG investigation (Certain Oil Country Tubular Goods from China, Inv. No. 701-TA-463 (F), USITC

Publication No. 4124 (January 2010)), the Commission collected data with respect to drill pipe. However, because the focus of

this proceeding was on casing and tubing (whether finished or unfinished), data provided by mills and processors regarding

finished and unfinished drill pipe was presented in the context of alternative products produced on shared equipment.

Source: Cited USITC publications.

 7 ***. ***’s importer questionnaire response. Staff notes, however, that the partial data provided by this

company suggest that it might account for a sizeable share of the value of drill collar sales, as it specializes in high

value *** drill collars. Email from ***, February 5, 2010.

I-4
NATURE AND EXTENT OF ALLEGED SUBSIDIES AND SALES AT LTFV

Alleged Subsidies

On January 27, 2010, Commerce published a notice in the Federal Register of the initiation of its

countervailing duty investigation on drill pipe from China.8

 Commerce indicated its intention to

investigate the following government programs in China:

! Preferential Loans and Interest Rates

! Debt-To-Equity Swaps and Loan Forgiveness

! Income Tax and Other Direct Tax Benefit Programs 

! Subsidies for Foreign Invested Enterprises (FIES)

! Indirect Tax and Tariff Exemption Programs

! Government Provision of Goods and Services for Less Than Adequate Remuneration

(LTAR)

! Grant Programs

! Subsidies To DP Producers Located in Economic Development Zones

Alleged Sales at LTFV

On January 28, 2010, Commerce published a notice in the Federal Register of the initiation of its

antidumping duty investigations on drill pipe from China.9

 Commerce has initiated antidumping duty

investigations based on estimated dumping margins that range from 429.53 percent to 496.93 percent for

drill pipe from China.

THE SUBJECT MERCHANDISE

Commerce’s Scope

Commerce has defined the scope of this investigation as follows:

The products covered by this investigation are steel drill pipe, and steel drill collars,

whether or not conforming to American Petroleum Institute (API) or non–API

specifications, whether finished or unfinished (including green tubes suitable for

drill pipe), without regard to the specific chemistry of the steel (i.e., carbon, stainless

steel, or other alloy steel), and without regard to length or outer diameter. The scope does

not include tool joints not attached to the drill pipe, nor does it include unfinished

tubes for casing or tubing covered by any other antidumping or countervailing duty

order.10

 8 Drill Pipe from the People’s Republic of China: Initiation of Countervailing Duty Investigation, 75 FR 4345,

January 27, 2010.

 9 Drill Pipe from the People’s Republic of China: Initiation of Antidumping Duty Investigations, 75 FR 4531,

January 28, 2010.

 10 Drill Pipe from the People’s Republic of China: Initiation of Countervailing Duty Investigation, 75 FR 4345,

January 27, 2010.

I-5
Tariff Treatment

The subject merchandise currently is classified in the Harmonized Tariff Schedule of the United

States (HTSUS) under subheadings 7304.22, 7304.23, and 8431.43. Drill pipe, other than that fitted with

tool joints, is properly entered under the following HTSUS statistical reporting numbers: 7304.22.0030,

7304.22.0045, 7304.22.0060, 7304.23.3000, 7304.23.6030, 7304.23.6045, and 7304.23.6060. Drill pipe

with tool joints attached that is treated by Customs as machinery parts is properly entered under HTSUS

statistical reporting number 8431.43.8040, while drill collars are properly entered under HTSUS

statistical reporting number 8431.43.8060 (a broad category that includes a substantial volume of

nonsubject merchandise). 

These HTSUS provisions became effective on February 3, 2007.11 Subsequent editions of the

HTSUS have not resulted in revisions to the provisions listed above. Excerpts from the current HTSUS

are attached as exhibit I-1. The column 1-general (normal trade relations) rates of duty for the subject

products under all covered subheadings are free.

Table I-2

Drill pipe and drill collars: Tariff rates, 2010

HTSUS rate

line Brief article description1

General2 Special3 Column4

Rates (percent ad valorem)

7304.22.00 

Stainless steel, seamless drill pipe, of a

kind used in drilling for oil or gas Free --- 35 percent

7304.23.30

Iron (other than cast) or nonalloy steel,

seamless drill pipe, of a kind used in

drilling for oil or gas Free --- 25 percent

7304.23.60

Alloy (other than stainless) steel, seamless

drill pipe, of a kind used in drilling for oil or

gas Free --- 35 percent

8431.43.80

Parts for boring or sinking machinery of

subheading 8430.41 or 8430.49, nesoi 5 Free --- 35 percent

 1 For full legal description, see the Harmonized Tariff Schedule of the United States.

 2

 Normal trade relations, formerly known as the most-favored-nation duty rate. 

 3

 Special rates not applicable when General rate is free.

 4

 Applies to imports from a small number of countries that do not enjoy normal trade relations duty status.

 5

 Rate line includes drill pipe fitted with tool joints (8431.43.8040) and drill collars (in 8431.43.8060).

 

Source: Harmonized Tariff Schedule of the United States (2010) and Tariff Database.

 11 Prior to February 3, 2007, drill pipe other than that fitted with tool joints, was properly classified under HTSUS

statistical reporting numbers 7304.21.3000, 7304.21.6030, 7304.21.6045, and 7304.21.6060.

I-6
THE DOMESTIC LIKE PRODUCT

Overview12

Steel pipes and tubes are made in circular, rectangular, or other cross sections, and are generally

manufactured by either a welded or seamless production process. Steel pipes and tubes manufactured by

either process can be categorized by the grades of steel (e.g., carbon and alloy grades) used in steel

production13 as well as by end-use. The American Iron and Steel Institute (AISI) has defined six such

end-use categories: standard pipe, line pipe, structural pipe and tubing, mechanical tubing, pressure

tubing, and oil country tubular goods (OCTG).14

Steel pipes and tubes are generally produced according to standards and specifications published

by a number of organizations, including the American Petroleum Institute (API),15 the American Society

for Testing and Materials (ASTM), and the American Society of Mechanical Engineers. Comparable

organizations in the United Kingdom, Japan, Russia, and other countries also have developed standard

specifications for steel pipes and tubes.16

The products that are the focus of these proceedings conist of drill pipe and drill collars, which

are tubular steel products used in drilling for oil and natural gas. They are the basic components of the

drill string, which transmits drilling motion (see figures I-1 and I-2). Tubular products are used because

of the need to conduct drilling fluid (mud) down to the drill bit at the bottom of the drill hole and to flush

drill cuttings to the surface for removal.17 Finished drill pipe and drill collars are both hollow drill string

components but vary by wall thickness, length, and production methods.

 12 Except as noted, information presented in the “Description and Applications” and “Manufacturing Processes”

is drawn from Oil Country Tubular Goods from Argentina, Austria, Italy, Japan, Korea, Mexico, and Spain,

Investigations Nos. 701-TA-363 and 364 (Final) and Investigation No. 731-TA-711-717 (Final), USITC Publication

2911, August 1995, from Oil Country Tubular Goods from Argentina, Italy, Japan, Korea, and Mexico,

Investigation Nos. 701-TA-364 (Review) and 731-TA-711 and 713-716 (Review), USITC Publication 3434, June

2001, and from Certain Oil Country Tubular Goods from China, Investigation No. 701-TA-463 (Final), USITC

Publication 4124, January 2010.

 13 Included in alloy grades are heat-resisting, stainless, and “other” alloy grades.

 14 Standard, line, and pressure pipe is generally intended to convey liquids and is typically tested and rated for its

ability to withstand hydrostatic pressure. Structural pipe and tubing is used for load-bearing purposes and

construction, although only small amounts of seamless pipe are used in structural applications. Seamless mechanical

tubing is typically a custom-designed product employed within the automotive industry and by equipment

manufacturers. OCTG are steel pipes and tubes used in the drilling of oil and gas wells and in the conveying of oil

and gas from within the well to ground level.

 15 The API or American Petroleum Institute is a trade organization serving the petroleum industry. It produces

standards, recommended practices, specifications, codes and technical publications, reports and studies that cover

each segment of the industry. API standards promote the use of safe, interchangeable equipment and operations

through the use of proven, sound engineering practices as well as help reduce regulatory compliance costs. In

conjunction with API’s Quality Programs, many of these standards form the basis of API certification programs. 

 16 Particular specifications to which pipe products are produced are commonly marked on each pipe and are

referred to as a “stencil.”

 17 Drill pipe is defined by the API Specification 7 (March 2002, p. 2) as a length of tube, usually steel, to which

special threaded connections called tool joints are attached. Drill collar is defined by API Specification 7 (March

2002, p. 2) as a thick-walled pipe to provide stiffness and concentration of weight at the bit. (See below for further

details on drill pipe and drill collar). Other elements of a drill string may include pup joints, reamers, stabilizers,

shock subs, crossover subs, and other accessories which are attached to the drill string. Conference transcript, p. 45

(Morris).

I-7
Figure I-1

Drill pipe and drill collars: Simplified diagrammatic representation of a well

Source: Introduction to Oil and Gas Production, Fifth Edition, American Petroleum Institute, June 1996, p. 11.

I-8
Figure I-2

Drill pipe and drill collars: Drill string showing relative position of drill pipe, heavy weight drill

pipe, drill collars, and connecting tool joints

Source: Timken, retrieved from www.timken.com, February 7, 2007.

I-9
Description and Applications

Drill Pipe

A single length (or joint) of drill pipe comprises a hollow tube, usually about 30 feet long, with a

wall thickness of less than .5 inch and a tool joint connection on each end.18 Drill pipe, which is subject

to torsional stresses and fatigue during drilling operations, must be seamless and heat-treated to API

specifications. 

The subject product includes both finished drill pipe as well as unfinished pipe used in the

manufacturing of finished drill pipe. Such unfinished pipe is known as “green tube” and is produced by

seamless steel pipe producers. Producers of finished drill pipe use green tube to which they weld

separately manufactured tool joints. A tool joint is a steel component for drill-pipe designed to be welded

to the drill-pipe body and having a rotary shoulder connection. The tool joint is a heavy coupling element

having robust, tapered threads. It is designed to sustain the weight of the drill stem, withstand the strain

of repeated connection and disconnection, and provide a leak-proof seal. The male tool joint section (or

pin, with threads cut on the outside) is attached to one end of the length of drill pipe and the female tool

joint section (or box, with threads cut on the inside) is attached to the other end. Like drill pipe, tool

joints are also subject to stress caused by shear and vibration, and consequently fatigue. The scope of

these investigations does not include tool joints that are not attached to the drill pipe.

Heavy-weight drill pipe (HWDP)19 is a form of drill pipe whose walls are thicker and tool joints

are longer than conventional drill pipe. This intermediate weight pipe has a wall thickness of

approximately one inch and has an integral wear pad in the middle. HWDP is designed to provide a

gradual transition from the relatively lightweight drill pipes to the heavier drill collars to help reduce drill

pipe fatigue or failure and prevent stress concentration at the top of drill collar. HWDP also allows

drilling to operate at higher speed, reducing torque and differential pressure sticking.20 HWDP is

well-suited for directional drilling because it bends easily, it simplifies directional control and minimizes

connection fatigue problems common to high-angle or horizontal drilling.21

Drill Collar

The drill collar is a heavy, thick-walled, machined product that is designed to guide, stabilize,

provide stiffness and add weight to the drill bit to drill a more vertical hole.22 Most drill collars are round

with lengths of about 30 feet.23 The inside diameter (I.D.) of a drill collar ranges from 2 inches to 3

 18 The outside diameter of a green tube ranges from 2.375 to 6.625 inches.

 19 This description is adapted from S.T. Horton, “Drill String and Drill Collars,” University of Texas at Austin

and International Association of Drilling Contractors, third edition, 1995, pp. 63 and 87.

 20 Differential pressure sticking is the rubbing of the tool joint against the wall of the hole. Differential pressure

sticking usually takes place in directional drilling. S.T. Horton, “Rotary Drilling: Drill String and Drill Collars,”

University of Texas at Austin and International Association of International Contractors, third edition, 1995, p. 66. 

 21 National Oilwell Varco (Grant Prideco), found at http://www.nov.com/grantprideco, retrieved January 14,

2010. See also VAM Drilling Catalogue, p. 47, found at http://www.vamdrilling.com/userfiles/file/catalog.pdf,

 22 The drill bit is the cutting or pulverizing head which bores through underground formations. See also S.T.

Horton, “Rotary Drilling: Drill String and Drill Collars,” University of Texas at Austin and International

Association of International Contractors, third edition, 1995, p. 5.

 23 See table 14-Drill Collars, Specification for Rotary Drill Stem Elements, ANSI/API 7-1, 2006, p. 40. See S.T.

Horton, “Rotary Drilling: Drill String and Drill Collars,” University of Texas at Austin and International

Association of International Contractors, third edition, 1995, pp. 4-5. API is an American National Standards

(continued...)

I-10
inches, and outside diameter (O.D.) from 4 inches to 11 inches. To reduce differential pressure sticking,

the surface of the drill collar can have spiral grooves or the drill collars may be of square cross section.24

Manufacturing Processes

Drill Pipe

The manufacturing process for the body of the drill pipe consists of two phases, first forming

(performed by pipe mills) and then finishing (performed by processors). 

In the forming phase, the initial raw material is a round or square solid steel billet.25 Green tube

is manufactured by either of two high temperature methods to form a central cavity in the solid steel

billet, namely, the rotary piercing method or the hot extrusion method. In the rotary piercing method, the

heated billet is gripped by angled rolls, which cause it to rotate and advance over a piercer point, forming

a hole through its length. In the extrusion method, the billet is hot punch-pierced and then extruded

axially through a die and over a mandrel, forming a hollow shell. The hollow shell produced by either

method is then rolled with either a fixed plug or a continuous mandrel inside the shell to reduce the wall

thickness, and thereby increasing the length. Finally, the shell is rolled in the sizing mill or a stretch

reducing mill and is formed to size.

Subsequent to the forming phase, the green tube is transferred to a processor where the it will go

through the finishing phase. In this phase, as shown in figure I-3, the pipe is heated, upset,26 heat-treated,

inspected, straightened.

Heat treatments for drill pipe are agreed to between the buyer and maker or specified by the

API.27 In general, heat treatments depends on the grade of the pipe. For group 1 (lower grade) the drill

pipe is normalized or normalized and tempered or quenched and tempered. For group 3 (high strength

grades) the drill pipe is quenched and tempered or normalized or tempered. All upset drill pipe is heat

treated full length after upsetting. 

 23 (...continued)

Institute (ANSI) accredited standards developing organization, operating with approved standards development

procedures and undergoing regular audits of its processes. 

 24 VAM Drilling Catalogue, p. 64, found at http://www.vamdrilling.com/userfiles/file/catalog.pdf, retrieved

January 10, 2010 (also found in attachment 9 of the petition).

 25 If square billet is used, it is first forced through a single circular roll pass, producing a round billet for the

piercing operation.

 26 In the upsetting process, the pipe ends on the green tubes are first heated to forging temperature and then

quickly inserted into a special forging press or upsetter. The press will form a pipe upset that is thicker than the pipe

wall by pressing the hot metal around a set of special forging dies. Dimensional tolerances for the various pipe sizes

and upset configurations are specified by API standards. The upset pipe is then heat-treated by any of several

methods of thermal processes to API specifications. See figure I-3.

 27 See Heat treatment, API Specification 5D, 2002, p. 3.

I-11
Following the above processes, the drill pipe tube is ready to weld. A drill pipe tube is converted

to drill pipe by friction welding a tool joint to each end of the drill pipe tube by rotational friction.28 The

pin is attached to one end of the length of drill pipe tube and the box is attached to the other end.29 No

filler is used.30 In friction welding, the heat for the weld is created by pressuring one piece of metal

against another piece which is rotated at high speed.31

The drill pipe (with tool joint) will undergo an additional heat treatment, albeit using a polymer

rather than water as the quenching agent to provide a gradual cooling process. The pipe then goes

through a finishing process where it is machined smooth and inspected. Figure I-3 presents a schematic

for the manufacturing of drill pipe.

A tool joint can be made either from a seamless pipe that is cut to length or from a steel billet,

bored to size. The seamless pipe is then heat-treated, threaded, hard banded, coated with phosphate, and

inspected as depicted in figure I-4.32

The production of HWDP also begins with a solid steel bar or a seamless pipe that is cut to size. 

HWDP is made to API ANSI/API Specification 7-133 and, except for certain details, is produced basically

in the same way as that of drill pipe.34 

Drill Collar 

Drill collar begins with a solid round steel bar that is bored or trepanned in order to form a

continuous seamless product. The boring or trepanning process can be performed by a mill (such as

Timken) or by a processor (such as NOV Grant Prideco). At ***,35 for example, the bar goes through a

heat treatment process for *** hours at *** degrees that is followed by a water quench process to freeze

the pipe microscopic structure to *** degrees. The bar is then tempered in another furnace at *** degrees

to achieve the desired mechanical property. The bar is subsequently straightened and then bored

(trepanned) by carbide thread cutters. Spiral grooves may also be formed and hardbanding applied on to

the outside of the drill collars. Since the wall of the collar is very thick, threads are cut directly into each

end of the drill collar so that it can be connected to other collars.36 Phosphate coating and inspections are

usually the final processes. See figure I-5 for a depiction of the manufacturing process for drill collars.

 28 Friction welding can also be known as inertia welding. Tool joints may also be screwed onto the pipe or joined

by a combination of screwing and welding. 

 29 See also field trip notes regarding a visit by the staff to ***, on January 13, 2010. ***.

 30 Id.

 31 Id. 

 32 Phosphate coating is for protection against corrosion.

 33 Addendum 1 to ANSI/API Specification 7-1, 2009, p. 1.

 34 The HWDP has an integral wear pad in the middle of its body. Grant Prideco for example, reportedly uses the

same heat treatment process for HWDP and drill pipe. Staff report on field visit to ***, January 13, 2010.

 35 Staff report on field visit ***, January 13, 2010.

 36 The grooves help the drill collar advance through the earth more smoothly. 

I-12
Figure I-3

Drill pipe: Manufacturing process for drill pipe 

Source: Grant Prideco, from http://www.grantprideco.com/drilling/manufacturing_drillpipe_manproc.asp, retrieved 

January 15, 2010.

I-13
Figure I-4

Drill pipe: Manufacturing process for tool joint

I-14
Figure I-5

Drill collar: Manufacturing process for drill collar

Source: VAM Catalogue, found at http://www.VAMdrilling.com, retrieved January 15, 2010.

I-15
DOMESTIC LIKE PRODUCT ISSUES

The Commission's decision regarding the appropriate domestic product(s) that are “like” the

subject imported product is based on a number of factors including: (1) physical characteristics and uses;

(2) common manufacturing facilities and production employees; (3) interchangeability; (4) customer and

producer perceptions; (5) channels of distribution; and (6) price. Information regarding these factors is

discussed below.

The petition in these investigations explicitly references drill pipe and drill collars; this is a

departure from language appearing in the scopes of previous proceedings involving drill pipe.37 Petitioners

contend that the Commission should find one domestic like product coextensive with Commerce’s scope.38

Petitioners also maintain that unfinished drill pipe (even in its green tube stage) can be used only to make

drill pipe. Petitioners further argue that green tube for drill pipe differs from green tube for casing and

tubing and therefore must be considered, in this case, as a single product “like” finished drill pipe and drill

collars.39

Respondents do not contest the inclusion of drill collars, but contend that green tube should be

excluded from the domestic like product.40 Respondents contend that green tube is a commodity product

that can be used to make a variety of OCTG items including drill pipe as well as casing or tubing. 

Respondents further argue that green tube should be excluded from consideration as a like product in this

case because it is already covered in the scope of the current OCTG investigation.41 Respondents stress

that since imports of green tubes destined for OCTG have been classified and reported as green tube for

drill pipe,42 the inclusion of green tube imports in the scope of these investigations would result in overreporting the imports of green tubes. Respondents quote a U.S. Steel official in an earlier proceeding as

supporting their contention that a green tube can be made into drill pipe or casing and tubing.43

Physical Characteristics and Uses

Finished drill pipe, HWDP, and drill collar, as discussed earlier in this chapter, are part of the drill

string which is designed to transmit motion from the (above ground) drilling motor to the drill bit, and to

conduct drilling fluid (mud) down to the drill bit to flush drill cuttings to the surface for removal. Drill

collars generally are used to place weight on the drill bit (and so typically, but not always, are placed on

the lower portions of the drill string). Conventional drill pipe transmits torque and supports the tension of

the drill string, while HWDP serves as an intermediate drill string member. Although similar in terms of

length (generally 30-31 feet), each of these drill string components differ in terms of wall thickness, with

 37 “The products covered by this order consist of oil country tubular goods, hollow steel products of circular

cross-section, including oil well casing, tubing, and drill pipe, of iron (other than cast iron) or steel (both carbon and

alloy), whether seamless or welded, whether or not conforming to American Petroleum Institute (API) or non-API

specifications, whether finished or unfinished (including green tubes and limited service OCTG products). This

scope does not cover casing, tubing, or drill pipe containing 10.5 percent or more of chromium.” See Oil Country

Tubular Goods From Argentina, Italy, Japan, Korea, and Mexico, USITC Publication 3923, June 2007, p. 7 (citing a

May 1, 2007, memorandum to the file by Commerce’s Program Manager). Staff notes that the scope of the current

investigations includes stainless steel products, another distinction from prior drill pipe cases. However, U.S.

production of stainless steel products is believed to be limited to drill collars.

 38 Petitioners’ postconference brief, p. 2.

 39 Petitioners’ postconference brief, p. 7.

 40 Respondents’ postconference brief, p. 4.

 41 Respondents’ postconference brief, p. 5.

 42 Conference transcript, p. 134 (Chen).

 43 Respondents’ postconference brief, p. 8.

I-16
drill collars having the thickest walls and conventional drill pipe the thinnest. In addition, as described

earlier in this chapter, drill pipe is joined using tool joints, while drill collars are coupled together.

Unfinished (or “green” if not heat-treated) drill pipe is an intermediate product that is sold by U.S.

manufacturers (specifically, U.S. mills such as Timken, TMK, and U.S. Steel) to drill pipe processors. 

Green tubes are produced domestically but are also imported in large volumes.44 While finished drill pipe

has tool joints attached to each end so that it can be connected to other drill pipe to form a drill string,

green tube is a section of pipe that cannot be connected to any other pipe.45 Thus, while finished drill pipe

can be used in oil and gas drilling applications, green tube cannot.46

Manufacturing and Employees

Petitioners stress the overlap in the manufacturing processes for drill pipe and drill collars47 and

contend that the drill string members are generally made by the same facilities by the same employees.48 

U.S. mills differ with respect to whether the “mother tubes” are produced with common equipment –

Timken produces pierced tubes for drill pipe and drill collars on the same equipment, while certain boring

equipment is used only for drill collars. Neither TMK nor U.S. Steel produce drill collars. U.S. processors

pointed to the distinctions in their operations (several processors trepan, or drill, their own drill collars

from bar, while purchasing green tubes for the production of drill pipe), but also pointed to some overlap

in production (certain HWDP is produced from drill collar material) and common processes (such as heat

treating, machining, threading, hardbanding, and inspection). Most processors noted the requirement for

specialized welding equipment to join the drill pipe with the tool joints.

Respondents note that the manufacturing facilities, production processes, and production

employees are different between green tube and finished drill pipe, as recognized by the petition.49 There

is no overlap between the U.S. mills that produce green tube and the U.S. processors that produce finished

drill pipe, although at least one drill pipe processor, ***, occasionally produces and sells drill pipe that has

been upset and heat treated, but not tool joined.

 44 Information in this section is drawn to a large degree from Oil Country Tubular Goods from Austria, Brazil,

China, France, Germany, India, Indonesia, Romania, south Africa, Spain, Turkey, Ukraine, and Venezuela

(Preliminary), Inv. Nos. 701-TA-428 and Invs. Nos. 731-TA-992-994 and 996-1005, USITC Publication 3511, May

2002, p. I-6.

 45 Respondents’ postconference brief, p. 11.

 46 In terms of API minimum requirements for physical dimensions, there is overlap between green tubes (for drill

pipes) and tubing having O.D. sizes ranging from 2.375 to 4.500 inches and between green tubes and casing of O.D.

sizes ranging from 5 to 5.500 inches. The tolerances for dimensions and weight are largely identical. The mechanical

strength requirements, including yield and tensile strength (minimum yield strength indicates the load at which the

pipe will be permanently stretched; minimum tensile strength specifies the load at which the pipe will break apart),

for drill pipes also overlap with those for casing and tubing; however, at the high end of the products, API-specified

mechanical strengths for high-end drill pipe are significantly more stringent than those for casing and tubing.

Moreover, drilling under arduous operational conditions such as deep sea drilling, arctic drilling, directional drilling,

and drilling in corrosive environment, require finished drill pipe to be of much higher tensile strength than that

specified by the API. Finished drill pipe is also subject to torsional stress, as already noted, and the API therefore

has specified torsional strength for drill pipe. In regard to chemical composition, API 5D and API 5DP only specify

the maximum contents of sulphur and phosphorous for drill pipe, which are largely similar to casing and tubing. 

 47 Petitioners’ postconference brief, p. 9; and Staff field trip report, ***, January 13, 2010.

 48 Petitioners’ postconference brief, p. 9; conference transcript (Fields and Morris), p. 43. 

 49 Respondents’ postconference brief, p. 13; petition, p. 9, and conference transcript, p. 28 (Ramsey). Mr.

Ramsey testifies that TMK-IPSO sold green tube to virtually all U.S. producers of finished drill pipe. 

I-17
Interchangeability

Petitioners maintain that individual drill collar and finished drill pipe are not interchangeable with

other individual drill collar or finished drill pipe, nor are individual sizes of HWDP and the standard

finished drill pipe.50 Petitioners stress that they can be treated as part of the same like product because they

are all used in a complementary fashion. The drill string must use both products to drill a well.51 In their

questionnaire responses, responding producers generally agreed that finished drill collar and drill pipe are

not interchangeable.52

No party suggests that unfinished drill pipe can be used “as is” on a drill string. However,

Petitioners quote the Commission’s past findings indicating that there is little evidence of purchasers

actually using drill pipe interchangeably with casing or tubing at the finished stage.53

Customer and Producer Perceptions 

Five producers report that there is little or no difference in sales or marketing of finished drill pipe

and collar. The same marketing personnel typically handle both finished drill pipe and drill collar, which

are also sold to the same type of customers. One producer maintains that the two products are typically

marketed and sold as part of a drilling package.54 

Respondents contend that customers and producers perceive green tube and finished drill pipe

(including drill collars) as different products because, as noted above, one cannot put green tubes on a drill

string.55 Petitioners do not dispute the notion that drill strings consist of finished product, but caution

against assuming that green tubes used in the production drill pipe are necessarily “like” those used in the

production of casing and tubing, noting that there has reportedly been no problem differentiating these two

types of green tubes by leading suppliers, including TMK and U.S. Steel.56

Channels of Distribution

 Table I-3 presents the respective channels of distribution for U.S. producers’ U.S. shipments of

unfinished drill pipe, finished drill pipe, unfinished drill collars, and finished drill collars. Additional

details regarding the channel structure of domestically produced and imported drill pipe and drill collars

are presented in Part II of this report, Conditions of Competition in the U.S. Market. As shown in table I-3,

domestic producers sell pipe and drill collars almost exclusively to end users. Unfinished drill pipe (and

unfinished drill collars) are sold *** to the processors that finish them for downhole drilling.

 50 Petitioners’ postconference brief, p. 8.

 51 Petitioners’ postconference brief, p. 9.

 52 Producers’ questionnaire responses, part V-38.

 53 Petitioners’ postconference brief, p. 7.

 54 Producers’ questionnaire responses, part V.

 55 Conference transcript, p. 159 (Mostoway) and p. 47 (Morris); Respondents’ postconference brief, p. 11. 

 56 Conference transcript, pp. 36-37 (Schagrin).

I-18
Table I-3 

Drill pipe and drill collars: Channels of distribution for U.S. producers’ U.S. shipments of drill 

pipe and drill collars, 2006-08, January-September 2008, and January-September 2009

* * * * * * *

Price

Table I-4 presents average unit values for U.S. producers’ U.S. shipments of unfinished drill pipe,

finished drill pipe, unfinished drill collars, and finished drill collars produced in the United States. Pricing

practices and prices reported for domestically produced and imported drill pipe and drill collars in

response to the Commission’s questionnaires are presented in Part V of this report, Pricing and Related

Information. 

Table I-4

Drill pipe and drill collars: Average unit values of U.S. producers’ U.S. shipments of drill pipe and 

drill collars, 2006-08, January-September 2008, and January-September 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Average unit value (dollars per short ton)1

U.S. producers’ U.S. shipments of

unfinished drill pipe *** *** *** *** ***

U.S. producers’ U.S. shipments of

finished drill pipe 4,686 5,528 6,100 5,941 6,232

U.S. producers’ U.S. shipments of

unfinished drill collars *** *** *** *** ***

U.S. producers’ U.S. shipments of

finished drill collars 2,889 3,235 3,992 3,829 3,315

 1 Net value, f.o.b. U.S. point of shipment.

Source: Compiled from data submitted in response to Commission questionnaires.

As shown in table I-4, the average unit values for finished drill pipe exceeded those for finished

drill collars in every period. The differential between finished drill pipe and unfinished drill pipe was even

greater, although unfinished drill pipe maintained higher average unit values than unfinished drill collars.

I-19
INTERMEDIATE PRODUCTS

As discussed above, unfinished (or “green” if not heat-treated) drill pipe is a precursor to finished

drill pipe. Therefore, in addressing whether unfinished drill pipe and finished drill pipe constitute a single

domestic like product, the Commission may apply its semifinished product analysis.57

Uses

“Green tube” is a term that can apply to unfinished, non-heat-treated tube bodies for casing and

tubing or for drill pipe.58 The scope of these investigations, however, focuses on the latter form of green

tube.59 From the perspective of at least two leading processors, the green tube usedin their operations is

dedicated to the finished drill pipe. VAM Drilling, for example states that “(b)y controlling quality at all

stages of product manufacture, from the seamless green tube to finished drill pipe and drillstem

components, VAM Drilling ensures a superior product.”60 Similarly, Grant Prideco (prior to its merger

with NOV), indicated that it “controlled each facet of the drill pipe process,” manufacturing (through

Voest-Alpine Tubulars) “the green tube (drill pipe tube that has not been heat-treated or processed), the

tool joint, and complete the finishing and welding operations.”61 

As discussed above, NOV Grant Prideco and VAM focus on the green tubes that they source

outside of the United States. Three U.S. mills produce unfinished drill pipe domestically. Timken, the

***, is not believed to produce casing or tubing, while TMK and U.S. Steel do produce these products.62

TMK distinguishes between drill pipe, casing, tubing, and coupling stock, indicating on its website that

“(s)emifinished drill pipe is available in carbon and alloy grades ... Our seamless drill pipe can be ordered

 57 Under this analysis, the Commission examines (1) whether the upstream article is dedicated to the production

of the downstream article or has independent uses; (2) whether there are perceived to be separate markets for the

upstream and downstream articles; (3) differences in the physical characteristics and functions of the upstream and

downstream articles; (4) differences in the costs or value of the vertically differentiated articles; and (5) the

significance and extent of the processes used to transform the upstream into the downstream articles.

 58 See, e.g., INSTRUCTION BOOKLET: GENERAL INFORMATION, INSTRUCTIONS, AND DEFINITIONS

FOR COMMISSION QUESTIONNAIRES, Certain Oil Country Tubular Goods from China, Investigation Nos.

701-TA-463 and 731-TA-1159 (Final), p. 5 (green tubes identified as one example of unfinished casing and tubing);

INSTRUCTION BOOKLET: GENERAL INFORMATION, INSTRUCTIONS, AND DEFINITIONS FOR

COMMISSION QUESTIONNAIRES, Drill Pipe / Drill Collars from China, Investigation Nos. 701-TA-474 and

731-TA-1176 (Preliminary), p. 5 (green tubes identified as one example of unfinished drill pipe and/or drill collars).

 59 While not commonplace, terms such as “green drill pipe” or “green drill pipe tubes” have been employed. See,

e.g., Drilling Contractor: Capital Wirelines (September/October 2001), p. 4 (in which the International Association

of Drilling Contractors cites a letter by Grant Prideco, joined by IADC and several drilling contractors, which uses

those terms on four occasions).

 60 VAM Quality Statement, found at http://www.vamdrilling.com/qhse.asp, retrieved on February 10, 2010. The

company notes on its website that “VAM Drilling receives green tubes from V&M Tubes’ mills in Saint-Saulve,

France, Mülheim, Germany and Belo Horizonte, Brazil. (The) tubes are upset and heat-treated to the required

specifications at VAM Drilling’s manufacturing plants in Europe and the United States. VAM Supply Chain, found

at http://www.vamdrilling.com/supply_chain.asp, retrieved on February 10, 2010.

 61 Grant Prideco, Form 10-K for the year ended December 31, 2007, pp. 1-2 (found at Petition, exhibit 3). The

company went on to note that “(W)e are able to meet our customers’ demanding product specifications, particularly

with respect to the green drill pipe tubes with body wall thickness, wall uniformity, and other features that exceed

minimum API standards and are not readily available from third-party mills.” Ibid.

 62 Certain Oil Country Tubular Goods from China, Investigation No. 701-TA-463 (Final), USITC Publication

4124, January 2010, table III-1.

I-20
as green tube or as upset and heat-treated to API 5D grades.”63 Although U.S. Steel’s online product

catalogue identifies drill pipe as a distinct entry,64 U.S. Steel officials have testified in previous

proceedings as to interchangeability of green tube (as a general term), prior to heat-treatment and

upsetting.65

Markets 

As shown previously in table I-3, unfinished drill pipe in its green stage is sold *** to the

processors that provide heat treatment, upsetting, and tool joining. The finished drill pipe, in turn, is sold

by the processors almost exclusively to end users.66 Thus, both unfinished and finished drill pipe

marketing differs from that of casing and tubing (whether unfinished or finished) and coupling stock,

which are sold almost exclusive to distributors.67

Characteristics and Functions 

As discussed above, unfinished drill pipe in its green stage is produced to the chemistry and

dimensional specifications that permit processors to heat treat, upset, and join the tube body with the tool

joint that is characteristic of finished drill pipe. Prior to these operations, however, unfinished drill pipe

cannot be connected to other drill pipes and thus cannot function as a component of a drill string for use in

oil and gas drilling.

Value 

Unfinished drill pipe in its green stage is produced by seamless pipe mills, primarily from billet,

while finished drill pipe is produced almost entirely from unfinished drill pipe.68 As shown in table I-4,

U.S. mill shipments of unfinished drill pipe in its green stage had an average unit value of $*** in 2008,69

 63 Found at http://www.tmk-group.com/ipsco_seamless.php, presented in Respondents’ Postconference Brief,

exhibit 9.

 64 U.S. Steel, Tubular Products Drill Pipe Search, found at

http://www.uss.com/corp/tubular/scripts/drillsearch.asp, retrieved January 22, 2010. Because the information in this

listing includes end finish (upset ends) and grades, it is not certain that it pertains to unfinished drill pipe in its green

stage.

 65 See generally Respondents’ Postconference Brief, exhibit 9. In a more recent interview, ***. Staff telephone

interview with ***, November 12, 2009 (used with permission).

 66 At least one drill pipe processor, ***, occasionally produces and sells drill pipe that has been upset and heat

treated but not tool joined.

 67 Certain Oil Country Tubular Goods from China, Investigation No. 701-TA-463 (Final), USITC Publication

4124, January 2010, table II-1. See also conference transcript, pp. 36 (Schagrin) and 99 (Ramsey) (TMK relies upon

different personnel for green tubes, casing and tubing; announced price increases by TMK for casing and tubing do

not cover drill pipe green tube).

 68 Heavyweight drill pipe can be produced from drill collar material, such as bar stock (conference transcript, p.

55, Williamson) or the drill collar itself (conference transcript, p. 106, Morris). However, the share of drill pipe that

is not produced from green tubes is believed to be very small. Conference transcript, pp. 106 (Parks) and 107

(Morris).

 69 In a recent interview, ***. Staff telephone interview with ***, November 12, 2009 (used with permission).

I-21
while U.S. processor shipments had an average unit value of $6,100. As noted at the staff conference, the

tool joint represents a not insubstantial portion of the production cost of finished drill pipe.70

Transformation Processes 

As discussed previously, the tube body of drill pipe is formed from round or square solid steel

billets in seamless pipe mills. These mills use either rotary piercing or hot extrusion to form a central

cavity in the billets, then roll the hollow shell with either a fixed plug or a continuous mandrel inside the

shell to reduce the wall thickness and thereby increase the length. Finally, they roll the shell to size in a

sizing or stretch-reducing mill. 

U.S. processors typically acquire unfinished drill pipe at its green stage, then finish the product

through a series of value-added operations.71 The processors heat the ends of the tube body, then insert

them into a forging press or upsetter, compressing and thickening the walls at the end of the tube body to

form internal or external upsets. The length of the tube body is next heat treated by one of several possible

methods and prepared for welding. Processors then weld separately manufactured tool joints to each end

of the tube body by rotational friction or friction welding. The drill pipe undergoes additional heat

treatment using a polymer as the quenching agent so that it cools gradually, followed by additional

machining and inspection.72

 70 According to one witness, “(t)he tool joint constitutes about 30 percent of the final cost of completed drill

pipe.” Conference transcript, p. 134 (Garvey).

 71 The President of VAM Drilling USA estimated that it may engage in as many as 18 separate operations while

finishing drill pipe. Conference transcript, p. 15 (Fields).

 72 For a description of NOV Grant Prideco’s drill pipe processing, see

http://www.nov.com/Tubular_and_Corrosion_Control/Drilling_Tubulars/Drill_Pipe/Drill_Pipe_Manufacturing_Proc

ess.aspx, retrieved on February 11, 2010.

I-22
PART II: CONDITIONS OF COMPETITION IN THE U.S. MARKET

U.S. MARKET CHARACTERISTICS

Drill pipes and drill collars are parts of a drill string used in drilling for oil and natural gas. They

are sold in both unfinished and finished forms; standard weight and heavy weight; and new as well as

used or refurbished. 

Seven of nine responding U.S. mills and processors producing drill pipe reported that all of their

drill pipe is produced to order, with lead times ranging from four weeks to over seven months.1 Four of

six responding U.S. mills and processors producing drill collar reported that all of their drill collar is

produced to order, with lead times ranging from four weeks to over five months. Six of twelve

responding importers of drill pipe from China reported that all or virtually all of their drill pipe is

produced to order, with lead times ranging from four weeks to over seven months.2

 Four importers

reported that all or nearly all of their drill pipe is sold from inventory, with lead times ranging from

immediate delivery to 15 days. Two importers reported a mixture of sales produced to order and sales

from inventory. Four of 10 responding importers of drill collar from China reported that all or nearly all

of their drill collar is produced to order, with lead times ranging from four weeks to six months.3

 Four

importers reported that all of their drill collar is sold from inventory, with lead times ranging from

immediate delivery to six months. Two importers reported a mixture of sales of product produced to

order and sales from inventory. 

When firms were asked to list the geographic regions of the United States where they sell drill

pipe and drill collars, four of the U.S. producers reported that they served a nationwide market and the

others reported mostly selling to the central southwest. One importer reported that it served a nationwide

market, while the majority of importers reported serving specific geographic markets, with most citing the

central southwest, followed by the mountain states, and the west coast.

CHANNELS OF DISTRIBUTION

As shown in table II-1, the majority of U.S. producers’ U.S. shipments of drill pipe and drill

collars were to end users, including drilling contractors, followed by sales to processors, and a small share

to distributors.4 In 2006, the majority of importers’ U.S. shipments of drill pipe from China went to

distributors; in 2007 and 2008, their U.S. shipments of drill pipe were divided between distributors and

end users; and in the first three quarters of 2009, the majority of their U.S. shipments of drill pipe were to

end users. The majority of importers’ U.S. shipments of drill collars from China went to end users,

followed by distributors. The majority of importers’ U.S. shipments of drill pipe and drill collars from

nonsubject countries went to end users, followed by processors.

 1 *** reported that *** percent of its sales of drill pipe and drill collar are from inventory and *** reported that

*** percent of its sales of drill pipe and drill collar are from inventory.

 2

 Included in this total are importers *** that are ***. 

 3

 Included in this total are importers *** that are ***. 

 4

 U.S. Producers’ Questionnaire responses at II-8a and II-8d and Importers’ Questionnaire responses at II-5a and

II-5b. Conference transcript, p. 15 (Fields). Staff notes that there are different channels for unfinished and finished

drill pipe and drill collars; in particular, U.S. producers’ U.S. shipments of unfinished products went *** to

processors. See table I-3.

II-1
Table II-1

Drill pipe and drill collars: U.S. producers’ and importers’ U.S. shipments of drill pipe and drill

collars, by sources and channels of distribution, 2006-08, and January-September 2009

* * * * * * *

There was limited customer overlap among U.S. producers and importers of drill pipe and drill

collars in 2008. Specifically, among the total 51 “top five” customers for drill pipe in 2008 cited by 

producers and importers, *** customers (***) were listed by both a U.S. producer and an importer.5

Among the total 43 “top five” customers for drill collars in 2008 reported by producers and importers,

*** (***) was listed by both a U.S. producer and an importer.6

Respondents asserted that U.S. producers of drill pipe and drill collars sell mostly to the larger

drilling contractors, whereas suppliers of imports from China tend to sell to smaller land drilling

contractors.7

SUPPLY AND DEMAND CONSIDERATIONS

Supply8

U.S. Supply

The supply response of U.S. producers to changes in price depends on such factors as the level of

excess capacity, the availability of alternate markets for U.S.-produced drill pipe and drill collars,

inventory levels, and the ability to shift production to the manufacture of other products. The evidence

indicates that the U.S. producers of unfinished drill pipe and unfinished drill collars have the ability to

respond to changes in prices with small to moderate changes in quantity, due primarily to ***. The

evidence indicates that the U.S. producers of finished drill pipe and finished drill collars have the ability

to respond to changes in prices with moderate changes in quantity, due primarily to ***. 

Industry capacity 

U.S. producers’ annual capacity utilization rates for unfinished drill pipe decreased from 53.0

percent in 2006 to 44.0 percent in 2007 before increasing to 57.4 percent in 2008; the capacity utilization

rate was 4.8 percent in the first three quarters of 2009. U.S. producers’ annual capacity utilization rates

for finished drill pipe decreased from 96.4 percent in 2006 to 80.4 percent in 2008; the capacity

utilization rate was 46.3 percent in the first three quarters of 2009. U.S. producer Timken’s annual

capacity utilization rates for unfinished drill collars increased from *** percent in 2006 to *** percent in

2007 before decreasing to *** percent in 2008; the capacity utilization rate was *** percent in the first

three quarters of 2009. U.S. producers’ annual capacity utilization rates for finished drill collars

 5 *** additional top customers for drill pipe reported by U.S. producers (***) are importers of drill pipe from

China.

 6

 *** additional top customers for drill collars reported by U.S. producers (***) are importers of drill collars from

China.

 7 Conference transcript, p. 164 (Garvey).

 8

 Short run effects discussed in the supply and demand sections refer to changes that could occur within 12

months, unless otherwise indicated.

II-2
decreased from 83.7 percent in 2006 to 76.6 percent in 2008; the capacity utilization rate was 44.1 percent

in the first three quarters of 2009. 

Alternative markets

U.S. producers’ exports of unfinished drill pipe, as a share of their total shipments of unfinished

drill pipe, decreased from *** percent in 2006 to *** percent in 2008; they accounted for *** percent of

total shipments in the first three quarters of 2009. U.S. producers’ exports of finished drill pipe, as a

share of their total shipments of finished drill pipe, increased from 23.8 percent in 2006 to 35.8 percent in

2008; they accounted for 38.4 percent of total shipments in the first three quarters of 2009. U.S. producer

Timken’s exports of unfinished drill collars, as a share of the company’s total shipments of unfinished

drill collars, increased from *** percent in 2006 to *** percent in 2008; they accounted for *** percent

of total shipments in the first three quarters of 2009. U.S. producers’ exports of finished drill collars, as a

share of their total shipments of finished drill collars, increased from 25.5 percent in 2006 to 39.3 percent

in 2008; they accounted for 50.5 percent of total shipments in the first three quarters of 2009. These data

indicate that the U.S. producers of unfinished products are *** to divert shipments to or from alternative

markets in response to changes in the price of unfinished drill pipe and unfinished drill collars, whereas

U.S. producers of finished drill pipe and drill collars *** to do so.

Inventory levels

U.S. producers’ ratio of end-of-period inventories of unfinished drill pipe to total shipments of

unfinished drill pipe decreased from *** percent in 2006 to *** percent in 2008; they were equivalent to

*** percent of total shipments in the first three quarters of 2009. U.S. producers’ ratio of end-of-period

inventories of finished drill pipe to total shipments of finished drill pipe increased from 7.2 percent in

2006 to 10.2 percent in 2008; they were equivalent to 24.9 percent of total shipments in the first three

quarters of 2009. U.S. producer Timken’s ratio of end-of-period inventories of unfinished drill collars to

total shipments of unfinished drill collars *** from *** percent in 2006 to *** percent in 2008; they were

equivalent to *** percent of total shipments in the first three quarters of 2009. U.S. producers’ ratio of

end-of-period inventories of finished drill collars to total shipments of finished drill collars increased

from 43.5 percent in 2006 to 65.3 percent in 2008; they were equivalent to 81.1 percent of total

shipments in the first three quarters of 2009. These data indicate that the U.S. producers of unfinished

drill pipe and unfinished drill collars *** to use inventories as a means of increasing shipments of

unfinished product to the U.S. market, whereas the U.S. producers of finished products *** to use

inventories as a means of increasing shipments of drill pipe.

Production alternatives

*** U.S. producers of unfinished drill pipe and *** of the five U.S. producers of finished drill

pipe (***) reported that they use the same manufacturing equipment and the same workers used to make

drill pipe in the production of other products. *** U.S. producer of unfinished drill collars and ***

producer of finished drill collars reported that they use the same manufacturing equipment and the same

workers used to make drill pipe in the production of other products. The other products cited included

OCTG, other pipe and tubing, ***. The ability of some U.S. producers to shift production from drill pipe

and drill collars to other products increases their supply responsiveness in the short run.

Supply disruptions

One U.S. producer of drill pipe, ***, reported that it faced supply constraints in periods of 2008,

during which it limited volume to its customers. Importer of drill pipe and drill collars Command Energy

II-3
Services reported that since 2006 it has experienced backlogs from U.S. producers ranging from 15 to 18

months that peaked in mid-2008.9 *** other importers of drill pipe and drill collars from China also

reported experiencing long lead times and late deliveries during certain periods, but did not identify the

suppliers involved. Weatherford, an importer and purchaser of drill pipe and drill collars, reported ***.10

Used products

At least one U.S. producer of finished drill pipe and drill collars (Rotary Drilling) and two U.S.

importers (Command Energy and Downhole Pipe) sell used or refurbished drill pipe and drill collars.11

U.S. producer Rotary Drilling reported that used products are sold to small shallow land drilling

companies that account for approximately 15 percent of the U.S. market.12 U.S. producer VAM Drilling

reported that drilling contractors can transfer used products from idled rigs to active rigs rather than

buying new product.13 U.S. producer Rotary Drilling also stated that some of the large manufacturers of

drill pipe and drill collars face difficulty in selling used products because they are not necessarily API

certified.14 Importer Downhole Pipe reported that it supplied customers with used products between 2006

and 2008 when these customers “could not afford to pay current list prices {from} the major

manufacturers” or could not “get delivery.”15 This importer also reported that ***.16 Importer Command

Energy also reported that it has a trade program with many of its customers in which it exchanges new

products for customers’ used products of equal value.17 ***.18

Subject Imports from China

The responsiveness of supply of imports from China to changes in price in the U.S. market is

affected by such factors as capacity utilization rates and the availability of home markets and other export

markets. Based on available information, producers of drill pipe in China have the capability to respond

to changes in demand with changes in the quantity of shipments of drill pipe to the U.S. market. The

main contributing factors to this degree of responsiveness of supply are the *** over the period for which

data were collected. Based on available information, producers of drill collar in China have the capability

to respond to changes in demand with moderate changes in the quantity of shipments of drill pipe to the

U.S. market. The main contributing factors to the degree of responsiveness of supply are the *** over the

period for which data were collected.

 9 Conference transcript, pp. 166-167 (Garvey).

 10 Weatherford’s postconference brief, p. 3.

 11 U.S. producers Texas Steel and VAM Drilling reported that they only sell new products. Conference transcript,

p. 66 (Parks, Brand). Importers Command Energy and Downhole Pipe reported that they have, at times, imported

used products from Mexico, South America, Europe, and the Middle East. Conference transcript, pp. 188-189

(Lesco, Garvey).

 12 Conference transcript, pp. 65-66 (Morris). This producer also noted that offshore drilling companies do not use

used products. Ibid. Importer Command Energy reported that there are limited applications for used drill pipe and

drill collars. Conference transcript, p. 176 (Garvey).

 13 Conference transcript, p. 67 (Fields).

 14 Conference transcript, pp. 65-66 (Morris). This producer also stated that it re-certifies used drill collars and

processes them into heavyweight drill pipe. Conference transcript, p. 106 (Morris).

 15 Conference transcript, p. 170 (Lesco). 

 16 Respondents’ postconference brief, responses to staff questions #6.

 17 Conference transcript, p. 176 (Garvey).

 18 ***.

II-4
Industry capacity

During the period for which data were collected, the capacity utilization rate for reporting

producers in China of drill pipe decreased from *** percent in 2006 to *** percent 2008; it is projected to

be *** percent in 2009 and *** percent in 2010. During the period for which data were collected, the

capacity utilization rate for reporting producers in China of drill collars increased from *** percent in

2007 to *** percent in 2008; it is projected to be *** percent in 2009 and *** percent in 2010. 

Alternative markets

Available data indicate that producers of drill pipe and drill collars in China may have some

ability to divert shipments to or from alternative markets in response to changes in the price of drill pipe

and drill collars. The share of shipments by producers of drill pipe in China that went to the United States

increased from *** percent in 2006 to *** percent in 2008; it is projected to be *** percent in 2009 and

*** percent in 2010. The share of shipments by producers of drill pipe in China to export markets other

than the United States increased from *** in 2006 to *** percent in 2008; it is projected to be *** percent

in 2009 and *** percent in 2010. The share of shipments by producers of drill pipe in China going to the

home market decreased from *** percent in 2006 to *** percent in 2008; it is projected to be *** percent

in 2009 and *** percent in 2010.19

The share of shipments by producers of drill collars in China that went to the United States

increased from *** percent in 2007 to *** percent in 2008; it is projected to be *** percent in 2009 and

*** percent in 2010. The share of shipments by producers of drill collars in China to export markets

other than the United States increased from *** percent in 2007 to *** percent in 2008; it is projected to

be *** percent in 2009 and *** percent in 2010. The share of shipments by producers of drill collars in

China going to the home market decreased from *** percent in 2007 to *** percent in 2008; it is

projected to be *** percent in 2009 and *** percent in 2010. 

Inventory levels

Inventories of responding producers of drill pipe in China, as a share of total shipments of drill

pipe, increased from *** percent in 2006 to *** percent in 2008; they are projected to be *** percent in

2009 and *** percent in 2010. Inventories of responding producers of drill collars in China, as a share of

total shipments of drill collars, decreased from *** percent in 2007 to *** percent in 2008; they are

projected to be *** percent in 2009 and *** percent 2010. 

Nonsubject Imports

Imports from nonsubject sources of drill pipe, as a share of the quantity of total U.S. imports of

drill pipe, generally declined during the period for which data were collected. With respect to unfinished

drill pipe, nonsubject imports fell from *** percent in 2006 to *** percent in 2008 and accounted for ***

percent of the quantity of total imports of unfinished drill pipe in the first three quarters of 2009. With

respect to finished drill pipe, nonsubject imports fell from *** percent in 2006 to *** percent in 2008 and

accounted for *** percent of the quantity of total imports of unfinished of drill pipe in the first three

quarters of 2009. Imports from nonsubject sources of drill collars, as a share of the quantity of total U.S.

imports of drill collars, increased from *** percent in 2006 to *** percent in 2007 before decreasing to

*** percent in 2008 and accounted for *** percent in the first three quarters of 2009.

 19 Because these data include ***, export shares are understated.

II-5
-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

20062007

2008

2009

Percent change

Real GDP growth

Demand

The lack of substitutes for drill pipe and drill collars and the fact that drill pipe and drill collars

represent a low share of overall drilling costs, as discussed below, indicate that the demand for these

products is likely to be price inelastic. The demand for drill pipe and drill collars are largely determined

by the overall economy and oil drilling activity which, in turn, is driven by the prices of oil and natural

gas. U.S. real GDP growth at seasonally adjusted annual rates is shown in figure II-1.20

Figure II-1

Drill pipe and drill collars: Real GDP growth, by quarters, January 2006-September 2009

Source: Bureau of Economic Analysis.

U.S. demand for drill pipe and drill collars depends on the number of active rigs drilling for oil

and natural gas in the United States and the footage being drilled, as shown in figures II-2, II-3, and II-4. 

Active rigs may be supplied with new drill pipe and drill collars or with used drill pipe and drill collars

transferred from inactive rigs. Drill pipe and drill collars on active rigs need to be replaced every 3-5

years. U.S. producers reported that drilling operators know their replacement needs well in advance.21

The number of active rigs is a broad indicator of demand for oil and natural gas.22 Figure II-3

presents monthly average crude oil prices, oil and total rig counts, and total rig permits issued. Figure II4 presents monthly average natural gas prices, natural gas and total rig counts, and total rig permits

issued. Figure II-5 presents actual and predicted prices for crude oil and natural gas.23

 20 U.S. Bureau of Economic Analysis. Gross Domestic Product: Third Quarter 2009 (Third Estimate). 

December 22, 2009.

 21 Conference transcript, pp. 71-72 (Schagrin).

 22 Oil Country Tubular Goods from Argentina, Italy, Japan, Korea, and Mexico, Investigations Nos. 701-TA-711

and 713-716 (Second Review), USITC Publication 3923, June 2007.

 23 The U.S. Energy Information Administration (USEIA) expects the price of West Texas Intermediate crude oil

to rise from $62 per barrel in 2009 to $80 in 2010 and $84 in 2011. USEIA also expects the annual average natural

gas Henry Hub spot price to increase from $4.06 per thousand cubic feet in 2009 to $5.36 in 2010 and $6.12 in 2011. 

USEIA, Short-Term Energy Outlook, January 2010, p. 1.

II-6
Figure II-2

Drill pipe and drill collars: Footage drilled, 2006-08, January-September 2008, and JanuarySeptember 2009

Source: “Drilling and Production Outlook September 2009,” Spears & Associates, Inc. (as presented in USITC

Publication 4124).

Figure II-3

Drill pipe and drill collars: Crude oil prices, Baker-Hughes U.S. oil rig count, and U.S. oil rig

permits, monthly averages, January 2006-September/October/November 2009

Source: Baker-Hughes Rig Count, Energy Information Administration, Preston, and RigData (as presented in USITC

Publication 4124).

II-7
Figure II-4

Drill pipe and drill collars: Natural gas prices, Baker-Hughes U.S. gas rig count, and U.S. gas rig

permits, monthly averages, January 2006-September/October/November 2009

Source: Baker-Hughes Rig Count, Energy Information Administration, Preston, and RigData (as presented in USITC

Publication 4124).

Figure II-5

Oil and gas: Short term actual and predicted monthly West Texas Intermediate crude oil prices

and composite wellhead spot prices of natural gas, January 2006-December 2010

Figure continued on following page.

II-8
Figure II-5--continued

Oil and gas: Short term actual and predicted monthly West Texas Intermediate crude oil prices

and composite wellhead spot prices of natural gas, January 2006-December 2010

Source: U.S. EIA, http://www.eia.doe.gov/emeu/steo/pub/xls/Fig1.xls and

http://www.eia.doe.gov/emeu/steo/pub/xls/Fig4.xls, retrieved February 3, 2010.

 

When asked how the overall demand for drill pipe and drill collars has changed since January 

2006, all of the responding producers and virtually all of the responding importers reported that demand

has decreased or fluctuated, citing the recession and noting that demand increased from 2006 to mid-2008

and decreased sharply thereafter.24 One U.S. producer and two importers also reported that demand for

drill pipe and drill collars outside the United States has followed the same trend as U.S. demand, but that

the decline in 2009 was less severe outside the United States.

Apparent U.S. consumption of finished drill pipe increased by *** percent from 2006 to 2007

before decreasing by *** percent in 2008. Apparent U.S. consumption of finished drill pipe was ***

percent lower in January-September 2009 than in January-September 2008. Apparent U.S. consumption

of finished drill collars increased by *** percent from 2006 to 2007 before decreasing by *** percent in

2008. Apparent U.S. consumption of finished drill collars was *** percent lower in January-September

2009 than in January-September 2008.

Business Cycle

The majority of the U.S. producers and importers reported that the business cycle of the drill pipe

and drill collars industry is subject to oil and gas prices and, therefore, it depends heavily on the oil and

gas rig counts. As shown in figure II-6, oil and gas drilling in the United States has experienced sharp

upward and downward adjustments with some frequency over the past two decades.

 24 One U.S. producer reported that demand decreased by *** percent from 2008 to 2009 and another reported that

it decreased by *** percent over the same period.

II-9
Figure II-6

Drill pipe and drill collars: Operating oil and gas rigs in the United States, 1990-2009

Source: Baker-Hughes Rig Count.

Substitute Products

The majority of U.S. producers and virtually all responding importers reported that there are no

substitutes for drill pipe and drill collars. Two firms cited casing, one cited aluminum-based drill pipe,

and another cited coil tubing as possible substitutes in limited applications.

Cost Share

The majority of U.S. producers reported that drill pipe and drill collars account for between one

and five percent of the total cost of oil and gas drilling.

SUBSTITUTABILITY ISSUES

The degree of substitutability between domestic products and subject and nonsubject imports and

between subject and nonsubject imports is examined in this section. The discussion is based upon the

results of questionnaire responses from producers and importers.25

Comparisons of Domestic Product and Subject Imports

To determine whether U.S.-produced drill pipe and drill collars can generally be used in the same

applications as imports from China, producers and importers were asked whether the products can

“always,” “frequently,” “sometimes,” or “never” be used interchangeably. Six of nine U.S. producers

reported that drill pipe from different sources are always interchangeable (3 of 6 for drill collars), as

shown in table II-2. A majority of the importers that compared drill pipe and drill collars from China with

those from the United States reported that they are always or frequently interchangeable, as shown in

table II-2. 

 25 Included in the importers’ responses in this section of the report are *** firms that are *** and ***.

II-10
Table II-2

Drill pipe and drill collars: Perceived degree of interchangeability of product produced in the

United States and in other countries, by country pairs

Country comparison

U.S. producers U.S. importers

A F S N A F S N

Drill pipe

U.S. vs. subject countries:

 U.S. vs. China 6 1 1 1 6 4 4 1

U.S. vs. nonsubject countries:

 U.S. vs. Other 6 2 0 1 6 5 2 1

Subject countries vs. nonsubject countries:

 China vs. Other 6 1 1 0 5 4 3 0

Drill collars

U.S. vs. subject countries:

 U.S. vs. China 3 1 1 1 6 3 3 1

U.S. vs. nonsubject countries:

 U.S. vs. Other 3 2 1 0 6 5 1 1

Subject countries vs. nonsubject countries:

 China vs. Other 3 1 1 0 5 3 2 0

Note.–“A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

Petitioners reported that U.S. producers’ product mix has shifted towards a higher share of

premium grades since 2006, as product from China competes mostly in the standard API grades.26 One

producer indicated that premium grades are often proprietary and suggested that premium grades from

China are imitations of other firms’ proprietary products. Another producer reported that product from

China is becoming increasingly accepted for more uses. One importer reported that product from China

is not interchangeable with premium U.S. grades and another importer reported that proprietary grades are

not interchangeable with 90 percent of drill systems.

Importer Command Energy reported that U.S. producers Grant Prideco and VAM Drilling “have

complete control” of the market for premium grades and that these producers’ prices for premium grades

are 30 to 40 percent higher than the prices of standard grades.27 Command Energy estimates that there are

premium-grade producers in China and that its sales of premium-grade drill pipe account for

approximately 15 percent of the entire U.S. drill pipe market.28 It further reported that ***.29 U.S.

producer VAM Drilling reported that premium grades of drill pipe account for approximately 15 to 20

percent of the total U.S. market for drill pipe and that Grant Prideco is currently the major supplier of

 26 Conference transcript, p. 78 (Schagrin). ***. Petitioners’ postconference brief, responses to staff questions.

 27 Conference transcript, p. 130 (Garvey).

 28 Conference transcript, p. 155 (Garvey).

 29 Respondents’ postconference brief, responses to staff questions #8.

II-11
premium grades.30 This producer and Rotary Drilling stated that drill pipe producers in China offer some

premium grades but they are not producing the highest level of premium grades.31 Rotary Drilling also

reported that premium grades are used in very deep wells.32

As indicated in table II-3, roughly half of responding U.S. producers reported that differences

other than price between U.S.-produced drill pipe and subject imports are frequently or sometimes a

significant factor in their sales, while the other half reported that they are never a significant factor. A

majority of responding importers reported that differences other than price between U.S.-produced

drill pipe and subject imports are always or frequently significant factor in their sales. A majority of

producers reported that differences other than price between U.S.-produced drill collars and subject

imports are sometimes a significant factor in their sales, while a majority of importers reported that such

differences are at least sometimes a significant factor.

Two U.S. producers reported that the quality of imports from China was previously perceived to

be inferior but that they now meet API specifications. Another producer reported that U.S. producers

have superior technical support. Two importers reported that their lead times for imported product are

shorter than those offered by U.S. producers.

Other Country Comparisons

In addition to comparisons between the U.S. product and imports from the subject country, U.S.

producer and importer comparisons between the United States and imports from nonsubject countries and

between subject imports and nonsubject imports are also shown in tables II-2 and II-3.

 30 Conference transcript, pp. 15-16 (Fields) and p. 59 (Parks). VAM Drilling also reported that producers in

Japan, Germany, and Austria produce premium grades. Conference transcript, pp. 63-64 (Fields).

 31 Conference transcript, p. 59 (Parks, Morris).

 32 Conference transcript, p. 60 (Morris). Rotary Drilling also noted that deep wells may sometimes necessitate the

use of very low grades of drill pipe.

II-12
Table II-3

Drill pipe and drill collars: Differences other than price between products from different sources1

Country comparison

U.S. producers U.S. importers

AFSNAFSN

Drill pipe

U.S. vs. subject countries:

 U.S. vs. China 0 2 3 4 5 3 3 2

U.S. vs. nonsubject countries:

 U.S. vs. Other 0 0 4 4 2 4 3 2

Subject countries vs. nonsubject countries:

 China vs. Other 0 1 2 4 2 1 2 2

Drill collars

U.S. vs. subject countries:

 U.S. vs. China 0 1 4 1 2 3 3 2

U.S. vs. nonsubject countries:

 U.S. vs. Other 0 0 4 1 1 3 4 2

Subject countries vs. nonsubject countries:

 China vs. Other 0 1 2 1 1 3 2 2

 1

 Producers and importers were asked if differences other than price between drill pipe and drill collars produced

in the United States and in other countries are a significant factor in their firms’ sales of drill pipe and drill collars.

Note.–“A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

II-13
 
PART III: U.S. PRODUCERS’ PRODUCTION, SHIPMENTS, AND

EMPLOYMENT

The Commission analyzes a number of factors in making injury determinations (see 19 U.S.C. §§

1677(7)(B) and 1677(7)(C)). Information on the alleged margins of dumping and subsidies was presented

earlier in this report and information on the volume and pricing of imports of the subject merchandise is

presented in Parts IV and V. Information on the other factors specified is presented in this section and/or

Part VI and (except as noted) is based on the questionnaire responses of eight firms that accounted for

*** percent of U.S. production of drill pipe and drill collars during 2008.1

U.S. PRODUCERS

The Commission sent producer questionnaires to 27 possible producers. Nine producers

responded to the Commission questionnaires, eight of which were able to provide useable data. Presented

in table III-1 is a list of current domestic producers of drill pipe and drill collars and each company’s

position on the petition, production location(s), related and/or affiliated firms, and share of reported

production of drill pipe and drill collars in 2008.

Table III-1

Drill pipe and drill collars: U.S. producers, positions on the petition, U.S. production locations, related

and/or affiliated firms, and shares of 2008 reported U.S. production

Firm

Position on

petition

U.S. production

location(s) Related and/or affiliated firms

Share of

production

(percent) 

Unfinished drill pipe

Timken ***

Canton, OH

Houston, TX None ***

TMK Support

Ambridge, PA

Koppel, PA

Downers Grove, IL OAO TMK1 ***

U.S. Steel ***

Fairfield, AL

Lorain, OH None ***

Total 100.0

Finished drill pipe

NOV Grant

Prideco ***

Amelia, LA

Navasota, TX (2

) ***

RDT Support Beasley, TX *** ***

Smith *** Houston, TX (3

) ***

TSC Support Houston, TX *** ***

VAM Support Houston, TX ***4 ***

Total 100.0

Table continued on next page.

 1 See, e.g., Petitioners’ postconference brief, p. 22 n.21. 

III-1
Table III-1--Continued

Drill pipe and drill collars: U.S. producers, positions on the petition, U.S. production locations, related

and/or affiliated firms, and shares of 2008 reported U.S. production

Firm

Position on

petition

U.S. production

location(s) Related and/or affiliated firms

Share of

production

(percent) 

Unfinished drill collars

Timken ***

Canton, OH

Houston, TX None 100.0

Total 100.0

Finished drill collars

NOV Grant

Prideco ***

Amelia, LA

Navasota, TX (2

) ***

RDT Support Beasley, TX *** ***

Smith *** Houston, TX (3

) ***

VAM Support Houston, TX ***4 ***

Total 100.0

 1 ***.

 2

 ***.

 3

 ***.

 4 ***.

Note.– ***.

Source: Compiled from data submitted in response to Commission questionnaires.

As indicated in table III-1, four U.S. producers are related to foreign producers of the subject

merchandise. In addition, as discussed in greater detail below, two U.S. producers, ***, directly import

the subject merchandise.

Table III-2 presents important drill pipe and drill collar industry events from 2006 to 2009.

Table III-2

Drill pipe and drill collars: Important industry events, 2006-09

Year Company Description

2006 IPSCO Purchase: IPSCO purchases NS Group for $1.5 billion.1

2006 Grant Prideco ***2

2006 TSC

Expansion: addition of a second welding line to increase product

range.3

2006

National Oilwell

Varco (NOV) ***4

2007 TSC ***5

2007

Evraz and TMK

(Russia)

Purchase: Evraz and TMK purchase IPSCO-Tubulars for $4 billion from

Svenskt Stal AB.6

2008 TMK

Expansion: TMK-IPSCO increases its production range for unfinished

drill pipe at its Ambridge, PA, mill.7

2008 NOV ***.

8

2008 RDT Expansion: addition of a second weld line; remains idle.9

Table continued on the next page.

III-2
Table III-2--Continued

Drill pipe and drill collars: Important industry events, 2006-09

Year Company Description

2008 NOV

Purchase: NOV purchases Houston-based Grant Prideco for $7.4

billion.10

2008

NOV and

Schlumberger

Joint venture: NOV and Schlumberger form joint venture in the

manufacturing and technology development of wired drill string telemetry

systems.11

2008 VAM Drilling USA

Production disrupted: Hurricane Ike disrupts operations of VAM’s

Houston manufacturing facility for several days in September.12

2008 Timken Purchase: Acquisition of Boring Specialties Inc., Houston.13

2009 U.S. Steel ***.14

2009 U.S. Steel

U.S. Steel Voluntary Early Retirement Program affects 500 employees

and saves $70 million companywide.15

2009 VAM Drilling USA

Lay off: reductions in February, June, and November hours reduced to

32 per week, 3 weeks of unpaid furlough (office).16

2009 VAM Drilling USA

Purchase: VAM Drilling acquires DPAL FZCO, an established supplier

of drill pipes, formerly owned by the Soconord Group. DPAL FZCO

offers a large range of drill pipes to the oil & gas industry in the Middle

East.17

2009 Smith International Production curtailment: due to low sales.18

1

The Fabricator, “IPSCO Completes NS Group Acquisition,” December 4, 2006. 2

 ***.

3

 Conference transcript, p. 19 (Brand).

4

 ***.

5

 ***.

6

 IPSCO, News release, March 14, 2008.

7

 Conference transcript, p. 27 (Ramsey).

8

 ***.

9

 Conference transcript, p. 23 ( Morris).

10 Grant Prideco, News release, April 21, 2008.

11 NOV, Press release, November, 19, 2008.

12 VAM Drilling USA, News, http://www.vamdrilling.com/news-details.asp?id=24/ 13 TIMKEN, News release, February 22, 2008. 

14 ***.

15 See U.S. Steel, press releases, found at http://uss.mediaroom.com/index.php?s=43&item=556, retrieved January 8, 2010. 16 Conference transcript, pp. 17-18 (Fields).

17 VAM Drilling, News, found at http://www.vamdrilling.com/userfiles/file/Vallourec%20Press%20Release%20DPAL.pdf/,

retrieved January 8, 2010. 

18 ***.

Sources: American Metal Markets (as indicated), companies’ news releases, various articles, questionnaire responses, and

conference transcript.

III-3
U.S. CAPACITY, PRODUCTION, AND CAPACITY UTILIZATION

U.S. producers’ capacity, production, and capacity utilization data for unfinished drill pipe are

presented in table III-3a. ***’s capacity growth was consistent with its capital expenditures. TMK also

reported a major capital investment in early 2008 that increased its capacity and allowed it to produce

unfinished drill pipe with an outside diameter of 5 1/2 inches.2

Table III-3a

Unfinished drill pipe: U.S. capacity, production, and capacity utilization, 2006-08, JanuarySeptember 2008, and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Capacity (short tons)

1 166,721 172,147 158,236 120,556 104,110

Production (short tons) 88,383 75,724 90,830 69,734 5,016

Capacity utilization (percent) 53.0 44.0 57.4 57.8 4.8

 1 *** reported capacity (production capability) based on operating *** hours per week and *** weeks per year. ***

reported capacity (production capability) based on operating *** hours per week and *** weeks per year. ***

reported capacity (production capability) based on operating *** per week and *** weeks per year. 

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. producers’ capacity, production, and capacity utilization data for finished drill pipe are

presented in table III-3b. Finished drill pipe capacity increased between 2006 and 2007 largely due to

***’s addition of a weld line, ***’s ramp-up of production of finished drill pipe, and ***’s additional ***

percent capacity. *** accounted for the largest decline in production of finished drill pipe in 2008,

although the company reported an increase in *** the decline in its production of drill pipe. ***

producers of finished drill pipe reported lower production in January-September 2009 through JanuarySeptember 2008 with *** showing production declines of *** percent. Capacity utilization rates in 2006

and 2007 were above 90 percent, while lower capacity utilization rates in 2008 were consistent with lower

U.S. shipments by *** and ***. Capacity utilization was lower for all producers in January-September

2009. 

 2 Conference transcript, p. 27 (Ramsey).

III-4
Table III-3b

Finished drill pipe: U.S. capacity, production, and capacity utilization, 2006-08, January-September

2008, and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Capacity (short tons)1 189,393 239,046 241,203 186,574 191,268

Production (short tons) 182,560 216,718 193,827 143,847 88,485

Capacity utilization (percent) 96.4 90.7 80.4 77.1 46.3

 1 *** reported capacity (production capability) based on operating *** hours per *** days per week depending on

the manufacturing lines utilized. ***. *** reported capacity (production capability) based on operating *** hours per

week and *** weeks per year. *** reported capacity (production capability) based on operating *** hours per week

and *** weeks per year. *** reported capacity (production capability) based on operating *** hours per week and ***

weeks per year. *** reported capacity (production capability) based on operating *** hours per week and *** weeks

per year.

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. producers’ capacity, production, and capacity utilization data for unfinished drill collars are

presented in table III-3c. Timken reported ***. In addition, Timken reported the acquisition of Boring

Specialties, Inc. in March 2008.

Table III-3c

Unfinished drill collars: U.S. capacity, production, and capacity utilization, 2006-08, JanuarySeptember 2008, and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Capacity (short tons)

1 *** *** *** *** ***

Production (short tons) *** *** *** *** ***

Capacity utilization (percent) *** *** *** *** ***

 1 Timken reported capacity (production capability) based on operating *** hours per week and *** weeks per

year. 

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. producers’ capacity, production, and capacity utilization data for finished drill collars are

presented in table III-3d. Capacity increased for the reasons stated above under finished drill pipe except

in the case of ***, which was already producing drill collars in 2006.

III-5
Table III-3d

Finished drill collars: U.S. capacity, production, and capacity utilization, 2006-08, JanuarySeptember 2008, and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Capacity (short tons)

1

 45,551 53,369 57,688 43,266 43,266

Production (short tons) 38,106 51,212 44,175 28,880 19,080

Capacity utilization (percent) 83.7 96.0 76.6 66.7 44.1

 1 *** reported capacity (production capability) based on operating *** hours per *** days per week depending on

the manufacturing lines utilized. ***. *** reported capacity (production capability) based on operating *** hours per

week and *** weeks per year. *** reported capacity (production capability) based on operating *** hours per week

and *** weeks per year. *** reported capacity (production capability) based on operating *** hours per week and ***

weeks per year. 

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. PRODUCERS’ SHIPMENTS

Data on U.S. producers’ shipments of unfinished drill pipe are presented in table III-4a. U.S.

shipments fluctuated between 2006 and 2008, but were *** percent lower in January-September 2009

than in January-September 2008. This coincides with a drop in the quantity of shipments of finished drill

pipe of *** percent.

Table III-4a

Unfinished drill pipe: U.S. producers’ shipments, by types, 2006-08, January-September 2008, and

January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Quantity (short tons)

U.S. shipments *** *** *** *** ***

Export shipments *** *** *** *** ***

Total shipments 83,627 78,561 90,178 67,865 7,823

Value (1,000 dollars)

U.S. shipments *** *** *** *** ***

Export shipments *** *** *** *** ***

Total shipments 119,719 117,250 178,647 128,621 12,672

Unit value (per short ton)

U.S. shipments $*** $*** $*** $*** $***

Export shipments *** *** *** *** ***

Total shipments 1,432 1,492 1,981 1,895 1,620

Share of quantity (percent)

U.S. shipments *** *** *** *** ***

Export shipments *** *** *** *** ***

Total shipments 100.0 100.0 100.0 100.0 100.0

 1

 Undefined.

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

III-6
Data on U.S. producers’ shipments of finished drill pipe are presented in table III-4b. U.S.

shipments of finished drill pipe were *** percent lower in January-September 2009 than in JanuarySeptember 2008, consistent with ***’s reported declines in their order books for 2009.

Table III-4b

Finished drill pipe: U.S. producers’ shipments, by types, 2006-08, January-September 2008, and

January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Quantity (short tons)

U.S. shipments 135,667 167,827 121,092 88,761 49,858

Export shipments 42,316 47,562 67,553 46,988 31,071

Total shipments 177,983 215,389 188,645 135,749 80,929

Value (1,000 dollars)

U.S. shipments 635,689 927,758 738,658 527,289 310,723

Export shipments 222,219 318,066 474,369 335,166 241,497

Total shipments 857,908 1,245,824 1,213,027 862,455 552,220

Unit value (per short ton)

U.S. shipments $4,686 $5,528 $6,100 $5,941 $6,232

Export shipments 5,251 6,687 7,022 7,133 7,772

Total shipments 4,820 5,784 6,430 6,353 6,824

Share of quantity (percent)

U.S. shipments 76.2 77.9 64.2 65.4 61.6

Export shipments 23.8 22.1 35.8 34.6 38.4

Total shipments 100.0 100.0 100.0 100.0 100.0

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

III-7
Data on U.S. producer Timken’s shipments of unfinished drill collars are presented in table III4c. Timken reported that its unfinished drill pipe and unfinished drill collar order books are currently

***, contributing to ***.3

Table III-4c

Unfinished drill collars: U.S. producers’ shipments, by types, 2006-08, January-September 2008,

and January-September 2009

* * * * * * *

Data on U.S. producers’ shipments of finished drill collars are presented in table III-4d. Once

again the reported decline of U.S. shipments from January-September 2008 to January-September 2009 is

consistent with the decline in orders reported by ***. 

Table III-4d

Finished drill collars: U.S. producers’ shipments, by types, 2006-08, January-September 2008, and

January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Quantity (short tons)

U.S. shipments 25,660 38,143 23,049 17,267 9,986

Export shipments 8,799 8,850 14,937 10,123 10,177

Total shipments 34,459 46,993 37,986 27,390 20,163

Value (1,000 dollars)

U.S. shipments 74,131 123,398 92,013 66,121 33,104

Export shipments 26,628 31,014 57,202 41,276 35,252

Total shipments 100,759 154,412 149,215 107,397 68,356

Unit value (per short ton)

U.S. shipments $2,889 $3,235 $3,992 $3,829 $3,315

Export shipments 3,026 3,504 3,830 4,077 3,464

Total shipments 2,924 3,286 3,928 3,921 3,390

Share of quantity (percent)

U.S. shipments 74.5 81.2 60.7 63.0 49.5

Export shipments 25.5 18.8 39.3 37.0 50.5

Total shipments 100.0 100.0 100.0 100.0 100.0

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

 3 Timken’s U.S. producer questionnaire response.

III-8
U.S. producers’ order book information is presented in table III-5. U.S. producers’ order books

peaked in the second and third quarters of 2008 before falling to their lowest point in the third and fourth

quarters of 2009. This is consistent with the testimony given at the staff conference where the

Petitioners’ stated that their order books have plummeted over the last year.4

Table III-5

Drill pipe and drill collars: U.S. producers’ order books, by types, 2006-09

* * * * * * *

U.S. PRODUCERS’ INVENTORIES

Table III-6a, which presents end-of-period inventories for unfinished drill pipe, shows that

inventories increased from 2007 to 2008 and this is primarily due to increases by ***. *** reported no

end-of-period inventories during the period examined.

Table III-6a

Unfinished drill pipe: U.S. producers’ end-of-period inventories, 2006-08, January-September 2008,

and January-September 2009

* * * * * * *

Table III-6b, which presents end-of-period inventories for finished drill pipe, reflects a

continuous increase in end-of-period inventories by ***. However, ***’s reported *** short tons in its

end-of period inventories was more than any other producer of finished drill pipe in 2008. RDT

explained at the staff conference that it is currently producing for inventory in order to keep people

working 5

 and, thus its January-September 2009 end-of-period inventories are ***.

Table III-6b

Finished drill pipe: U.S. producers’ end-of-period inventories, 2006-08, January-September 2008,

and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Inventories (short tons) 12,814 14,142 19,325 22,240 26,882

Ratio to production (percent) 7.0 6.5 10.0 11.6 22.8

Ratio to U.S. shipments (percent) 9.4 8.4 16.0 18.8 40.4

Ratio to total shipments (percent) 7.2 6.6 10.2 12.3 24.9

Note.–Partial-year ratios are based on annualized production and shipments.

Source: Compiled from data submitted in response to Commission questionnaires.

 4 Conference transcript, p. 20 (Brand); conference transcript, p. 16 (Fields); and conference transcript, p. 28

(Ramsey).

 5

 Conference transcript, p. 70 (Morris).

III-9
Table III-6c, which presents end-of-period inventories for unfinished drill collars, reflects that

Timken’s end-of-period inventories increased *** in *** and ***, and then decreased ***. Timken

explained that its overall tube orders ***. 

Table III-6c

Unfinished drill collars: U.S. producers’ end-of-period inventories, 2006-08, January-September

2008, and January-September 2009

* * * * * * *

Table III-6d, which presents end-of-period inventories for finished drill collars, shows that

inventories increased throughout the period examined. All finished drill collar producers’ inventories

increased throughout the period examined, with *** reporting more end-of-period inventories than the

other producers combined.6

Table III-6d

Finished drill collars: U.S. producers’ end-of-period inventories, 2006-08, January-September

2008, and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Inventories (short tons) 14,999 19,081 24,807 19,506 21,791

Ratio to production (percent) 39.4 37.3 56.2 50.7 85.7

Ratio to U.S. shipments (percent) 58.5 50.0 107.6 84.7 163.7

Ratio to total shipments (percent) 43.5 40.6 65.3 53.4 81.1

Note.–Partial-year ratios are based on annualized production and shipments.

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. PRODUCERS’ IMPORTS AND PURCHASES

U.S. producers’ imports and purchases of drill pipe are presented in table III-7a. *** U.S.

producers of drill pipe reported imports or purchases from China. *** reported imports from China ***. 

It also***. *** reported purchases from China of drill pipe. 

*** reported imports from all other sources. *** imports ***. *** imports unfinished drill pipe

from its sister companies ***.

*** reported purchases of imports of unfinished drill pipe from all other countries.

Table III-7a

Drill pipe: U.S. producers’ imports and purchases, 2006-08, January-September 2008, and

January-September 2009

* * * * * * *

 6 The only exception occurred in interim 2008 to interim 2009 when ***’s end-of-period inventories decreased.

III-10
U.S. producers’ imports and purchases of drill collars are presented in table III-7b. *** reported

imports of drill collars from ***.7

Table III-7b

Drill collars: U.S. producers’ imports and purchases, 2006-08, January-September 2008, and

January-September 2009

* * * * * * *

U.S. EMPLOYMENT, WAGES, AND PRODUCTIVITY

The U.S. producers’ aggregate employment data for unfinished drill pipe, finished drill pipe,

unfinished drill collars, and finished drill collars are presented in tables III-8a, b, c, and d, respectively. 

The number of reported production and related workers (“PRWs”) declined for each of the four products

from January-September 2008 to January-September 2009. All of the producers that presented testimony

at the staff conference discussed their employees and their layoffs. ***’s reported decline of its number of

PRWs is the ***. At the staff conference, RDT explained it was currently producing for inventory in

order to avoid laying its employees off.8

 TMK reported that it laid off people beginning in late 2008 and

continuing throughout 2009 in both its melt shop and its tube pipe mill.9

 TMK accounted for a *** part

of the reduced number of PRWs reported for unfinished drill pipe (table III-7a) because it reported ***

PRWs in January-September 2008 and a reduction to *** in January-September 2009. TSC reported at

the staff conference that it has had significant layoffs at its plant.10 TSC reported reducing its number of

PRWs from January-September 2008 to January-September 2009 by *** PRWs and is one of the driving

forces behind the reduced number of PRWs in finished drill pipe (table III-7b). VAM reported at the staff

conference that it has laid off one-third of its employees and is struggling to give its employees a 32 hour

work week.11 In addition, every white collar employee at VAM Drilling USA reportedly had three weeks

of unpaid furlough in 2009.12

 7 *** reported imports of unfinished drill collars from all other sources, but staff follow-up confirmed that ***’s

reported imports of drill collars were actually steel bars. Thus, ***’s reported imports have not been included in the

data. Staff telephone interview with ***.

 8

 Conference transcript, p. 70 (Morris).

 9

 Conference transcript, p. 29 (Ramsey).

 10 Conference transcript, p. 20 (Brand).

 11 Conference transcript, p. 17 (Fields).

 12 Conference transcript, p. 18 (Fields).

III-11
Table III-8a

Unfinished drill pipe: U.S. producers’ employment-related data, 2006-08, January-September 2008,

and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Production and related workers (PRWs) 163 176 202 176 38

Hours worked by PRWs (1,000 hours) 380 364 426 318 59

Hours worked per PRW 2,331 2,068 2,109 1,807 1,553

Wages paid to PRWs (1,000 dollars) 8,240 7,420 10,005 7,324 1,285

Hourly wages $21.68 $20.38 $23.49 $23.03 $21.78

Productivity (short tons produced per 1,000

hours) 232.6 208.0 213.2 219.3 85.0

Unit labor costs (per short ton) $93.23 $97.99 $110.15 $105.03 $256.18

Source: Compiled from data submitted in response to Commission questionnaires.

Table III-8b

Finished drill pipe: U.S. producers’ employment-related data, 2006-08, January-September 2008,

and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Production and related workers (PRWs) 1,138 1,335 1,377 1,404 1,083

Hours worked by PRWs (1,000 hours) 3,017 3,595 3,596 2,525 1,860

Hours worked per PRW 2,651 2,693 2,611 1,798 1,717

Wages paid to PRWs (1,000 dollars) 46,783 59,106 63,623 42,721 28,868

Hourly wages $15.51 $16.44 $17.69 $16.92 $15.52

Productivity (short tons produced per 1,000

hours) 60.5 60.3 53.9 57.0 47.6

Unit labor costs (per short ton) $256.26 $272.73 $328.25 $296.99 $326.25

Source: Compiled from data submitted in response to Commission questionnaires.

Table III-8c

Unfinished drill collars: U.S. producers’ employment-related data, 2006-08, January-September

2008, and January-September 2009

* * * * * * *

III-12
Table III-8d

Finished drill collars: U.S. producers’ employment-related data, 2006-08, January-September 2008,

and January-September 2009

Item

Calendar year January-September--

2006 2007 2008 2008 2009

Production and related workers (PRWs) 162 204 207 199 148

Hours worked by PRWs (1,000 hours) 410 517 547 350 279

Hours worked per PRW (1,000 hours) 2,531 2,534 2,643 1,759 1,885

Wages paid to PRWs (1,000 dollars) 8,595 11,767 12,855 8,647 5,565

Hourly wages $20.96 $22.76 $23.50 $24.71 $19.95

Productivity (short tons produced per 1,000

hours) 92.9 99.1 80.8 82.5 68.4

Unit labor costs (per short ton) $225.56 $229.77 $291.00 $299.41 $291.67

Source: Compiled from data submitted in response to Commission questionnaires.

III-13
 
PART IV: U.S. IMPORTS, APPARENT CONSUMPTION, AND

MARKET SHARES

U.S. IMPORTERS

Importer questionnaires were sent to 76 firms believed to be importers of subject drill pipe and

drill collars, as well as to all U.S. producers of drill pipe and drill collars.1

 Two U.S. producers, ***,

reported imports of drill pipe. Only *** reported imports of drill collars.2

 Staff compiled data from

usable questionnaire responses submitted by 22 companies believed to account for more than 80 percent

of U.S. imports of drill pipe and drill collars properly entered under HTS subheadings 7304.22.00,

7304.23.30, 7304.23.60, and 8431.43.80, a “basket” category. Table IV-1 lists all responding U.S.

importers of drill pipe and drill collars from China and other sources, their locations, and their shares of

U.S. imports, in 2008.

Table IV-1

Drill pipe and drill collars: U.S. importers, source(s) of imports, U.S. headquarters, and shares of

imports in 2008

Firm Headquarters Source of

imports

Share of imports (percent)

China Other Total

Unfinished drill pipe

Benteler Steel & Tube Corporation

(“Benteler”) Houston, TX *** *** *** ***

Drill Pipe International, LLC New Hope, MN ***1 *** *** ***

NOV Grant Prideco Houston, TX *** *** *** ***

VAM Houston, TX *** *** *** ***

Total 100.0 100.0 100.0

Table continued on next page.

 1 The Commission sent questionnaires to those firms identified in the petition as importers, along with firms that,

based on a review of data provided by U.S. Customs and Border Protection (“Customs”), may have imported at least

900,000 dollars (landed duty value paid) or which may have imported more than one percent of total imports under

the following HTS statistical reporting numbers 7304.22.0030, 7304.22.0045, 7304.22.0060, 7304.23.3000,

7304.23.6030, 7304.23.6045, 7304.23.6060, 8431.43.8040, and 8431.43.8060 (as well as the prior HTS statistical

reporting numbers 7304.21.3000, 7304.21.6030, 7304.21.6045, and 7304.21.6060) in any one year since 2006.

 2

 *** initially reported imports of drill collars from ***. However, staff confirmed that these entries were ***

which the company subsequently ***. Staff telephone interview with ***, January 27, 2010.

IV-1
Table IV-1 – Continued

Drill pipe and drill collars: U.S. importers, source(s) of imports, U.S. headquarters, and shares of

imports in 2008

Firm Headquarters Source of

imports

Share of imports (percent)

China Other Total

Finished drill pipe

Baosteel America, Inc. Montvale, NJ *** *** *** ***

Champions Pipe & Supply, Inc.2 Houston, TX *** *** *** ***

Command Energy Services

International Ltd. (“Command”) Barbados, WI *** *** *** ***

Downhole Pipe & Equipment, L.P.

(“Downhole”) Sugar Land, TX *** *** *** ***

Drill Pipe Industries Texarkana, TX *** *** *** ***

Hilong USA LLC Houston, TX *** *** *** ***

Hunt Oil Tool Company Lafayette, LA *** *** *** ***

Longbright (American), Inc. Alhambra, CA *** *** *** ***

NOV Grant Prideco Houston, TX *** *** *** ***

Sentry Pumping Units Int’l., Inc.3 Wichita, KS *** *** *** ***

Soconord Corporation Houston, TX *** *** *** ***

Thyssen Krupp Materials North

American Inc. Southfield, MI *** *** *** ***

Tiger Trading, Inc. Conroe, TX *** *** *** ***

VAM Houston, TX *** *** *** ***

Viking Drilling, LLC Odessa, TX *** *** *** ***

Weatherford International, Inc. Houston, TX *** *** *** ***

Total 100.0 100.0 100.0

Unfinished drill collars

(

4

) (4) (4) (4) (4) (4)

Table continued on next page.

IV-2
Table IV-1 – Continued

Drill pipe and drill collars: U.S. importers, source(s) of imports, U.S. headquarters, and shares of

imports in 2008

Firm Headquarters Source of

imports

Share of imports (percent)

China Other Total

Finished drill collars

Champions Pipe & Supply, Inc.2 Houston, TX *** *** *** ***

Command Energy Services

International Ltd. (“Command”) Barbados, WI *** *** *** ***

Downhole Pipe & Equipment, L.P.

(“Downhole”) Sugar Land, TX *** *** *** ***

Drill Pipe Industries Texarkana, TX *** *** *** ***

Great White Directional Services 

Oklahoma City,

OK *** *** *** ***

Hunt Oil Tool Company Lafayette, LA *** *** *** ***

John Lawrie Inc. Houston, TX *** *** *** ***

Longbright (American), Inc. Alhambra, CA *** *** *** ***

NOV Grant Prideco Houston, TX *** *** *** ***

Schoeller-Bleckmann America, Inc. Houston, TX *** *** *** ***

Sentry Pumping Units Int’l., Inc.3 Wichita, KS *** *** *** ***

Thyssen Krupp Materials North

American Inc. Southfield, MI *** *** *** ***

Tiger Trading, Inc. Conroe, TX *** *** *** ***

VAM Houston, TX *** *** *** ***

Viking Drilling, LLC Odessa, TX *** *** *** ***

Weatherford International, Inc. Houston, TX *** *** *** ***

Total 100.0 100.0 100.0

 1 ***.

 2

 ***.

 3

 ***.

 4

 There are believed to be *** imports of unfinished drill collars into the United States.

Note.–***’s importer questionnaire response is not included in the data because its response indicates that it is a

purchaser not an importer. 

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

IV-3
U.S. IMPORTS

Table IV-2a presents data for U.S. imports of unfinished drill pipe from China and all other

sources. The leading sources of nonsubject imports are Austria, France, and Germany.

Table IV-2a

Unfinished drill pipe: U.S. imports, by sources, 2006-08, January-September 2008, and JanuarySeptember 2009

* * * * * * *

Table IV-2b presents data for U.S. imports of finished drill pipe from China and all other sources. 

The leading source of nonsubject imports is ***.3

Table IV-2b

Finished drill pipe: U.S. imports, by sources, 2006-08, January-September 2008, and JanuarySeptember 2009

* * * * * * *

There are believed to be *** imports of unfinished drill collars. Accordingly table IV-2c is not 

presented.

Table IV-2d presents data for U.S. imports of finished drill collars from China and all other

sources.4

 The leading nonsubject sources of finished drill pipe collars are Austria and France.

Table IV-2d

Finished drill collars: U.S. imports, by sources, 2006-08, January-September 2008, and JanuarySeptember 2009

* * * * * * *

Table IV-2e presents data for U.S. imports of drill pipe of (both unfinished and finished) and drill

collars from China and all other sources. 

Table IV-2e

Drill pipe and drill collars: U.S. imports, by sources, 2006-08, January-September 2008, and

January-September 2009

* * * * * * *

 3 Imports reported as originating from Mexico under statistical reporting number 8431.43.8040 are not included

in the compilation of finished drill pipe imports. These low-value entries were ***. According to a company

representative, ***. Staff telephone interview with ***, January 27, 2010.

 4

 Data do not include ***’s reported imports from *** because the company was unable to provide consistent

quantity and value data.

IV-4
NEGLIGIBILITY

The statute requires that an investigation be terminated without an injury determination if imports

of the subject merchandise are found to be negligible.5

 Negligible imports are generally defined in the

Tariff Act of 1930, as amended, as imports from a country of merchandise corresponding to a domestic

like product where such imports account for less than 3 percent of the volume of all such merchandise

imported into the United States in the most recent 12-month period for which data are available that

precedes the filing of the petition or the initiation of the investigation. However, if there are imports of

such merchandise from a number of countries subject to investigations initiated on the same day that

individually account for less than 3 percent of the total volume of the subject merchandise, and if the

imports from those countries collectively account for more than 7 percent of the volume of all such

merchandise imported into the United States during the applicable 12-month period, then imports from

such countries are deemed not to be negligible.6

 Imports from China accounted for *** percent of total

imports of drill pipe and drill collars by quantity during the most recent 12-month period.7

APPARENT U.S. CONSUMPTION

Data concerning apparent U.S. consumption of unfinished drill pipe, finished drill pipe,

unfinished drill collars, and finished drill collars during the period for which data were collected are

shown in tables IV-3a, IV-3b, IV-3c, and IV-3d.

Table IV-3a

Unfinished drill pipe: U.S. shipments of domestic product, U.S. imports, and apparent U.S.

consumption, 2006-08, January-September 2008, and January-September 2009

* * * * * * *

 5 Sections 703(a)(1), 705(b)(1), 733(a)(1), and 735(b)(1) of the Act (19 U.S.C. §§ 1671b(a)(1), 1671d(b)(1),

1673b(a)(1), and 1673d(b)(1)).

 6

 Section 771(24) of the Act (19 U.S.C. § 1677(24)).

 7

 Imports of unfinished drill pipe from China accounted for *** percent of total imports of unfinished drill pipe by

quantity during the most recent 12-month period. Imports of finished drill pipe from China accounted for ***

percent of total finished drill pipe by quantity during the most recent 12-month period. Imports of unfinished and

finished drill pipe from China accounted for *** percent of total imports of unfinished and finished drill pipe by

quantity during the most recent 12-month period. Imports of drill collars from China accounted for *** percent of

total imports of drill collars by quantity during the most recent 12-month period. 

IV-5
Table IV-3b

Finished drill pipe: U.S. shipments of domestic product, U.S. imports, and apparent U.S.

consumption, 2006-08, January-September 2008, and January-September 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Quantity (short tons)

U.S. producers’ U.S. shipments 135,667 167,827 121,092 88,761 49,858

U.S. imports from–

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total U.S. imports *** *** *** *** ***

Apparent U.S. consumption *** *** *** *** ***

Value (1,000 dollars)

U.S. producers’ U.S. shipments 635,689 927,758 738,658 527,289 310,723

U.S. imports from--

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total U.S. imports *** *** *** *** ***

Apparent U.S. consumption *** *** *** *** ***

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

Table IV-3c

Unfinished drill collars: U.S. shipments of domestic product, U.S. imports, and apparent U.S.

consumption, 2006-08, January-September 2008, and January-September 2009

* * * * * * *

Table IV-3d

Finished drill collars: U.S. shipments of domestic product, U.S. imports, and apparent U.S.

consumption, 2006-08, January-September 2008, and January-September 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Quantity (short tons)

U.S. producers’ U.S. shipments 25,660 38,143 23,049 17,267 9,986

U.S. imports from–

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total U.S. imports *** *** *** *** ***

Apparent U.S. consumption *** *** *** *** ***

Value (1,000 dollars)

U.S. producers’ U.S. shipments 74,131 123,398 92,013 66,121 33,104

U.S. imports from--

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total U.S. imports *** *** *** *** ***

Apparent U.S. consumption *** *** *** *** ***

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

IV-6
U.S. MARKET SHARES

U.S. market share data are presented in tables IV-4a, IV-4b, IV-4c, and IV-4d.

Table IV-4a

Unfinished drill pipe: Apparent U.S. consumption and market shares, 2006-08, January-September

2008, and January-September 2009

* * * * * * *

Table IV-4b

Finished drill pipe: Apparent U.S. consumption and market shares, 2006-08, January-September

2008, and January-September 2009

* * * * * * *

Table IV-4c

Unfinished drill collars: Apparent U.S. consumption and market shares, 2006-08, JanuarySeptember 2008, and January-September 2009

* * * * * * *

Table IV-4d

Finished drill collars: Apparent U.S. consumption and market shares, 2006-08, January-September

2008, and January-September 2009

* * * * * * *

RATIO OF IMPORTS TO U.S. PRODUCTION

Information concerning the ratio of imports to U.S. production of unfinished drill pipe is

presented in table IV-5a.

Table IV-5a

Unfinished drill pipe: U.S. production, U.S. imports, and ratio of imports to U.S. production, 2006-

08, January-September 2008, and January-September 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Quantity (short tons)

U.S. production 88,383 75,724 90,830 69,734 5,016

Imports from:

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total imports *** *** *** *** ***

Ratio of U.S. imports to production (percent)

Imports from:

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total imports *** *** *** *** ***

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

IV-7
Information concerning the ratio of imports to U.S. production of finished drill pipe is presented

in table IV-5b.

Table IV-5b

Finished drill pipe: U.S. production, U.S. imports, and ratio of imports to U.S. production, 2006-08,

January-September 2008, and January-September 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Quantity (short tons)

U.S. production 182,560 216,718 193,827 143,847 88,485

Imports from:

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total imports *** *** *** *** ***

Ratio of U.S. imports to production (percent)

Imports from:

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total imports *** *** *** *** ***

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

Information concerning the ratio of imports to U.S. production of unfinished drill collars is

presented in table IV-5c.

Table IV-5c

Unfinished drill collars: U.S. production, U.S. imports, and ratio of imports to U.S. production,

2006-08, January-September 2008, and January-September 2009

* * * * * * *

IV-8
Information concerning the ratio of imports to U.S. production of finished drill collars is

presented in table IV-5d.

Table IV-5d

Finished drill collars: U.S. production, U.S. imports, and ratio of imports to U.S. production, 2006-

08, January-September 2008, and January-September 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Quantity (short tons)

U.S. production 38,106 51,212 44,175 28,880 19,080

Imports from:

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total imports *** *** *** *** ***

Ratio of U.S. imports to production (percent)

Imports from:

China *** *** *** *** ***

Nonsubject countries *** *** *** *** ***

Total imports *** *** *** *** ***

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

IV-9
 
PART V: PRICING AND RELATED INFORMATION

FACTORS AFFECTING PRICES

Raw Material Costs

 Raw materials as a share of cost of goods sold for domestic producers of drill pipe and drill

collars increased from *** percent in 2006 to *** percent in 2008 before decreasing to *** percent in the

first three quarters of 2009. Most producers reported that their raw material costs increased from 2006

through the end of 2008 and decreased thereafter.1

 The key costs in producing drill pipe and drill collars

are raw materials such as steel billets. The price of scrap (a key component for billet production) was

relatively stable in 2006-07, doubled over the first three quarters of 2008, and then decreased to levels

below those from 2006-07 by mid-2009 (figure V-1). The prices of natural gas, electricity, and iron ore

rose between 2006 and 2008, with noticeable increases for each in 2008, before declining in 2009 (table

V-1). 

Figure V-1

Drill pipe and drill collars: Ferrous scrap prices--No. 1 heavy melt, Chicago and Pittsburgh

average consumer prices, monthly, January 2006-November 2009

Source: American Metal Market LLC.

 1 One producer noted that the sales prices of drill pipe and drill collars are not set by raw material costs, but rather

by supply and demand in the market.

V-1
Table V-1

Drill pipe and drill collars: Energy and input prices--U.S. natural gas, electricity, and iron ore

average annual prices, 2006-08 and 2009 year-to-date

Item 2006 2007 2008 2009

U.S. natural gas industrial price1 $7.87 $7.68 $9.58 $5.22

Electricity industrial price2 6.2¢ 6.4¢ 7.0¢ 6.9¢ 

Iron ore (per metric ton) $53.88 $59.64 $70.43 $70.00

 1 Price to industrial users in dollars per thousand cubic feet.

 2

 Price to industrial users in cents per kilowatt-hour.

Sources: U.S. Energy Information Administration, http://www.eia.doe.gov, official statistics of the U.S. Department

of Energy, http://www.eia.doe.gov/cneaf/electricity/epm/table5_3.html,

http://www.eia.doe.gov/cneaf/electricity/epm/table5_6_b.html,

http://minerals.usgs.gov/minerals/pubs/commodity/iron_ore/mcs-2010-feore.pdf, retrieved February 3, 2010, and 

“Short-Term Energy Outlook,” Table 2 (January 2010).

 

U.S. Inland Transportation Costs

U.S. producers reported that U.S. inland transportation costs of drill pipe and drill collars range

from less than 1 to 5 percent of the delivered price. Importers reported that U.S. inland transportation

costs of drill pipe and drill collars range from less than 1 to 4.25 percent of the delivered price.

U.S. inland shipping distances for U.S.-produced drill pipe and drill collars and drill pipe and

drill collars produced in China were requested from both U.S. producers and U.S. importers. For the U.S.

producers, 42.8 percent of their U.S. sales in 2008 occurred within distances of 100 miles from their

facilities, 29.4 percent occurred within distances of 101 to 1,000 miles, and 27.9 percent occurred within

distances over 1,000 miles from their facilities. For importers of drill pipe and drill collars from China,

9.5 percent of sales by value in 2008 occurred within 100 miles of their storage facilities, 71.7 percent of

sales occurred within 101 to 1,000 miles, and 18.8 percent occurred within distances over 1,000 miles.

PRICING PRACTICES

Pricing Methods

When questionnaire respondents were asked how they determined the prices that they charge for

drill pipe and drill collars, *** the U.S. producers reported the use of transaction-by-transaction

negotiations, *** (***) reported also using contracts, and one reported also using price lists. Virtually all

responding importers of drill pipe and drill collars from China reported using transaction-by-transaction

negotiations, although two reported using contracts, and one reported also using price lists. 

All U.S. producers reported that they quote prices of drill pipe and drill collars on an f.o.b. basis

and one reported also quoting prices on a delivered basis. Eleven of fourteen responding importers

reported that they quote prices of drill pipe and drill collars on an f.o.b. basis, two reported quoting prices

on a delivered basis, and one reported quoting on either an f.o.b. or delivered basis.

Sales Terms and Discounts

U.S. producers and importers of drill pipe and drill collars from China were asked what share of

their sales were on a (1) long-term contract basis (multiple deliveries for more than 12 months), (2) shortterm contract basis (up to and including 12 months), and (3) spot sales basis (for a single delivery) during

V-2
2008. Six of nine U.S. producers of drill pipe reported that all of their sales of drill pipe are spot sales;

two reported that *** of their sales are on a short-term contract basis with the remainder being spot sales;

and one reported an even split between short-term contracts and spot sales. Three of six U.S. producers

of drill collars reported that all of their sales are spot sales; two reported that *** of their sales are on a

short-term contract basis with the remainder being spot sales; and one reported slight majority of shortterm contracts relative to spot sales. These producers’ short-term contracts typically last from one month

up to one year, may or may not fix price, and mostly contain meet-or-release provisions. 

Among the importers that reported sales of drill pipe from China, all but one reported that all of

their sales are made on a spot basis. All but one of the responding importers of drill collars from China

reported that their sales are made on a spot basis.

*** reported that they offer discounts based on volume or on market conditions. *** importers of

drill pipe and drill collars from China reported applying discounts based on volume or on market

conditions.

PRICE DATA

The Commission requested U.S. producers and importers of drill pipe and drill collars from China

to provide quarterly data for the total quantity and f.o.b. value of selected finished products that were

shipped to unrelated customers in the U.S. market.2

 Data were requested for the period January 2006-

September 2009. The finished products for which pricing data were requested are as follows:

Product 1.—Drill pipe, finished, 5” O.D., 19.5 lbs./ft., grade G-105 with tool joints attached.

Product 2. —Drill pipe, finished, 4 1/2” O.D., 16.6 lbs./ft., grade G-105 with tool joints

attached.

Product 3. —Heavy weight drill pipe, 5” O.D., 50.1 lbs./ft., with tool joints attached.

Product 4. —Drill collars, 6 1/2” O.D., x 2 13/16” ID with connections attached.

Four U.S. producers and seven importers of product imported from China provided pricing 

data for sales of the requested products, although not all firms reported pricing data for all products for 

all quarters.3 Pricing data on drill pipe products (products 1-3) reported by these firms accounted for 

approximately *** percent of the quantity of U.S. producers’s U.S. shipments of drill pipe and *** 

percent of the quantity of U.S. imports of drill pipe from China during January 2006-September 2009. 

Pricing data on the drill collar product (product 4) reported by these firms accounted for approximately 

*** percent of the quantity of U.S. producers’s U.S. shipments of drill collars and *** percent of the 

quantity of U.S. imports of drill collars from China during January 2006-September 2009.

Price Trends

Weighted-average f.o.b. prices and quantities reported for U.S. producers and importers are 

presented in tables V-2 through V-5 and in figures V-2 through V-5 on a quarterly basis during January 

 2 The Commission also requested firms to provide pricing data on sales of imports from nonsubject sources. 

These prices are presented in appendix E.

 3

 Petitioners suggested that importer ***’s revised submission of *** contains pricing data misreported in ***. 

Petitioner’s postconference brief, p. 24. Staff disagrees with petitioner’s assertion because ***.

 Staff excluded sales data of imports from China reported by importer *** because its data were ***.

V-3
2006-September 2009. For sales reported by U.S. producers, product 1 accounted for *** percent of 

the total quantity reported by U.S. producers for all pricing products over the entire period, product 

accounted for *** percent, product 3 accounted for *** percent, and product 4 accounted for *** 

percent. For sales of products imported from China, product 1 accounted for *** percent of the total 

quantity reported by importers for all pricing products from China over the entire period, product 2 

accounted for *** percent, product 3 accounted for *** percent, and product 4 accounted for *** 

percent. 

Table V-2

Drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported product 1 and

margins of underselling/(overselling), by quarters, January 2006-September 2009

* * * * * * *

Table V-3

Drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported product 2 and

margins of underselling/(overselling), by quarters, January 2006-September 2009

* * * * * * *

Table V-4

Drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported product 3 and

margins of underselling/(overselling), by quarters, January 2006-September 2009

* * * * * * *

Table V-5

Drill collars: Weighted-average f.o.b. prices and quantities of domestic and imported product 4

and margins of underselling/(overselling), by quarters, January 2006-September 2009

* * * * * * *

Figure V-2

Drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported product 1, by

quarters, January 2006-September 2009

* * * * * * *

Figure V-3

Drill pipe: Weighted-average f.o.b prices and quantities of domestic product 2, by quarters,

January 2006-September 2009

* * * * * * *

Figure V-4

Drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported product 3, by

quarters, January 2006-September 2009

* * * * * * *

V-4
Figure V-5

Drill collars: Weighted-average f.o.b. prices and quantities of domestic and imported product 4, by

quarters, January 2006-September 2009

* * * * * * *

The weighted-average sales prices of U.S.-produced product 1 increased overall by *** percent

from January 2006 to September 2009, fluctuating but generally increasing over the entire period and

increasing dramatically at the end of the period, by *** percent from the first quarter of 2009 to the third

quarter of 2009. The weighted-average sales prices of product 1 imported from China also increased

overall by *** percent from January 2006 to September 2009. These sales prices increased dramatically

at the end of the period, by *** percent from the first quarter of 2009 to the third quarter of 2009. 

The weighted-average sales prices of U.S.-produced product 2 increased overall by *** percent

from January 2006 to September 2009, fluctuating over the entire period to their lowest point in the ***

quarter of ***, after which they increased by *** to the third quarter of 2009. The weighted-average

sales prices of product 2 imported from China increased overall by *** percent from January 2006 to

September 2009, fluctuating but remaining relatively stable over the entire period.

The weighted-average sales prices of U.S.-produced product 3 increased overall by *** percent

from January 2006 to September 2009, with most of the increase being accounted for by an increase of

*** percent from *** quarter of *** to the *** quarter of ***, after which prices remained relatively flat

***. The weighted-average sales prices of product 3 imported from China increased by *** percent over

the entire period, remaining relatively stable ***, when ***.

The weighted-average sales prices of U.S.-produced product 4 decreased overall by *** percent

from January 2006 to September 2009, fluctuating but remaining relatively flat over most of the period

before decreasing by *** percent in ***. The weighted-average sales prices of product 4 imported from

China increased by *** percent from the *** (the first period for which data were reported) to the ***.4

Table V-6

Drill pipe and drill collars: Summary of weighted-average f.o.b. prices for products 1-4 from the

United States and China

* * * * * * *

Price Comparisons

Margins of underselling and overselling for the period are presented by product category in table 

V-7. The data show that prices of imports from China were lower than the U.S. producers’ prices in 16

out of 51 quarterly comparisons, by margins ranging from 0.1 percent to 49.1 percent. The prices of

imports from China were higher than U.S. producers’ prices in 35 quarterly comparisons, by margins

ranging from 0.1 to 103.3 percent. 

 4 There were limited reported sales of pricing product 4 imported from China.

V-5
Table V-7

Drill pipe and drill collars: Instances of underselling/overselling and the range and average of margins

for products 1-4, January 2006-September 2009

Underselling Overselling

Number of

instances

Range

(percent)

Volume

(short

tons)

1

Average

margin

(percent)

Number of

instances

Range

(percent)

Volume

(short

tons)

Average

margin

(percent)

By product:

 Product 1 6 *** *** *** 9 *** *** ***

 Product 2 6 *** *** *** 9 *** *** ***

 Product 3 0 *** *** *** 15 *** *** ***

 Product 4 4 *** *** *** 2 *** *** ***

By period:

 2006 3 *** *** *** 9 *** *** ***

 2007 3 *** *** *** 10 *** *** ***

 2008 5 *** *** *** 10 *** *** ***

 Jan-Sept 

 2009 5 *** *** *** 6 *** *** ***

 Total3 16 0.1 to 49.1 10,038 9.6 35 0.1 to 103.3 19,427 16.8

 1 Import volumes occurring in the instances cited.

 2 Not applicable.

 3 Total number of instances for all cited products, range of margins for all cited products, and average margin for all cited

products.

Source: Compiled from data submitted in response to Commission questionnaires.

LOST SALES AND LOST REVENUES

The Commission requested that U.S. producers report any instances of lost sales or revenues they

experienced due to competition from imports of drill pipe and drill collars from China since January

2006. U.S. producers provided *** lost sales allegations valued at a total of $*** and *** lost revenues

allegations valued at a total of $*** as shown in tables V-8 and V-9.5

Table V-8

Drill pipe and drill collars: U.S. producers’ and converters’ lost sales allegations

* * * * * * *

 5 *** of the lost sales allegations involved drill pipe and the remaining *** involved drill collars. *** of the lost

revenues allegations involved drill pipe and the remaining *** involved drill collars. The lost revenues allegations

provided involved sales of ***. ***. 

V-6
Table V-9

Drill pipe and drill collars: U.S. producers’ lost revenue allegations

* * * * * * *

Staff received responses from purchasers regarding *** lost sales allegations valued at $*** and

*** lost revenues allegations valued at $***. The responding firms confirmed *** allegations totaling

$*** and refuted *** allegations totaling $***. In the *** remaining allegations, purchasers did not

respond to the specific transactions cited but provided other responses that are discussed below.

*** was cited in a *** involving *** short tons of drill pipe valued at $*** allegedly occurring in

***. It disagreed with the allegation, stating that ***.

*** was cited in *** lost *** allegations involving *** short tons of drill pipe valued at $***

allegedly occurring in *** and *** involving *** short tons of drill pipe valued at $*** allegedly

occurring in ***. It agreed with the ***. It also reported that it has switched from purchasing drill pipe

from U.S. producers to Chinese import suppliers and that U.S. producers have reduced their prices in

order to compete with subject imports.

*** was cited in a *** involving *** short tons of drill pipe valued at $*** allegedly occurring in

*** and *** involving *** short tons of drill pipe valued at $***. While it reported that ***, it disagreed

with ***. It reported that it had switched approximately ***. It further reported that ***.

*** was cited in a lost sales allegation involving *** of drill pipe valued at $*** allegedly

occurring in ***. It did not respond to the specific transaction cited; however, it reported that ***. 

*** was cited in a lost sales allegation involving *** of drill pipe valued at $*** allegedly

occurring in ***. It disagreed with the allegation, stating that ***. 

*** was cited in a lost sales allegation involving *** short tons of drill pipe valued at $***

allegedly occurring in ***. It disagreed with the allegation, stating that it did not purchase any imports

from China during the time period cited and that it ***. It further reported that it ***. ***.6

*** was cited in *** lost sales allegations involving *** short tons of drill pipe valued at $***. It

agreed with the allegations. It further reported that ***. 

*** was cited in a lost sales allegation involving *** short tons of drill pipe valued at $***

allegedly occurring in ***. It reported that it ***.

*** was cited in a lost sales allegation involving *** short tons of drill pipe valued at $***

allegedly occurring in ***. It agreed with the allegation, stating that it has switched purchases of drill

pipe from U.S. producers to Chinese import suppliers due to price; however, it also stated that ***. 

*** was cited in *** lost sales allegations involving *** short tons of drill pipe valued at $***. It

did not respond to the specific allegations; however, it reported that it does not import drill pipe from

China and that it has ***. It further reported that it ***. 

***.7

 6 ***.

 7

 ***.

V-7
 
PART VI: FINANCIAL EXPERIENCE OF THE U.S. PRODUCERS

BACKGROUND

Eight U.S. producers (NOV Grant Prideco, RDT, Smith, TMK, TSC, Timken, U.S. Steel, and

VAM) reported drill pipe financial results. Five of these U.S. producers (NOV Grant Prideco, RDT,

Smith, Timken, and VAM) also separately reported financial results on drill collar operations.1

 ***.2

Because the majority of revenue reflects commercial sales, primarily representing U.S. domestic

shipments followed by a smaller share of exports, only a total sales line item is presented in the tables

below.3

 

With respect to unfinished drill pipe operations and finished drill collar operations, no single U.S.

producer represents a substantial share of either product category. In contrast, unfinished drill collar

financial results reflect the operations of a single company, Timken, while NOV Grant Prideco accounted

for *** percent of cumulative finished drill pipe sales value. By way of comparison, the next largest

producer in terms of cumulative sales value, ***, accounted for only *** percent. While grouped

according to primary product categories (unfinished drill pipe, finished drill pipe, unfinished drill collars,

and finished drill collars), each company is unique in terms of items such as specific product mix,

manufacturing, and cost classification.4

 Operational differences which distinguish U.S. producers also

include, among other features, the extent to which inputs are purchased from related parties, as well as the

overall focus of company-specific operations.5 6

 Notwithstanding these differences, U.S. producers

generally reported similar cost-cutting measures, in large part representing employee layoffs and reduced

hours, in response to notably lower sales volume at the end of the period.7

 1 ***.

 2

 ***. Staff telephone interview with ***, January 20, 2010 (USITC auditor notes (preliminary phase)).

 3

 Financial results reflect generally accepted accounting principles (“GAAP”) with annual periods reported on a

calendar-year basis. ***. 

 ***. In its 2009 3rd quarter 10-Q, National Oilwell Varco stated that “{b}ased on the Company’s indefinitelived intangible asset impairment analysis performed during the second quarter of 2009, the Company incurred an

impairment charge of $147 million in the Petroleum Services & Supplies segment related to a partial impairment of

the Company’s Grant Prideco trade name. The impairment charge was primarily the result of the substantial decline

in worldwide rig counts through June 2009, declines in current forecasts in rig activity for the remainder of 2009,

2010, and 2011 compared to rig count forecasts at the beginning of 2009, and a current decline in the revenue

forecast for the drill pipe business unit for the remainder of 2009, 2010, and 2011.” National Oilwell Varco 2009

3rd quarter 10-Q, p. 8. 

 4

 Underlying product mix is presumed to be the primary factor which explains differences in company-specific

average sales value and average cost of goods sold (“COGS”). In addition to differences such as the extent to which

tool joints are manufactured from tool joint forgings or purchased in essentially completed form, the components of

reported COGS also likely reflect differences in cost accounting systems which are variously based on standard cost

(predominant), job order, process cost, modified actual cost, and hybrid job order. 

 5

 The following companies reported input purchases from related parties: ***. Staff telephone interview with

***, January 26, 2010 (USITC auditor notes (preliminary phase)). 

 6

 ***. In addition to producing heavyweight finished drill pipe and drill collars, Smith is also reportedly a

producer/distributor of other drilling products. Conference transcript, p. 19 (Fields). 

 7

 Conference transcript, p. 17 (Smith), p. 20 (Fields), pp. 23-24 (Morris), p. 29 (Ramsey). In addition to

employee layoffs, a VAM official noted at the staff conference that cost cutting initiatives were implemented in a

number of other areas such as material purchases and energy. Conference transcript, pp. 83-84 (Fields). An RDT

(continued...)

VI-1
OPERATIONS ON DRILL PIPE AND DRILL COLLARS

Income-and-loss data for operations on unfinished drill pipe, finished drill pipe, unfinished drill

collars, and finished drill collars are presented in table VI-1a, table VI-1b, table VI-1c, and table VI-1d.8

Table VI-2a and table VI-2b present selected company-specific financial information with subtotals for

unfinished and finished drill pipe operations and unfinished and finished drill collar operations,

respectively. A variance analysis of the financial results of each of the above-referenced product

categories is presented in table VI-3a, table VI-3b, table VI-3c, and table VI-3d.9

 An overall consolidation

of finished drill pipe and finished drill collar operations is presented in appendix C.

Unfinished and Finished Drill Pipe Operations

As presented in table VI-2a, three U.S. producers (Timken, TMK, and U.S. Steel) reported

financial results on unfinished drill pipe, while five U.S. producers (NOV Grant Prideco, RDT, Smith,

TSC, and VAM) reported financial results on finished drill pipe. As noted previously, NOV Grant

Prideco accounts for *** of overall finished drill pipe activity. With the exception of a relatively small

volume of exported unfinished drill pipe, the unfinished drill pipe produced and sold by U.S. mills (see

table VI-1a) is consumed in U.S. finished drill pipe production. As indicated in footnote 5 above, ***

which represent a large share of the remaining unfinished drill pipe consumed in the production of

finished drill pipe.

While the overall pattern of sales for the two categories of drill pipe was similar, the absolute

sales volume of finished drill pipe peaked in 2007. In contrast, the absolute sales volume for unfinished

drill pipe reached its highest level in 2008. The subsequent decline in unfinished drill pipe sales volume

in interim 2009 compared to interim 2008 was also sharper compared to the corresponding decline in

finished drill pipe sales volume; e.g., unfinished drill pipe sales volume was 88.5 percent lower in interim

2009 than in interim 2008, while finished drill pipe sales volume was 40.4 percent lower. The larger

contraction of unfinished drill pipe sales, in conjunction with declines in corresponding production and

capacity utilization, at least in part, appears to explain why unfinished drill pipe producers reported an

overall gross and operating loss in interim 2009, while finished drill pipe producers collectively remained

profitable in interim 2009 albeit at a lower absolute level (see table VI-1a and table VI-1b). 

 7(...continued)

official also indicated that, because of poor market conditions at the end of the period, the installation of purchased

equipment related to a second welding line has been postponed. Conference transcript, p. 23, 84-85 (Morris). With

regard to steps taken by NOV Grant Prideco, a company official stated that ***. E-mail from ***, January 28, 2010.

 8

 The majority of companies are either unfinished drill pipe producers or finished drill pipe producers. ***. Staff

telephone interview with ***, January 22, 2010 (USITC auditor notes (preliminary phase)). 

 9

 A variance analysis is calculated in three parts, sales variance, cost of sales variance, and SG&A expense

variance. Each part consists of a price variance (in the case of the sales variance) or a cost variance (in the case of

the cost of sales and SG&A expense variance) and a volume variance. The sales or cost variance is calculated as the

change in unit price times the new volume, while the volume variance is calculated as the change in volume times

the old unit price. Summarized at the bottom of table VI-3a, table VI-3b, table VI-3c, and table VI-3d, the price

variance is from sales; the cost/expense variance is the sum of those items from COGS and SG&A variances,

respectively, and the volume variance is the sum of the lines under price and cost/expense variance. 

 With regard to changes in product mix and the utility of the variance analysis (i.e., a stable product mix

generally enhances the utility of the variance analysis), producers indicated that product mix was generally stable but

that there was some change in effective product mix during the period. Conference transcript, pp. 77 (Fields, Morris,

Brand). E-mail from ***, January 26, 2010. 

VI-2
As shown in table VI-2a, most company-specific average per-short ton sales values for both

categories of drill pipe increased in each annual period. At the end of the period, this pattern changed

with *** reporting higher average sales value in interim 2009 compared to interim 2008. ***.10 VAM,

*** indicated that its product mix shifted to a higher share of premium grade drill pipe and a lower

corresponding share of API grade.11 

As shown in the variance analysis for finished drill pipe (table VI-3b), the positive price variance

generated by finished drill pipe operations at the end of the period was more than offset by much larger

corresponding negative cost and volume variances. In the absence of employee layoffs and other costcutting measures adopted by U.S. producers, as noted above, the overall negative cost variances at the end

of the period presumably would have been higher and corresponding financial results lower. With regard

to company-specific financial results on drill pipe shown in table VI-2a, it should be noted that, while

***.12 Among the finished drill pipe producers, *** percentage decline in sales volume in interim 2009

compared to interim 2008, as well as the lowest capacity utilization. As shown in table VI-2a, *** at the

end of the period. 

Unfinished and Finished Drill Collar Operations

As shown in table VI-2b, unfinished drill collar financial results represent the operations of a

single company, Timken, while finished drill collar financial results were reported by four U.S. producers

(NOV Grant Prideco, RDT, Smith, and VAM).

Similar to the pattern of sales volume reported by unfinished drill pipe producers, the percentage

decline in unfinished drill collar sales volume in interim 2009 compared to interim 2008 was ***

compared to the corresponding decline in finished drill collar sales volume (26.4 percent). Unlike the

finished drill pipe category, where *** U.S. producers reported lower sales volume in interim 2009

compared to interim 2008, volume changes for finished drill collar producers were ***. ***. 

In addition to the underlying physical differences which distinguish unfinished and finished drill

collars, the break in terms of average unfinished and finished drill collar sales value and COGS shown in

table VI-2b also in part reflects the fact that ***.13

As shown in table VI-2b, ***.14 ***.15

While both finished drill collar and finished drill pipe financial results declined in interim 2009

compared to interim 2008, a negative price variance (table VI-3d) was the largest single component of the

overall decline of finished drill collar operating income at the end of the period. In contrast, as noted

previously, finished drill pipe operations generated a positive price variance at the end of the period with

the decline in operating income attributable to a combination of negative net cost and volume variances.

 10 Staff telephone interview with ***, January 25, 2010 (USITC auditor notes (preliminary phase)). E-mail from

***, January 26, 2010. 

 11 Conference transcript, p. 77 (Fields).

 12 ***. 

 13 ***. Staff telephone interview with ***, January 21, 2010 (USITC auditor notes (preliminary phase)). 

 14 E-mail with attachment from ***, January 27, 2010. 

 15 Staff telephone interview with ***, January 28, 2010 (USITC auditor notes (preliminary phase)).

VI-3
Table VI-1a

Unfinished drill pipe: Results of operations, 2006-08, January-September 2008, and JanuarySeptember 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Quantity (short tons)

Total net sales quantity 83,628 78,561 90,178 67,865 7,823

Value ($1,000)

Total net sales value 119,719 117,252 178,647 128,608 12,672

Cost of goods sold:

 Raw materials 38,121 38,686 57,105 44,142 3,496

 Direct labor 9,648 8,734 10,932 7,839 1,158

 Other factory costs 36,877 34,936 48,255 35,945 9,224

 Total cost of goods sold 84,646 82,356 116,292 87,926 13,878

Gross profit or (loss) 35,073 34,896 62,355 40,682 (1,206)

Selling expenses 696 710 869 653 219

General and administrative expenses 5,616 5,758 8,170 5,399 1,532

 Total SG&A expenses 6,312 6,468 9,039 6,052 1,751

Operating income or (loss) 28,761 28,428 53,316 34,630 (2,957)

Interest expense 872 698 649 428 123

Other expenses 137 88 (14) 71 46

Other income items 1,899 1,235 1,579 1,200 331

Net income or (loss) 29,651 28,877 54,260 35,331 (2,795)

Depreciation/amortization 1,716 2,213 6,371 3,641 1,558

Estimated cash flow 31,367 31,090 60,631 38,972 (1,237)

Ratio to net sales (percent)

Raw material 31.8 33.0 32.0 34.3 27.6

Direct labor 8.1 7.4 6.1 6.1 9.1

Other factory costs 30.8 29.8 27.0 27.9 72.8

 Cost of goods sold 70.7 70.2 65.1 68.4 109.5

Gross profit or (loss) 29.3 29.8 34.9 31.6 (9.5)

SG&A expenses 5.3 5.5 5.1 4.7 13.8

Operating income or (loss) 24.0 24.2 29.8 26.9 (23.3)

Net income or (loss) 24.8 24.6 30.4 27.5 (22.1)

Table continued on next page.

VI-4
Table VI-1a--Continued

Unfinished drill pipe: Results of operations, 2006-08, January-September 2008, and JanuarySeptember 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Unit value (dollars per short ton)

Total net sales 1,432 1,492 1,981 1,895 1,620

Cost of goods sold:

 Raw material 456 492 633 650 447

 Direct labor 115 111 121 116 148

 Other factory costs 441 445 535 530 1,179

 Total cost of goods sold 1,012 1,048 1,290 1,296 1,774

Gross profit or (loss) 419 444 691 599 (154)

SG&A expenses 75 82 100 89 224

Operating income or (loss) 344 362 591 510 (378)

Number of producers reporting

Operating losses 0 0 0 0 2

Data 3 3 3 3 3

Source: Compiled from data submitted in response to Commission questionnaires.

VI-5
Table VI-1b

Finished drill pipe: Results of operations, 2006-08, January-September 2008, and JanuarySeptember 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Quantity (short tons)

Total net sales quantity 177,983 216,390 188,644 135,750 80,929

Value ($1,000)

Total net sales value 857,907 1,245,824 1,213,027 862,455 552,221

Cost of goods sold:

 Raw materials 355,643 481,045 497,013 339,806 280,019

 Direct labor 19,567 24,947 29,024 20,102 18,017

 Other factory costs 192,307 252,490 210,918 145,001 136,411

 Total cost of goods sold 567,517 758,482 736,955 504,909 434,447

Gross profit 290,390 487,342 476,072 357,546 117,774

Selling expenses 19,853 23,617 34,977 23,374 25,759

General and administrative expenses 5,789 7,323 7,886 6,147 10,839

 Total SG&A expenses 25,642 30,940 42,863 29,521 36,598

Operating income 264,748 456,402 433,209 328,025 81,176

Interest expense 1,014 1,183 1,481 1,059 1,007

Other expenses 288 1,324 1,044 761 1,216

Other income items 0 0 350 266 18

Net income 263,446 453,895 431,034 326,471 78,971

Depreciation/amortization 12,045 12,810 14,264 11,667 13,165

Estimated cash flow 275,491 466,705 445,298 338,138 92,136

Ratio to net sales (percent)

Raw material 41.5 38.6 41.0 39.4 50.7

Direct labor 2.3 2.0 2.4 2.3 3.3

Other factory costs 22.4 20.3 17.4 16.8 24.7

 Cost of goods sold 66.2 60.9 60.8 58.5 78.7

Gross profit 33.8 39.1 39.2 41.5 21.3

SG&A expenses 3.0 2.5 3.5 3.4 6.6

Operating income 30.9 36.6 35.7 38.0 14.7

Net income 30.7 36.4 35.5 37.9 14.3

Table continued on next page.

VI-6
Table VI-1b--Continued

Finished drill pipe: Results of operations, 2006-08, January-September 2008, and JanuarySeptember 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Unit value (dollars per short ton)

Total net sales 4,820 5,757 6,430 6,353 6,824

Cost of goods sold:

 Raw material1 1,998 2,223 2,635 2,503 3,460

 Direct labor 110 115 154 148 223

 Other factory costs 1,080 1,167 1,118 1,068 1,686

 Total cost of goods sold 3,189 3,505 3,907 3,719 5,368

Gross profit 1,632 2,252 2,524 2,634 1,455

SG&A expenses 144 143 227 217 452

Operating income 1,487 2,109 2,296 2,416 1,003

Number of producers reporting

Operating losses 0 0 0 0 1.0

Data 4 5 5 5 5

1

 ***. Petition, exhibit II-1B-1-a.

Source: Compiled from data submitted in response to Commission questionnaires.

Table VI-1c

Unfinished drill collars: Results of operations, 2006-08, January-September 2008, and JanuarySeptember 2009

* * * * * * *

VI-7
Table VI-1d

Finished drill collars: Results of operations, 2006-08, January-September 2008, and JanuarySeptember 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Quantity (short tons)

Total net sales quantity 34,459 46,993 37,986 27,389 20,163

Value ($1,000)

Total net sales value 100,759 154,411 149,215 107,397 68,357

Cost of goods sold:

 Raw materials 42,552 59,007 66,859 45,108 31,807

 Direct labor 6,791 9,246 8,626 5,574 5,282

 Other factory costs 22,929 29,975 26,599 17,721 18,707

 Total cost of goods sold 72,272 98,228 102,084 68,403 55,796

Gross profit 28,487 56,183 47,131 38,994 12,561

Selling expenses 4,526 7,516 9,385 7,213 4,262

General and administrative expenses 936 1,456 1,794 859 955

 Total SG&A expenses 5,462 8,972 11,179 8,072 5,217

Operating income 23,025 47,211 35,952 30,922 7,344

Interest expense 140 194 258 152 253

Other expenses 265 531 788 275 509

Other income items 0 0 34 27 2

Net income 22,620 46,486 34,940 30,522 6,584

Depreciation/amortization 2,656 3,127 3,651 3,521 2,861

Estimated cash flow 25,276 49,613 38,591 34,043 9,445

Ratio to net sales (percent)

Raw material 42.2 38.2 44.8 42.0 46.5

Direct labor 6.7 6.0 5.8 5.2 7.7

Other factory costs 22.8 19.4 17.8 16.5 27.4

 Cost of goods sold 71.7 63.6 68.4 63.7 81.6

Gross profit 28.3 36.4 31.6 36.3 18.4

SG&A expenses 5.4 5.8 7.5 7.5 7.6

Operating income 22.9 30.6 24.1 28.8 10.7

Net income 22.5 30.1 23.4 28.4 9.6

Table continued on next page.

VI-8
Table VI-1d--Continued

Finished drill collars: Results of operations, 2006-08, January-September 2008, and JanuarySeptember 2009

Item

Calendar year January-September

2006 2007 2008 2008 2009

Unit value (dollars per short ton)

Total net sales 2,924 3,286 3,928 3,921 3,390

Cost of goods sold:

 Raw material 1,235 1,256 1,760 1,647 1,577

 Direct labor 197 197 227 204 262

 Other factory costs 665 638 700 647 928

 Total cost of goods sold 2,097 2,090 2,687 2,497 2,767

Gross profit 827 1,196 1,241 1,424 623

SG&A expenses 159 191 294 295 259

Operating income 668 1,005 946 1,129 364

Number of producers reporting

Operating losses 0 0 0 0 1.0

Data 4 4 4 4 4

Source: Compiled from data submitted in response to Commission questionnaires.

Table VI-2a

Unfinished and finished drill pipe: Results of operations, by firm, 2006-08, January-September

2008, and January-September 2009

* * * * * * *

Table VI-2b

Unfinished and finished drill collars: Results of operations, by firm, 2006-08, January-September

2008, and January-September 2009

* * * * * * *

VI-9
Table VI-3a

Unfinished drill pipe: Variance analysis of financial results, 2006-08, January-September 2008, and

January-September 2009

Item

Calendar year Jan.-Sept.

2006-08 2006-07 2007-08 2008-09

Value ($1,000)

Total net sales:

 Price variance 49,551 4,787 44,057 (2,153)

 Volume variance 9,377 (7,254) 17,338 (113,783)

 Total net sales variance 58,928 (2,467) 61,395 (115,936)

Cost of sales:

 Cost variance (25,016) (2,839) (21,758) (3,743)

 Volume variance (6,630) 5,129 (12,178) 77,791

 Total net cost of sales (31,646) 2,290 (33,936) 74,048

Gross profit variance 27,282 (177) 27,459 (41,888)

SG&A expenses:

 Expense variance (2,233) (538) (1,615) (1,053)

 Volume variance (494) 382 (956) 5,354

 Total SG&A variance (2,727) (156) (2,571) 4,301

Operating income variance 24,555 (333) 24,888 (37,587)

Summarized as:

 Price variance 49,551 4,787 44,057 (2,153)

 Net cost/expense variance (27,249) (3,377) (23,372) (4,796)

 Net volume variance 2,253 (1,743) 4,204 (30,638)

Source: Compiled from data submitted in response to Commission questionnaires.

VI-10
Table VI-3b

Finished drill pipe: Variance analysis of financial results, 2006-08, January-September 2008, and

January-September 2009

Item

Calendar year Jan.-Sept.

2006-08 2006-07 2007-08 2008-09

Value ($1,000)

Total net sales:

 Price variance 303,732 202,789 126,945 38,058

 Volume variance 51,388 185,128 (159,742) (348,292)

 Total net sales variance 355,120 387,917 (32,797) (310,234)

Cost of sales:

 Cost variance (135,444) (68,500) (75,727) (133,439)

 Volume variance (33,994) (122,465) 97,254 203,901

 Total net cost of sales (169,438) (190,965) 21,527 70,462

Gross profit variance 185,682 196,952 (11,270) (239,772)

SG&A expenses:

 Expense variance (15,685) 235 (15,890) (18,999)

 Volume variance (1,536) (5,533) 3,967 11,922

 Total SG&A variance (17,221) (5,298) (11,923) (7,077)

Operating income variance 168,461 191,654 (23,193) (246,849)

Summarized as:

 Price variance 303,732 202,789 126,945 38,058

 Net cost/expense variance (151,129) (68,265) (91,617) (152,438)

 Net volume variance 15,858 57,130 (58,521) (132,469)

Source: Compiled from data submitted in response to Commission questionnaires.

VI-11
Table VI-3c

Unfinished drill collars: Variance analysis of financial results, 2006-08, January-September 2008,

and January-September 2009

* * * * * * *

Table VI-3d

Finished drill collars: Variance analysis of financial results, 2006-08, January-September 2008, and

January-September 2009

Item

Calendar year Jan.-Sept.

2006-08 2006-07 2007-08 2008-09

Value ($1,000)

Total net sales:

 Price variance 38,143 17,002 24,399 (10,706)

 Volume variance 10,313 36,650 (29,595) (28,334)

 Total net sales variance 48,456 53,652 (5,196) (39,040)

Cost of sales:

 Cost variance (22,415) 332 (22,683) (5,440)

 Volume variance (7,397) (26,288) 18,827 18,047

 Total net cost of sales (29,812) (25,956) (3,856) 12,607

Gross profit variance 18,644 27,696 (9,052) (26,433)

SG&A expenses:

 Expense variance (5,158) (1,523) (3,927) 725

 Volume variance (559) (1,987) 1,720 2,130

 Total SG&A variance (5,717) (3,510) (2,207) 2,855

Operating income variance 12,927 24,186 (11,259) (23,578)

Summarized as: 0

 Price variance 38,143 17,002 24,399 (10,706)

 Net cost/expense variance (27,573) (1,191) (26,610) (4,714)

 Net volume variance 2,357 8,375 (9,049) (8,158)

Source: Compiled from data submitted in response to Commission questionnaires.

VI-12
CAPITAL EXPENDITURES, RESEARCH AND DEVELOPMENT EXPENSES, 

ASSETS, AND RETURN ON INVESTMENT

Data on capital expenditures, research and development (“R&D”) expenses, assets, and return on

investment related to drill pipe (unfinished and finished) and drill collars (finished and unfinished) are

presented in table VI-4. As shown in table VI-4, the majority of capital expenditures were reported by the

finished drill pipe segment with company-specific increases/decreases generally reflecting material

expansions/upgrades undertaken during the period.16 The overall lower level of capital expenditures in

interim 2009 compared to interim 2008 is also consistent with a decline in corresponding estimated cash

flow from operations.

As noted above, a RDT official stated at the staff conference that the company purchased but left

uninstalled a second weld line.17 ***.18 ***. Testimony at the staff conference indicates that related

investments have essentially gone unused since TMK has received no orders for the larger diameter green

tube it can now produce.19 ***.20 ***.21 

Table VI-4

Operations on drill pipe and drill collars: Capital expenditures, R&D expenses, total assets, and

return on investment, by firm, 2006-08, January-September 2008, and January-September 2009

* * * * * * *

CAPITAL AND INVESTMENT

The Commission requested U.S. producers to describe any actual or anticipated negative effects

of imports of drill pipe and drill collars, respectively, from China on their firms’ growth, investment,

ability to raise capital, existing development and production efforts (including efforts to develop a

derivative or more advanced version of the product), or the scale of capital investments. 

Drill Pipe – Actual Negative Effects

Drill Pipe Intl. ***.22 

NOV Grant Prideco ***.

RDT ***.

Smith ***.

 16 ***. Staff telephone interview with ***, January 20, 2010 (USITC auditor notes (preliminary phase)).

 17 Conference transcript, pp. 84-85 (Morris). E-mail from ***, February 2, 2010. 

 18 Staff telephone interview with ***, February 2, 2010.

 19 According to a TMK official, “{d}espite the capital investment that we committed to expanding our tube size

range, we have yet to receive an order in 5-1/2 inch green tube due to in large part because of import{ed} drill pipe

from China.” Conference transcript, p. 27 (Ramsey).

 20 ***. E-mail from ***, January 29, 2010. ***. Ibid.

 21 ***. Staff telephone interview with ***, January 28, 2010 (USITC auditor notes (preliminary phase)).

 22 ***.

VI-13
Timken ***. 

TMK ***.

TSC ***. 

U.S. Steel ***.

VAM ***. 

Drill Pipe – Anticipated Negative Effects

Drill Pipe Intl. ***.

NOV Grant Prideco ***.

RDT ***.

Smith ***.

Timken ***. 

TMK ***. 

TSC ***. 

U.S. Steel ***.

VAM ***.

Drill Collars – Actual Negative Effects

Drill Pipe Intl. ***. 

NOV Grant Prideco ***.

RDT ***.

Smith ***.

Timken ***. 

TMK ***.

TSC ***.

U.S. Steel ***.

VAM ***.

Drill Collars – Anticipated Negative Effects

Drill Pipe Intl. ***.

NOV Grant Prideco ***.

RDT ***.

Smith ***.

Timken ***. 

TMK ***.

TSC ***. 

U.S. Steel ***. 

VAM ***. 

VI-14
PART VII: THREAT CONSIDERATIONS AND INFORMATION ON

NONSUBJECT COUNTRIES

The Commission analyzes a number of factors in making threat determinations (see 19 U.S.C. §

1677(7)(F)(i)). Information on the nature of the alleged subsidies was presented earlier in this report;

information on the volume and pricing of imports of the subject merchandise is presented in Parts IV and

V; and information on the effects of imports of the subject merchandise on U.S. producers’ existing

development and production efforts is presented in Part VI. Information on inventories of the subject

merchandise; foreign producers’ operations, including the potential for “product-shifting;” any other

threat indicators, if applicable; and any dumping in third-country markets, follows. Also presented in this

section of the report is information obtained for consideration by the Commission on nonsubject countries

and the global market.

THE INDUSTRY IN CHINA

Overview

According to the World Steel Association (WSA),1

 China was the leading global producer of

seamless tubular products in 2007,2

 accounting for nearly 62 percent (20.0 million short tons) of global

production of (table VII-1). Regionally, Asia accounted for almost 70 percent of global production of

seamless tubular products in 2007. 

 1 The WSA, formerly known as the International Iron and Steel Institute (IISI), is an international organization

representing approximately 180 steel producers, national and regional steel industry associations, and steel research

institutes. WSA members produce about 85 percent of the world’s steel. WSA provides data for all seamless

tubular products, a much broader category than the subject products.

 2

 In this section, “seamless tube” refers to a broad range of seamless tubular products, including the subject

merchandise. “Seamless OCTG” covers a smaller group of steel tubular goods, such as casing, tubing, coupling

stock, drill pipe, and drill collars. See part I for more details on different categories of steel tubular goods. 

VII-1
Table VII-1

Seamless tubular products: Global production, by region, 2005–07

Region

Calendar year

2005 2006 2007

Quantity (1,000 short tons)

North America

 United States 2,184 2,293 1,908

 Mexico 822 823 732

 Subtotal 3,006 3,116 2,640

South America

 Argentina 950 936 925

 Brazil 541 614 (1

)

 All others 54 55 (1

)

 Subtotal 1,545 1,633 925

European Union (15)

 Austria 428 473 492

 Germany 1,786 1,958 2,011

 Italy 847 913 933

 France 780 873 929

 All others 476 503 522

 Subtotal 4,317 4,719 4,886

Asia

 China 12,608 16,975 20,039

 Japan 2,237 2,307 2,281

 All others 21 22 22

 Subtotal 14,866 19,305 22,341

All others 1,365 1,517 1,595

Total 25,098 30,289 32,388

 1 Not reported.

Note.--Data originally reported in metric tons, which were converted to short tons by multiplying by 1.1023.

Source: WSA, Steel Statistical Yearbook 2008, 2009, table 25, p. 62.

VII-2
According to ***,3

 China bypassed the United States in 2001 to become the world’s leading

producer of seamless OCTG, accounting for *** of the world’s production. By 2007, China’s total

production of seamless OCTG was 4.2 million short tons, over three times larger than that of the United

States, the world’s second largest producer of seamless OCTG.4

 *** reported that among the most

important developments in the global supply of OCTG has been the steady rise of China’s production,

especially in seamless OCTG.5

More specific to the subject merchandise, according to Globe Trade Atlas, China was the largest

exporter of drill pipe in 2008, exporting 3 times more than Germany, the world’s second leading drill pipe

exporter.6

 With respect to home market prospects, most Chinese oil and natural gas exploration activities

have been concentrated in the onshore fields in the western provinces of Xinjiang, Sichuan, Gansu, and

Inner Mongolia.7

Operations on Drill Pipe and Drill Collars

China is the world’s most populous country and has a rapidly growing economy. It is also the

world’s second-leading consumer of oil after the United States, and the third-largest net importer of oil

following the United States and Japan.8

According to the Petitioners, China has excess capacity to produce seamless pipe products (which

includes unfinished drill pipe).9

 The Petitioners further report that *** catalogues the existence of ***

producers with at least *** friction welding lines (each with a capacity of *** tons).10 The Respondents

contend that the Chinese home market and third-country demand has and will continue to absorb the

majority of Chinese production capacity.11 The Respondents cite a recent article which states that China

is the second-biggest consumer of oil after the United States, consuming 8.14 million barrels of oil per

day.12 Respondents also note that the largest oil producer in the world, Saudi Aramco, recently made a

significant refinery investment in China because of China’s strong demand for oil and its robust economic

recovery.13 However, Petitioners’ counter that China produces only one-ninth as much natural gas as the

United States and less than half as much oil.14

 3 ***.

 4

 ***. *** provides data for seamless OCTG, a category that is broader than the subject products.

 5

 ***.

 6 Global Trade Information Services, Inc., Global Trade Atlas online database. Global trade data for the subject

products are reported at the HTS 6-digit subheading level 7304.22, 7304.23, and 8431.43. These subheadings also

include nonsubject products and therefore likely overstate the volume of exports of drill pipe.

 7

 U.S. Department of Energy, Energy Information Administration (EIA), “China Energy Profile,” July 2009.

 8

 China’s economic growth averaged 10 percent during 2000-08. The current global economic crisis reduced

Chinese annual economic growth from 13 percent in 2007 to 6.1 percent in the first quarter of 2009. Energy

Information Administration, Department of Energy, July 2009, found at

http://www.eia.doe.gov/emeu/cabs/China/Background.html, retrieved January 27, 2010.

 9

 Petition, p. 21.

 10 Petitioners’ postconference brief, p. 41 and exh. 6. Friction weld lines join the tool joints to the tube body,

creating finished drill pipe. Id.

 11 Respondents’ postconference brief, p. 26.

 12 Respondents’ postconference brief, pp. 26-27 and exh. 11.

 13 Id.

 14 Petitioners’ postconference brief, p. 42.

VII-3
 Table VII-2 presents the names of the responding manufacturers/exporters in China, along with

their estimated total production and estimated total exports to the United States of drill pipe and drill

collars. 

Table VII-2

Drill pipe and drill collars: Reporting manufacturers/exporters in China, and quantities and shares

of reported production and exports to the United States, 2008

* * * * * * *

Tables VII-3a and VII-3b present information on Chinese producers’ drill pipe and drill collars

operations, respectively, as compiled from responses to the Commission’s questionnaires. All foreign

producers *** reported production of drill pipe. Three firms, *** responded that they produce drill

collars. *** accounted for all reported internal consumption of drill pipe.15 In 2008, internal consumption

of drill pipe accounted for *** percent of total shipments of Chinese drill pipe. *** internally consumed a

small amount of drill collars throughout the period examined. Most of China’s exports of drill pipe and

drill collars are to markets other than the United States. Chinese exports of drill pipe to non-U.S. markets

increased from 2006 through 2008 by *** percent. During the same period, Chinese exports of drill pipe

to the United States increased by *** percent. With a limited number of reporting drill collar producers,

Chinese exports of drill collars increased noticeably in 2008 from 2007.

Table VII-3a

Drill pipe: Chinese production capacity, production, shipments, and inventories, 2006-08, JanuarySeptember 2008, January-September 2009, and projected 2009-10

* * * * * * *

Table VII-3b

Drill collars: Chinese production capacity, production, shipments, and inventories, 2006-08,

January-September 2008, January-September 2009, and projected 2009-10

* * * * * * *

U.S. IMPORTERS’ INVENTORIES OF DRILL PIPE AND DRILL COLLARS

Data collected in these investigations on U.S. importers’ end-of-period inventories of drill pipe

and drill collars are presented in tables VII-4a and VII-4b, respectively. Five U.S. importers reported

holding inventories of drill pipe from China in December 2008, and five in September 2009.

Table VII-4a

Drill pipe: U.S. importers’ end-of-period inventories of imports, 2006-08, January-September 2008,

and January-September 2009

* * * * * * *

 15 *** reported that its drill pipe volumes include semi-finished (upset to grade) drill pipe produced and then sold

to a related firm, ***, where it is finished. *** foreign producer questionnaire response.

VII-4
Table VII-4b

Drill collars: U.S. importers’ end-of-period inventories of imports, 2006-08, January-September

2008, and January-September 2009

* * * * * * *

U.S. IMPORTERS’ CURRENT ORDERS

The Commission requested importers to indicate whether they imported or arranged for the

importation of drill pipe and drill collars from China after September 30, 2009. Importers reported drill

pipe imports of *** short tons from China. Importers reported drill collar imports of *** short tons from

China. The Commission also requested importers to indicate whether they imported or arranged for the

importation of drill pipe and drill collars from all other countries after September 30, 2009. Importers

reported drill pipe imports of *** short tons from all other countries. Importers reported drill collar

imports of *** short tons from all other countries. 

ANTIDUMPING INVESTIGATIONS IN THIRD-COUNTRY MARKETS

The European Union conducted an investigation on seamless pipe (including drill pipe) from

China, and in April 2009, imposed provisional antidumping duties with margins ranging from 35 to 51

percent on seamless pipe “used in a wide variety of applications, like for mechanical uses (including

automotive and engineering), in the construction business for piling, for power generation like boiler

tubes, as oil country tubular goods (“OCTG”) used for drilling, casing and tubing in the oil industry, and

as line pipes to transport liquids or gases.”16 Subsequently, the European Union imposed definitive

antidumping duties ranging from 17 to 39 percent.17

Russia reportedly concluded its own antidumping duty investigation on steel pipe from China in

October 2009. The investigation found that Chinese market share of steel pipe increased from 8.9 percent

in 2007 to 14 percent in 2008. A five-year antidumping duty of 29.4 percent has been proposed.18

Argentina reportedly instituted an antidumping duty investigation on steel pipe from China on

November 4, 2009. The scope of the investigation includes seamless and welded steel pipe with an

external diameter less than 103⁄4 inches. Alloy, carbon, spiral, and straight-seam steel pipe and CR and

HR pipes are included in the investigation.19

INFORMATION ON NONSUBJECT COUNTRIES

Supply Considerations

Seamless tube is produced throughout the world, as noted previously in table VII-1. Between

2005 and 2007, global production of all seamless tubular products increased by 30 percent to 32.4 million

 16 Official Journal of the European Union, Commission Regulation (EC) No. 289/2009, L 94/48, April 8, 2009.

 17 Official Journal of the European Union, Commission Regulation (EC) No. 926/2009, L 262/19, October 6,

2009.

 18 “Russia may impose an anti-dumping tariff on China’s steel pipe.” Alibaba. October 19, 2009,

http://news.alibaba.com/article/detail/metalworking/100186174-1-russia-may-impose-an-anti-dumping.html,

retrieved on February 4, 2010.

 19 “Argentina carried out anti-dumping investigation on China’s steel pipe.” Alibaba. November 5, 2009,

http://news.alibaba.com/article/detail/metalworking/100195594-1-argentina-carried-out-anti-dumping-investigation.h

tml, retrieved on February 4, 2010.

VII-5
short tons. China’s growth in the production of seamless tube has outpaced that of all other global

producers. China’s share of world seamless tubular production increased from about 50 percent in 2005

to 62 percent in 2008. 

*** publishes historical and forecasted production of seamless OCTG, by region. According to

this source, world seamless OCTG production is projected to decline in 2010 from 2008 (table VII-5).

Table VII-5

Seamless OCTG: Projected production, by region, 2008-10

* * * * * * *

Demand Considerations

Changes in energy prices affect new drilling activities that, in turn, influence worldwide demand

for drill pipe. As shown in table VII-6, worldwide drilling increased by almost 7 percent between 2007

and 2008, led primarily by growth in drilling in the United States. However, in 2009, worldwide rig

counts declined by over 31 percent from 2008. *** maintains that drilling activities are mostly

concentrated in the big oil and gas producing regions, especially in those countries where oil production

is more efficient.20 In terms of consumption for OCTG, North America has been the world’s leading

region. ***, however, contends that the Far East is the next most important region as its share of global

consumption is increasing. In this region, China has become the increasingly dominant market.21 

Table VII-6

Operating rigs: Global and regional annual averages, 2006-09

Region

2006 2007 2008 2009

Quantity (number of rigs)

Latin America 324 355 384 356

Europe 77 78 98 84

Africa 58 66 65 62

Middle East 238 265 280 252

Far East 228 241 252 243

Canada 470 343 379 221

United States 1,648 1,768 1,878 1,086

 Total 3,043 3,116 3,336 2,304

Note.–Baker Hughes data do not include operations in China. However, one estimate places the number of rigs in

China at more than ***. Respondents’ postconference brief, exh. 12.

Source: Baker Hughes, Inc., Worldwide Rig Count, January 30, 2010.

 20 ***.

 21 ***.

VII-6
In the United States, demand for drill pipe and drill collars remained at low levels through the end

of 2009.22 Similar weak demand in 2009 was reported in South America, Europe, the C.I.S. and Asia.23

Overall market conditions are expected to remain difficult in 2010, although it appears that prospects may

have improved for seamless pipe generally in the United States and in Europe.24

Leading Nonsubject Countries

The leading producers and exporters of drill pipe and drill collars are Austria, France, Germany,

Mexico, and Japan. Table VII-7 summarizes the primary suppliers while table VII-8 presents rig count as

a measure of demand.

Table VII-7

Drill pipe and drill collars: Producers of drill pipe (API-5D) in certain nonsubject countries

Country/Company Location

Tube capacity 

(short tons)

1 API products Remarks

Austria

 Voestalpine Tubulars 

Kinberg

Aumehl ***2 5D, 5CT,5L

Rotary piercing,

Drill pipe groups

1&3

France 

 VAM Drilling-France Aulnoye 1 million tons3 5D, 5CT, 7

Green tube, tool

joints, collars

Germany

 Benteler Staht/Rohr 

GmbH Dinlaken ***4 5D, 5CT, 5L

Rotary piercing,

drill pipe groups

1&3

 ESW - Röhrenwerke 

 GmbH Eschweiler ***4 5D, 5CT, 5L

Drill pipe groups

1&3

 TPS-Technitube 

 Rohrenwerke 

 GmbH Nerdlen not available 5D, 5CT,5L

Drill pipe groups

1&3

 V&M Deutschland 

 GmbH 

Muelheim an

der Ruhr ***4 5D, 5CT, 5L

Drill pipe groups

1&3

Japan

 JFE Steel Corp. Handa City ***5 5D, 5CT, 5L

Drill pipe groups

1&3

 Nippon Steel Corp. Tokyo ***6 5D, 5CT,5L,

Drill pipe groups

1&3

 Petromaterials Corp. Wakayama not available 5D, 5CT, 5L,7, 7.1, 

Drill pipe groups

1&3

 Sumitomo Metal 

 Industries Ltd. Wakayama ***6 5D, 5CT,5L

Drill pipe groups

1&3

 Tenaris Kawasaki ***6 5D,5CT,5L,7

Drill pipe groups

1&3

Table continued on next page.

 22 Metal Bulletin Research, Seamless Steel Tube and Pipe Monthly, Issue 51, December 2009, p. 1.

 23 Tenaris S.A., “Half-Year Report 2009—Interim Management Report,” pp. 1-7.

 24 Metal Bulletin Research, Seamless Steel Tube and Pipe Monthly, Issue 51, December 2009, p. 1; and issue 52,

January 2010.

VII-7
Table VII-7

Drill pipe and drill collars: Producers of drill pipe (API-5D) in certain nonsubject countries

Country/Company Location

Tube capacity 

(short tons),1 API products Remarks

Mexico

 Tenaris Tamsa Veracruz ***7 5D, 5CT, 5L

Drill pipe groups

1&3 1 Capacity covers subject and nonsubject products and may overstate the actual data for drill pipe. 2

 ***.

3

 The Simdex Steel Tube Manufacturers Worldwide Guide, Simdex Publishing, 2009. 4

 ***.

5

 ***.

6

 ***.

7

 ***.

Note.--API standards: 5D is for drill pipe; 5L for line pipe; 5CT for casing and tubing; 7, 7.1 and 7.2 for related

equipment including tool joints.

Source: Except as shown in footnotes, all data are from the API Composite List, 2010, found at

http://compositlist.api.org/companylist.asp/, retrieved January 30, 2010.

Table VII-8

Operating rigs: Baker Hughes International Rig Count for selected countries, December 2009

Country

Rig counts

Highest (date) Lowest (date) December 2009

Austria 3 (12/09) 0 (8/09) 3

France 2 (3/08) 0 (9/09) 1

Germany 12 (11/08) 2 (12/04) 5

Mexico 130 (9/09) 112 (8/04) 122

Japan 6 (6/08) 1 (1/09) 3

Canada 715 (2/06) 72 (5/09) 313

United States 2,014 (9/08) 895 (6/09) 1,172

 Note.–Highest and lowest rig counts are for the last 6 years. Data for China and Korea are not available from

Baker Hughes. Rig counts on January 29, 2010, for the United States and Canada were 1,317 and 531,

respectively.

Source: Baker Hughes International Rig Count, January 2010, found at

http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm; retrieved January 30, 2010.

Austria

Austria’s domestic market for drill pipe is limited since the country has few active rotary rigs.25

Voestalpine Tubulars (“Voestalpine”) is the only known seamless OCTG manufacturer. Its annual

 25 According to Baker Hughes Austria has 3 active rigs but 2 of these are classified as “miscellaneous” (i.e., not

for the oil or gas industry). 

VII-8
production amounts to 352,000 tons covering a wide range of seamless tubes and pipes, including drill

pipe and line pipe, up to an outside diameter of 7 inches.26 According to Global Trade Atlas, in 2008,

Austria exported approximately 17,000 short tons of drill pipe.27 Voestalpine is a joint venture between

the Voestalpine AG, a steel group located in Austria and the U.S.-based NOV-Grant Prideco, one of the

world’s largest manufacturers of drill pipe and related products.28 According to an industry source,

Voestalpine is a high-quality producer focusing on the high end of the market and its production lines are

equipped with modern automatic facilities.29

France

Similar to Austria, Germany, and Japan, France has no significant oil or natural gas resources and

thus no domestic exploration activities (table VII-8). The WSA reported that France produced

approximately 930,000 short tons of seamless tubes in 2007, as shown in table VII-1. According to ***

estimate, France produced *** short tons of seamless OCTG that year.30

In France, VAM Drilling-France (VAM) is the only drill pipe producer. VAM Drilling is part of

the oil and gas division of Vallourec & Mannesmann Tubes, a subsidiary of the Vallourec Group. VAM

is supported by annual production of 2.5 million short tons of steel pipe worldwide. This global network

includes 15 production facilities for seamless OCGT production in many countries, including the United

States.31 VAM claims to be one of the world’s largest fully integrated manufacturers of drill pipe and

related drill stem products.32 In the United States, VAM Drilling-United States receives green tubes from

V&M Tubes’ mills in France, Germany, and Brazil. The green tubes are processed according to the

required API standards. Tool joint forgings are made in France and the United States and are machined

and phosphated before friction welding in VAM Drilling’s facilities in Houston and Aulnoye, France.33

VAM produces a wide range of seamless tubular products including drill pipe, tool joint, line pipe, and

casing and tubing. 

Germany

According to WSA, Germany produced approximately 2 million short tons of seamless pipe and

tube in 2007, ranking third in the world, behind China and Japan (table VII-1). *** estimates that the

country produced *** short tons of seamless OCTG that year.34 According to Global Trade Atlas,

 26 Voestalpine’s website, found at http://www.vatubulars.com, retrieved May 4, 2009; and staff telephone

interview with ***, May 1, 2009. 

 27 Global Trade Atlas, January 2010. This figure appears to be limited to drill pipe that has been heat-treated,

upset, and /or tool-joined.

 28 In this joint venture, each partner owns 50 percent of the total equity. Voestalpine’s website, found at 

http://www.vatubulars.com, retrieved May 4, 2009. 

 29 Staff telephone interview with ***, May 1, 2009. 

 30 ***. 

 31 The Simdex Steel Tube Manufacturers Worldwide Guide, Simdex Publishing, 2009. Houston-base VAM

Drilling USA is an affiliate of the Vallourec Group.

 32 VAM Drilling Catalogue, p. 2. 

 33 VAM Drilling Catalogue, p. 2.

 34 ***.

VII-9
Germany was the world’s second leading exporter of drill pipe following China in 2008.35 There are four

known producers of drill pipe in Germany: Benteler Stahl/Rohr GmbH, ESW - Röhrenwerke GmbH,

TPS-Technitube Rohrenwerke, and V&M Deutschland GmbH (“VMD”).36 All four also produce other

seamless tubular products, including OCTG, boiler tubing, tubing suitable for ball or roller bearings,

mechanical tubing, structural tubing, and tube hollows on the same equipment.37

Japan

Although Japan is the third largest oil consumer behind the United States and China, it has very

limited oil and natural gas resources and must rely almost completely on imports to meet its needs.38 As

of September 2009, Japan had only 3 active rotary rigs (table VII-8). As such, Japan exports almost all of

its drill pipe production. According to ***, Japan produced *** of seamless OCTG in 2007, ranking

fourth, behind China, the United States, and Russia.39 Global Trade Atlas reports that, in 2008, Japan

exported about 57,000 short tons of drill pipe, ranking seventh in the world.40 Japan has five

manufacturers of drill pipe, including Sumitomo Metal Industries, Nippon Steel, JFE Steel Corp.,

Petromaterials Corp., and Tenaris, a facility jointly owned by Tenaris and NKK. Most Japanese tube

capacity is controlled by major integrated mills.41

Mexico

According to WSA, Mexico produced 732,000 short tons of seamless pipe and tube in 2007, as

noted in table VII-1. *** estimates that the country produced almost *** short tons of seamless OCTG

that year.42 According to Global Trade Atlas, Mexico exported approximately 53,385 short tons of drill

pipe in 2008, an increase of 20 percent compared with 2006.43

Tubos de Acero de Mexico (“TAMSA”), wholly owned by Tenaris, is reportedly the only

manufacturer of drill pipe and other OCTG products in Mexico.44 TAMSA has an annual production

capacity of approximately 875,000 short tons of finished products, which include seamless pipe

 35 According to Global Trade Atlas, China and Germany exported 390,000 short tons and 110,000 short tons of

drill pipe, respectively. Trade data reported at the HS 6-digit subheading level for subheadings 7304.22, 7304.23,

and 8431.43. These subheadings include nonsubject products and therefore data likely overstate the volume of the

country’s exports of drill pipe. 

 36 VMD is affiliated with seamless pipe producers V&M Star (United States), V&M Brazil (Brazil), V&M France

(France), and V&M Tubes (wholly-owned by Groupe Vallourec (France)).

 37 Certain Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from Argentina, Brazil, and

Germany, Inv. Nos. 731-TA-707-709 (Second Review), USITC Publication 3918, May 2007, p. IV-16.

 38 Energy Information Administration, Japan Energy Profile, April 10, 2009, found at

http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=Ja, retrieved December 1, 2009.

 39 ***. 

 40 Global Trade Atlas, January 2010. Data may be overstated 

 41 ***.

 42 ***. 

 43 Global Trade Information Services, Inc., Global Trade Atlas online database. Trade data reported at the HS 6-

digit subheading level for subheadings 7304.22, 7304.23, and 8431.43. These subheadings include nonsubject products

and therefore data are likely to overstate the volume of Mexico’s exports of drill pipe.

 44 However, NOV Grant Prideco has a related producer (100 percent subsidiary) in Mexico, NOV Grant Prideco

de Mexico, S.A. de C.V., that is capable of processing drill pipe.

VII-10
(excluding OCTG), OCTG casing, drill pipe, fittings, mechanical tubing, and automotive components.45

In September 2008, TAMSA announced plans to increase production capacity by installing a new facility

capable of producing seamless pipe up to 7 inches in outside diameter.46 The new $1.6 billion pipe mill,

which will reportedly include iron and steelmaking facilities, will have an annual production capacity of

approximately 500,000 short tons of finished tubular products, and is expected to begin production in

2011.47 In November 2009, TAMSA reportedly has signed a contract for two heat treatment facilities to

be installed at its Veracruz plant.48

 45 Tenaris Dalmine information sheet, found at http://www.tenaris.com/shared/documents/files/CB286.pdf,

retrieved October 19, 2009; Steel Guru, “Production Pruning—Tenaris Tamsa Operating At 80% Capacity,” March

12, 2009.

 46 Tenaris, Annual Report 2008, p. 9; Tenaris press release, “Tenaris To Expand Production Capacity,” September

2, 2008.

 47 Metal Bulletin, “Tenaris plans to build $1.6B pipe mill in Mexico,” September 3, 2008. Steel Guru, “Tenaris

Tamsa To Continue Pursuing Its Investment Plans,” March 15, 2009.

 48 Steel Guru, “Tenaris Tamsa Inks Deal With Tenova LOI For Two Bfs,” November 3, 2009.

VII-11
 
APPENDIX A

FEDERAL REGISTER NOTICES

A-1

Federal Register / Vol. 75, No. 3 / Wednesday, January 6, 2010 / Notices 877 

Collection Survey, Control No. OMB– 

55. 

INTERNATIONAL TRADE 

COMMISSION 

[Investigation Nos. 701–TA–474 and 731– 

TA–1176 (Preliminary)] 

Drill Pipe From China 

AGENCY: International Trade 

Commission. 

ACTION: Institution of antidumping and 

countervailing duty investigations and 

scheduling of preliminary phase 

investigations. 

SUMMARY: The Commission hereby gives 

notice of the institution of investigations 

and commencement of preliminary 

phase antidumping and countervailing 

duty investigations Nos. 701–TA–474 

and 731–TA–1176 (Preliminary) under 

sections 703(a) and 733(a) of the Tariff 

Act of 1930 (19 U.S.C. 1671b(a) and 

1673b(a)) (the Act) to determine 


jlentini on DSKJ8SOYB1PROD with NOTICES
878 Federal Register / Vol. 75, No. 3 / Wednesday, January 6, 2010 / Notices 

whether there is a reasonable indication 

that an industry in the United States is 

materially injured or threatened with 

material injury, or the establishment of 

an industry in the United States is 

materially retarded, by reason of 

imports from China of drill pipe, 

provided for in subheadings 7304.22, 

7304.23, and 8431.43 of the Harmonized 

Tariff Schedule of the United States, 

that are alleged to be sold in the United 

States at less than fair value and alleged 

to be subsidized by the Government of 

China. Unless the Department of 

Commerce extends the time for 

initiation pursuant to sections 

702(c)(1)(B) or 732(c)(1)(B) of the Act 

(19 U.S.C. 1671a(c)(1)(B) or 

1673a(c)(1)(B)), the Commission must 

reach a preliminary determination in 

antidumping and countervailing duty 

investigations in 45 days, or in this case 

by February 16, 2010 (as a result of an 

intervening weekend and Federal 

holiday). The Commission’s views are 

due at Commerce within five business 

days thereafter, or by February 23, 2010. 

For further information concerning 

the conduct of these investigations and 

rules of general application, consult the 

Commission’s Rules of Practice and 

Procedure, part 201, subparts A through 

E (19 CFR part 201), and part 207, 

subparts A and B (19 CFR part 207). 

DATES: Effective Date: December 31, 

2009. 

FOR FURTHER INFORMATION CONTACT: 

Angela M. W. Newell (202–708–5409), 

Office of Investigations, U.S. 

International Trade Commission, 500 E 

Street, SW., Washington, DC 20436. 

Hearing-impaired persons can obtain 

information on this matter by contacting 

the Commission’s TDD terminal on 202– 

205–1810. Persons with mobility 

impairments who will need special 

assistance in gaining access to the 

Commission should contact the Office 

of the Secretary at 202–205–2000. 

General information concerning the 

Commission may also be obtained by 

accessing its Internet server (http:// 

www.usitc.gov). The public record for 

these investigations may be viewed on 

the Commission’s electronic docket 

(EDIS) at http://edis.usitc.gov. 

SUPPLEMENTARY INFORMATION: 

Background.—These investigations 

are being instituted in response to a 

petition filed effective December 31, 

2009, by VAM Drilling USA Inc., 

Houston, TX; Rotary Drilling Tools, 

Beasley, TX; Texas Steel Conversions, 

Inc., Houston, TX; TMK IPSCO, 

Downers Grove, IL; and the United 

Steel, Paper and Forestry, Rubber, 

Manufacturing, Energy, Allied 

Industrial and Service Workers 

International Union, AFL–CIO–CLC, 

Pittsburgh, PA. 

Participation in the investigations and 

public service list.—Persons (other than 

petitioners) wishing to participate in the 

investigations as parties must file an 

entry of appearance with the Secretary 

to the Commission, as provided in 

sections 201.11 and 207.10 of the 

Commission’s rules, not later than seven 

days after publication of this notice in 

the Federal Register. Industrial users 

and (if the merchandise under 

investigation is sold at the retail level) 

representative consumer organizations 

have the right to appear as parties in 

Commission antidumping and 

countervailing duty investigations. The 

Secretary will prepare a public service 

list containing the names and addresses 

of all persons, or their representatives, 

who are parties to these investigations 

upon the expiration of the period for 

filing entries of appearance. 

Limited disclosure of business 

proprietary information (BPI) under an 

administrative protective order (APO) 

and BPI service list.—Pursuant to 

section 207.7(a) of the Commission’s 

rules, the Secretary will make BPI 

gathered in these investigations 

available to authorized applicants 

representing interested parties (as 

defined in 19 U.S.C. 1677(9)) who are 

parties to the investigations under the 

APO issued in the investigations, 

provided that the application is made 

not later than seven days after the 

publication of this notice in the Federal 

Register. A separate service list will be 

maintained by the Secretary for those 

parties authorized to receive BPI under 

the APO. 

Conference.—The Commission’s 

Director of Investigations has scheduled 

a conference in connection with these 

investigations for 9:30 a.m. on January 

21, 2010, at the U.S. International Trade 

Commission Building, 500 E Street, 

SW., Washington, DC. Parties wishing to 

participate in the conference should 

contact Angela M. W. Newell (202–708– 

5409) not later than January 15, 2010, to 

arrange for their appearance. Parties in 

support of the imposition of 

antidumping and countervailing duties 

in these investigations and parties in 

opposition to the imposition of such 

duties will each be collectively 

allocated one hour within which to 

make an oral presentation at the 

conference. A nonparty who has 

testimony that may aid the 

Commission’s deliberations may request 

permission to present a short statement 

at the conference. 

Written submissions.—As provided in 

sections 201.8 and 207.15 of the 

Commission’s rules, any person may 

submit to the Commission on or before 

January 26, 2010, a written brief 

containing information and arguments 

pertinent to the subject matter of the 

investigations. Parties may file written 

testimony in connection with their 

presentation at the conference no later 

than three days before the conference. If 

briefs or written testimony contain BPI, 

they must conform with the 

requirements of sections 201.6, 207.3, 

and 207.7 of the Commission’s rules. 

The Commission’s rules do not 

authorize filing of submissions with the 

Secretary by facsimile or electronic 

means, except to the extent permitted by 

section 201.8 of the Commission’s rules, 

as amended, 67 FR 68036 (November 8, 

2002). Even where electronic filing of a 

document is permitted, certain 

documents must also be filed in paper 

form, as specified in II (C) of the 

Commission’s Handbook on Electronic 

Filing Procedures, 67 FR 68168, 68173 

(November 8, 2002). 

In accordance with sections 201.16(c) 

and 207.3 of the rules, each document 

filed by a party to the investigations 

must be served on all other parties to 

the investigations (as identified by 

either the public or BPI service list), and 

a certificate of service must be timely 

filed. The Secretary will not accept a 

document for filing without a certificate 

of service. 

Authority: These investigations are 

being conducted under authority of title 

VII of the Tariff Act of 1930; this notice 

is published pursuant to section 207.12 

of the Commission’s rules. 

By order of the Commission. 

Issued: December 31, 2009. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. E9–31412 Filed 1–5–10; 8:45 am] 

BILLING CODE 7020–02–P 
Federal Register / Vol. 75, No. 17 / Wednesday, January 27, 2010 / Notices 4345 

1Petitioners filed the Petition at the International 

Trade Commission (ITC) after 12:00 noon on 

December 30, 2009, therefore, pursuant to 19 CFR 

207.10(a), the ITC deemed the Petition to have been 

filed on the next business day, December 31, 2009. 

Section 702(b)(2) of the Tariff Act of 1930, as 

amended (the Act) requires simultaneous filings of 

countervailing duty petitions with the Department 

of Commerce and the ITC, therefore, we deem the 

Petition to have been filed with Commerce on 

December 31, 2009. This file date will change the 

initiation date from January 19, 2009, to January 20, 

2009. See Memorandum to Ronald K. Lorentzen, 

entitled ‘‘Decision Memorandum Concerning 

Petitions Filing Date,’’ dated concurrently with this 

checklist. 

and 3 copies) shall be addressed to the 

Board’s Executive Secretary at the 

address below. The closing period for 

their receipt is March 29, 2010. Rebuttal 

comments in response to material 

submitted during the foregoing period 

may be submitted during the subsequent 

15-day period to April 12, 2010. 

A copy of the application will be 

available for public inspection at the 

Office of the Executive Secretary, 

Foreign-Trade Zones Board, Room 2111, 

U.S. Department of Commerce, 1401 

Constitution Avenue, NW., Washington, 

DC 20230–0002, and in the ‘‘Reading 

Room’’ section of the Board’s Web site, 

which is accessible via http:// 

www.trade.gov/ftz. 

For further information, contact 

Elizabeth Whiteman at 

Elizabeth.Whiteman@trade.gov or (202) 

482–0473. 

Dated: January 15, 2010. 

Andrew McGilvray, 

Executive Secretary. 

[FR Doc. 2010–1632 Filed 1–26–10; 8:45 am] 

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE 

International Trade Administration 

[C–570–966] 

Drill Pipe from the People’s Republic 

of China: Initiation of Countervailing 

Duty Investigation 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

DATES: Effective Date: January 27, 2010. 

FOR FURTHER INFORMATION CONTACT: John 

Conniff and Eric B. Greynolds, AD/CVD 

Operations, Office 3, Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Room 4014, Washington, 

DC 20230; telephone: (202) 482–1009, 

(202) 482–6071, respectively. 

SUPPLEMENTARY INFORMATION: 

The Petition 

On December 31, 2009,1 the 

Department of Commerce (the 

Department) received a petition 

concerning imports of drill pipe from 

the People’s Republic of China (PRC) 

filed in proper form by VAM Drilling 

USA, Inc., Texas Steel Conversions, 

Inc., Rotary Drilling Tools, TMK IPSCO, 

and United Steel, Paper and Forestry, 

Rubber, Manufacturing, Energy, Allied 

Industrial and Service Workers 

International Union, AFL–CIO-CLC 

(collectively, the petitioners). See 

Petitions for the Imposition of 

Antidumping and Countervailing 

Duties: Drill Pipe from the People’s 

Republic of China, dated December 31, 

2009 (Petition). On January 6, 2010, the 

Department issued additional requests 

for information and clarification of 

certain areas of the Petition. Petitioners 

filed timely additional information 

pertaining to general issues on January 

11, 2010. See Petition for the Imposition 

of Antidumping Duties on Drill Pipe 

from the PRC: Response to Department’s 

Letter of January 6, 2010 (Supplement to 

the AD/CVD Petitions). On January 8, 

2010, the Department issued a request 

for additional information pertaining to 

countervailing duty (CVD) issues. 

Petitioners filed timely information 

regarding countervailing issues on 

January 13, 2010. See Petitions for the 

Imposition of Antidumping and 

Countervailing Duties: Drill Pipe from 

the PRC: Response to Pre–initiation 

CVD questions (Supplement to the CVD 

Petition). On January 14, 2010, the 

Department issued an additional request 

for information and clarification 

regarding general issues and dumping. 

Petitioners filed a response containing 

additional information related to both 

general issues and dumping on January 

15, 2010. See Petitions for the 

Imposition of Antidumping and 

Countervailing Duties: Drill Pipe from 

the PRC: Response to the Department’s 

Letter of January 14, 2010 (Second 

Supplement to the AD/CVD Petitions). 

Petitioners also filed additional 

information pertaining to general issues 

on January 15, 2010. See Petitions for 

the Imposition of Antidumping and 

Countervailing Duties: Drill Pipe from 

the PRC: Response to Department’s 

Letter of January 14, 2010: Additional 

Affidavit (Third Supplement to the AD/ 

CVD Petitions). On January 19, 2010, 

petitioners filed further clarifications 

related to general issues. See Petitions 

for the Imposition of Antidumping and 

Countervailing Duties: Drill Pipe from 

the PRC: Response to Department’s 

Letter of January 14, 2010: Additional 

Affidavit: (Fourth Supplement to the 

AD/CVD Petitions). In addition, on both 

January 15, and January 19, 2010, we 

received comments filed by Lehnardt & 

Lehnardt, LLC, on behalf of Downhole 

Pipe & Equipment, LP (Downhole Pipe) 

and Command Energy Services 

International (Command Energy), U.S. 

importers of drill pipe from China. 

Downhole Pipe and Command Energy 

are interested parties per section 

771(9)(A) of the Act. 

In accordance with section 702(b)(1) 

of the Act, petitioners allege that 

manufacturers, producers, or exporters 

of drill pipe in the PRC receive 

countervailable subsidies within the 

meaning of section 701 of the Act, and 

that such imports are materially 

injuring, or threatening material injury 

to, an industry in the United States. 

The Department finds that petitioners 

filed the Petition on behalf of the 

domestic industry because they are 

interested parties as defined in section 

771(9)(C) and (D) of the Act, and 

petitioners have demonstrated sufficient 

industry support with respect to the 

CVD investigation (see ‘‘Determination 

of Industry Support for the Petition’’ 

section below). 

Period of Investigation 

The proposed period of investigation 

(POI) is January 1, 2009, through 

December 31, 2009. 

Scope of Investigation 

The products covered by this 

investigation are drill pipe from the 

PRC. For a full description of the scope 

of the investigation, see the ‘‘Scope of 

the Investigation’’ in Appendix I of this 

notice. 

Comments on Scope of Investigation 

During our review of the Petition, we 

discussed the scope with petitioners to 

ensure that it is an accurate reflection of 

the products for which the domestic 

industry is seeking relief. Moreover, as 

discussed in the preamble to the 

Department’s regulations (Antidumping 

Duties; Countervailing Duties; Final 

Rule, 62 FR 27296, 27323 (May 19, 

1997)), we are setting aside a period for 

interested parties to raise issues 

regarding product coverage. The 

Department encourages all interested 

parties to submit such comments by 

Wednesday, February 10, 2010, twenty 

calendar days from the signature date of 

this notice. Comments should be 

addressed to Import Administration’s 

APO/Dockets Unit, Room 1870, U.S. 

Department of Commerce, 14th Street 

and Constitution Avenue, NW, 

Washington, DC 20230. The period for 

scope consultations is intended to 

provide the Department with ample 


srobinson on DSKHWCL6B1PROD with NOTICES
4346 Federal Register / Vol. 75, No. 17 / Wednesday, January 27, 2010 / Notices 

opportunity to consider all comments 

and to consult with parties prior to the 

issuance of the preliminary 

determination. 

Consultations 

Pursuant to section 702(b)(4)(A)(ii) of 

the Act, on January 8, 2010, the 

Department invited representatives of 

the Government of the PRC (GOC) for 

consultations with respect to the CVD 

petition. On January 15, 2010, the 

Department held consultations with 

representatives of the GOC in Beijing. 

Determination of Industry Support for 

the Petition 

Section 702(b)(1) of the Act requires 

that a petition be filed on behalf of the 

domestic industry. Section 702(c)(4)(A) 

of the Act provides that a petition meets 

this requirement if the domestic 

producers or workers who support the 

petition account for: (i) at least 25 

percent of the total production of the 

domestic like product; and (ii) more 

than 50 percent of the production of the 

domestic like product produced by that 

portion of the industry expressing 

support for, or opposition to, the 

petition. Moreover, section 702(c)(4)(D) 

of the Act provides that, if the petition 

does not establish support of domestic 

producers or workers accounting for 

more than 50 percent of the total 

production of the domestic like product, 

the Department shall: (i) poll the 

industry or rely on other information in 

order to determine if there is support for 

the petition, as required by 

subparagraph (A), or (ii) determine 

industry support using a statistically 

valid sampling method to poll the 

industry. 

Section 771(4)(A) of the Act defines 

the ‘‘industry’’ as the producers as a 

whole of a domestic like product. Thus, 

to determine whether a petition has the 

requisite industry support, the statute 

directs the Department to look to 

producers and workers who produce the 

domestic like product. The ITC, which 

is responsible for determining whether 

‘‘the domestic industry’’ has been 

injured, must also determine what 

constitutes a domestic like product in 

order to define the industry. While both 

the Department and the ITC must apply 

the same statutory definition regarding 

the domestic like product (section 

771(10) of the Act), they do so for 

different purposes and pursuant to a 

separate and distinct authority. In 

addition, the Department’s 

determination is subject to limitations of 

time and information. Although this 

may result in different definitions of the 

like product, such differences do not 

render the decision of either agency 

contrary to law. See USEC, Inc. v. 

United States, 132 F. Supp. 2d 1, 8 (Ct. 

Int’l Trade 2001), citing Algoma Steel 

Corp., Ltd. v. United States, 688 F. 

Supp. 639, 644 (Ct. Int’l Trade 1988), 

aff’d 865 F.2d 240 (Fed. Cir. 1989), cert. 

denied 492 U.S. 919 (1989). 

Section 771(10) of the Act defines the 

domestic like product as ‘‘a product 

which is like, or in the absence of like, 

most similar in characteristics and uses 

with, the article subject to an 

investigation under this title.’’ Thus, the 

reference point from which the 

domestic like product analysis begins is 

‘‘the article subject to an investigation’’ 

(i.e., the class or kind of merchandise to 

be investigated, which normally will be 

the scope as defined in the petition). 

With regard to the domestic like 

product, petitioners do not offer a 

definition of domestic like product 

distinct from the scope of the 

investigation. Based on our analysis of 

the information submitted on the 

record, we have determined that drill 

pipe constitutes a single domestic like 

product and we have analyzed industry 

support in terms of that domestic like 

product. For a discussion of the 

domestic like product analysis in this 

case, see ‘‘Countervailing Duty 

Investigation Initiation Checklist: Drill 

Pipe from the People’s Republic of 

China’’ (Initiation Checklist), at 

Attachment II, Analysis of Industry 

Support for the Petitions Covering Drill 

Pipe from the People’s Republic of 

China, on file in the Central Records 

Unit (CRU), Room 1117 of the main 

Department of Commerce building. 

In determining whether petitioners 

have standing under section 

702(C)(4)(A) of the Act, we considered 

the industry support data contained in 

the Petition with reference to the 

domestic like product. To establish 

industry support, petitioners provided 

their production of the domestic like 

product in 2008, and compared this to 

the estimated total production of the 

domestic like product for the entire 

domestic industry. See Volume I of the 

Petition, at 2–3; see also Supplement to 

the AD/CVD Petitions at 6–13 and 

Exhibit 3; Second Supplement to the 

AD/CVD Petitions at 1–4 and Exhibits 

1–3; Third Supplement to the AD/CVD 

Petitions at Exhibit 1, and Fourth 

Supplement to the AD/CVD Petitions at 

Exhibit I. To estimate 2008 production 

of the domestic like product, petitioners 

used their own data and industry 

specific knowledge. See Second 

Supplement to the AD/CVD Petitions at 

1–4 and Exhibits 1–3; see also Initiation 

Checklist at Attachment II. We have 

relied upon data petitioners provided 

for purposes of measuring industry 

support. For further discussion, see 

Initiation Checklist at Attachment II. 

Based on information provided in the 

Petition, supplemental submissions, and 

other information readily available to 

the Department, we determine that the 

domestic producers and workers have 

met the statutory criteria for industry 

support under section 702(c)(4)(A)(i) of 

the Act because the domestic producers 

(or workers) who support the Petition 

account for at least 25 percent of the 

total production of the domestic like 

product. Because the Petition and 

supplemental submissions did not 

establish support from domestic 

producers (or workers) accounting for 

more than 50 percent of the total 

production of the domestic like product, 

the Department was required to take 

further action in order to evaluate 

industry support. See section 

702(c)(4)(D) of the Act. In this case, the 

Department was able to rely on other 

information, in accordance with section 

702(c)(4)(D)(i) of the Act, to determine 

industry support. See Initiation 

Checklist at Attachment II. Based on 

information provided in the Petition 

and other submissions, the domestic 

producers and workers have met the 

statutory criteria for industry support 

under section 702(c)(4)(A)(ii) of the Act 

because the domestic producers (or 

workers) who support the Petition 

account for more than 50 percent of the 

production of the domestic like product 

produced by that portion of the industry 

expressing support for, or opposition to, 

the Petition. Accordingly, the 

Department determines that the Petition 

was filed on behalf of the domestic 

industry within the meaning of section 

702(b)(1) of the Act. See Initiation 

Checklist at Attachment II. 

The Department finds that petitioners 

filed the Petition on behalf of the 

domestic industry because they are an 

interested party as defined in sections 

771(9)(C) and 771(9)(D) of the Act and 

has demonstrated sufficient industry 

support with respect to the CVD 

investigation that it is requesting the 

Department initiate. See Initiation 

Checklist at Attachment II. 

Injury Test 

Because the PRC is a ‘‘Subsidies 

Agreement Country’’ within the meaning 

of section 701(b) of the Act, section 

701(a)(2) of the Act applies to this 

investigation. Accordingly, the ITC must 

determine whether imports of subject 

merchandise from the PRC materially 

injure, or threaten material injury to, a 

U.S. industry. 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 17 / Wednesday, January 27, 2010 / Notices 4347 

Allegations and Evidence of Material 

Injury and Causation 

Petitioners allege that imports of drill 

pipe from the PRC are benefitting from 

countervailable subsidies and that such 

imports are causing, or threaten to 

cause, material injury to the domestic 

industry producing drill pipe. In 

addition, petitioners allege that 

subsidized imports exceed the 

negligibility threshold provided for 

under section 771(24)(A) of the Act. 

Petitioners contend that the industry’s 

injured condition is illustrated by 

reduced market share, reduced 

production, reduced shipments, 

reduced capacity and capacity 

utilization, underselling and price 

depression or suppression, reduced 

employment, hours worked, and wages 

paid, decline in financial performance, 

lost sales and revenue, and increase in 

import penetration. We have assessed 

the allegations and supporting evidence 

regarding material injury, threat of 

material injury, and causation, and we 

have determined that these allegations 

are properly supported by adequate 

evidence and meet the statutory 

requirements for initiation. See 

Initiation Checklist at Attachment III 

(Analysis of Injury Allegations and 

Evidence of Material Injury and 

Causation). 

Initiation of Countervailing Duty 

Investigation 

Section 702(b) of the Act requires the 

Department to initiate a CVD proceeding 

whenever an interested party files a 

petition on behalf of an industry that: 

(1) alleges the elements necessary for an 

imposition of a duty under section 

701(a) of the Act; and (2) is 

accompanied by information reasonably 

available to the petitioner(s) supporting 

the allegations. 

The Department has examined the 

CVD Petition on drill pipe from the PRC 

and finds that it complies with the 

requirements of section 702(b) of the 

Act. Therefore, in accordance with 

section 702(b) of the Act, we are 

initiating a CVD investigation to 

determine whether manufacturers, 

producers, or exporters of drill pipe in 

the PRC receive countervailable 

subsidies. For a discussion of evidence 

supporting our initiation determination, 

see Initiation Checklist. 

We are including in our investigation 

the following programs alleged in the 

Petition to have provided 

countervailable subsidies to producers 

and exporters of the subject 

merchandise in the PRC: 

A. Preferential Loans and Interest Rates 

1. Policy Loans To The Drill Pipe (DP) 

Industry 

2. Export Loans from Policy Banks 

and State–Owned Commercial 

Banks (SOCBs) 

3. Treasury Bond Loans 

4. Preferential Loans for State–Owned 

Enterprises (SOEs) 

5. Preferential Loans for Key Projects 

and Technologies 

6. Preferential Lending to DP 

Producers and Exporters Classified 

as ‘‘Honorable Enterprises’’ 

B. Debt-To-Equity Swaps and Loan 

Forgiveness 

1. Debt–to-Equity Swaps 

2. Loan and Interest Forgiveness for 

SOEs 

C. Income Tax and Other Direct Tax 

Benefit Programs 

1. Income Tax Credits for 

Domestically–Owned Companies 

Purchasing Domestically Produced 

Equipment 

2. Reduction In Or Exemption From 

Fixed Assets Investment 

Orientation Regulatory Tax 

D. Subsidies for Foreign Invested 

Enterprises (FIES) 

1. ‘‘Two Free, Three Half’’ Program 

2. Local Income Tax Exemption and 

Reduction Programs for 

‘‘Productive’’ FIEs 

3. Preferential Tax Programs for FIEs 

Recognized as High or New 

Technology Enterprises 

4. Income Tax Reductions For Export– 

Oriented FIEs 

B. Indirect Tax and Tariff Exemption 

Programs 

1. Indirect Tax And Tariff And Vat 

Exemptions For FIEs And Certain 

Domestic Enterprises Using 

Imported Equipment In Encourage 

Industries 

2. Deed Tax Exemption for SOEs 

Undergoing Mergers or 

Restructuring 

3. Export Subsidies Characterized as 

‘‘VAT Rebates’’ 

F. Government Provision of Goods and 

Services for Less Than Adequate 

Remuneration (LTAR) 

1. Provision of Land to SOEs for 

LTAR 

2. Provision of Land Use Rights 

Within Designated Geographical 

Areas for LTAR 

3. Provision of Steel Rounds for LTAR 

4. Provision of Hot–Rolled Steel 

(HRS) for LTAR 

5. Provision of Green Tube for LTAR 

6. Provision of Electricity for LTAR 

7. Provision of Electricity and Water 

at LTAR to DP Producers Located in 

Jiangsu Province 

8. Provision of Coking Coal for LTAR 

G. Grant Programs 

1. State Key Technology Project Fund 

2. Export Assistance Grants 

3. Programs to Rebate Antidumping 

Legal Fees 

4. GOC and Sub–Central Government 

Grants, Loans, and Other Incentives 

for Development of Famous Brands 

and China World Top Brands 

5. Grants and Tax Benefits to Loss– 

Making SOEs at National and Local 

Level 

H. Subsidies To DP Producers Located 

in Economic Development Zones 

1. Economic and Technological 

Development Zones (ETDZ) Located 

in Tianjin Binhai New Area (TBNA) 

2. ETDZs Located in Tianjin 

Economic and Technological 

Development Area (TEDA) 

3. ETDZs Located in Yangtze 

Riverside Economic Development 

Zone (YREDZ) 

4. High–Tech Industrial Development 

Zones (HTDZ) 

For further information explaining 

why the Department is investigating 

these programs, see the Initiation 

Checklist. 

Respondent Selection 

For this investigation, the Department 

expects to select respondents based on 

U.S. Customs and Border Protection 

(CBP) data for U.S. imports during the 

POI. We intend to release the CBP data 

under Administrative Protective Order 

(APO) to all parties with access to 

information protected by APO within 

five days of the announcement of the 

initiation of this investigation. 

Interested parties may submit comments 

regarding the CBP data and respondent 

selection within seven calendar days of 

publication of this notice. We intend to 

make our decision regarding respondent 

selection within 20 days of publication 

of this Federal Register notice. 

Interested parties must submit 

applications for disclosure under APO 

in accordance with 19 CFR 351.305(b). 

Instructions for filing such applications 

may be found on the Department’s 

website at http://ia.ita.doc.gov/apo. 

Distribution of Copies of the Petition 

In accordance with section 

702(b)(3)(A) of the Act and 19 CFR 

351.202(f), copies of the public versions 

of the Petition have been provided to 

the representatives of the GOC. Because 

of the large number of producers/ 

exporters identified in the Petition, the 

Department considers the service of the 

public version of the Petition to the 


srobinson on DSKHWCL6B1PROD with NOTICES
4348 Federal Register / Vol. 75, No. 17 / Wednesday, January 27, 2010 / Notices 

2Prior to February 2, 2007, these imports entered 

under different tariff classifications, including 

7304.21.3000, 7304.21.6030, 7304.21.6045, and 

7304.21.6060. 

foreign producers/exporters satisfied by 

the delivery of the public version to the 

Government of the PRC, consistent with 

19 CFR 351.203(c)(2). 

ITC Notification 

We have notified the ITC of our 

initiation, as required by section 702(d) 

of the Act. 

Preliminary Determination by the ITC 

The ITC will preliminarily determine, 

within 25 days after the date on which 

it receives notice of the initiation, 

whether there is a reasonable indication 

that imports of subsidized drill pipe 

from the PRC are causing material 

injury, or threatening to cause material 

injury, to a U.S. industry. See section 

703(a)(2) of the Act. A negative ITC 

determination will result in the 

investigation being terminated; 

otherwise, the investigation will 

proceed according to statutory and 

regulatory time limits. 

This notice is issued and published 

pursuant to section 777(i) of the Act. 

Dated: January 20, 2010. 

Ronald K. Lorentzen, 

Deputy Assistant Secretary for Import 

Administration. 

Appendix I 

Scope of the Investigation 

The products covered by this investigation 

are steel drill pipe, and steel drill collars, 

whether or not conforming to American 

Petroleum Institute (API) or non–API 

specifications, whether finished or 

unfinished (including green tubes suitable for 

drill pipe), without regard to the specific 

chemistry of the steel (i.e., carbon, stainless 

steel, or other alloy steel), and without regard 

to length or outer diameter. The scope does 

not include tool joints not attached to the 

drill pipe, nor does it include unfinished 

tubes for casing or tubing covered by any 

other antidumping or countervailing duty 

order. 

The subject products are currently 

classified in the following Harmonized Tariff 

Schedule of the United States (HTSUS) 

categories: 7304.22.0030, 7304.22.0045, 

7304.22.0060, 7304.23.3000, 7304.23.6030, 

7304.23.6045, 7304.23.6060, 8431.43.8040 

and may also enter under 8431.43.8060, 

8431.43.4000, 7304.39.0028, 7304.39.0032, 

7304.39.0036, 7304.39.0040, 7304.39.0044, 

7304.39.0048, 7304.39.0052, 7304.39.0056, 

7304.49.0015, 7304.49.0060, 7304.59.8020, 

7304.59.8025, 7304.59.8030, 7304.59.8035, 

7304.59.8040, 7304.59.8045, 7304.59.8050, 

and 7304.59.8055.2

While HTSUS subheadings are provided 

for convenience and Customs purposes, the 

written description of the scope of these 

investigations is dispositive. 

[FR Doc. 2010–1629 Filed 1–26–10; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

RIN 0648–XU04 

Pacific Fishery Management Council; 

Public Meeting 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Notice of public meeting. 

SUMMARY: The Pacific Fishery 

Management Council (Pacific Council) 

will convene a joint meeting of the 

Ecosystem Plan Development Team 

(EPDT) and Ecosystem Advisory 

Subpanel (EAS) which is open to the 

public. 

DATES: The meeting will be held on 

Wednesday, February 10, 2010 and 

Thursday, February 11, 2010 from 8:30 

a.m. to 5 p.m. or until business for each 

day is completed. 

ADDRESSES: The EPDT/EAS meeting 

will be held at the Sheraton Portland 

Airport Hotel, Mt. Hood C Room, 8235 

NE Airport Way, Portland, OR 97220; 

telephone: (503) 281–2500. 

Council address: Pacific Fishery 

Management Council, 7700 NE 

Ambassador Place, Suite 101, Portland, 

OR 97220–1384. 

FOR FURTHER INFORMATION CONTACT: 

Mike Burner, Staff Officer; telephone: 

(503) 820–2280. 

SUPPLEMENTARY INFORMATION: The 

purpose of this initial meeting of these 

advisory bodies is to review Pacific 

Council guidance and make 

recommendations on implementing an 

ecosystem-based management plan that 

is envisioned to complement, but not 

replace the Pacific Council’s four 

existing Fishery Management Plans 

(FMP). The EDPT and the EAS are 

scheduled to review the Pacific Council 

record and existing FMPs, inventory 

ecosystem-related management tools for 

their applicability to the Council’s 

ecosystem based FMP (E-FMP) process, 

and review existing ecosystem-based 

management efforts of other regional 

fishery management councils. The 

EPDT/EAS will also begin developing 

recommendations on the E-FMP’s 

purpose and need, its goals and 

objectives, its geographic and regulatory 

scope, and the species that may be 

included in the E-FMP. The findings 

and recommendations of the EPDT and 

the EAS will be summarized and 

reported to the Pacific Council, 

tentatively at the April 2010 Pacific 

Council meeting in Portland, OR. 

Although non-emergency issues not 

contained in the meeting agenda may 

come before the EPDT and the EAS for 

discussion, those issues may not be the 

subject of formal action during this 

meeting. EPDT and EAS action will be 

restricted to those issues specifically 

listed in this notice and any issues 

arising after publication of this notice 

that require emergency action under 

Section 305(c) of the Magnuson-Stevens 

Fishery Conservation and Management 

Act, provided the public has been 

notified of the intent to take final action 

to address the emergency. 

Special Accommodations 

This meeting is physically accessible 

to people with disabilities. Requests for 

sign language interpretation or other 

auxiliary aids should be directed to Ms. 

Carolyn Porter at (503) 820–2280 at least 

5 days prior to the meeting date. 

Dated: January 21, 2010. 

William D. Chappell, 

Acting Director, Office of Sustainable 

Fisheries, National Marine Fisheries Service. 

[FR Doc. 2010–1539 Filed 1–26–10; 8:45 am] 

BILLING CODE 3510–22–S 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

RIN 0648–XU05 

Mid-Atlantic Fishery Management 

Council; Public Hearings 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Notice of public hearings. 

SUMMARY: The Mid-Atlantic Fishery 

Management Council (MAFMC) will 

hold public hearings in February 2010 

to allow for input on Amendment 11 to 

the Atlantic Mackerel, Squid, and 

Butterfish (MSB) Fishery Management 

Plan (FMP). See SUPPLEMENTARY

INFORMATION below for times and 

locations. 

DATES: Send written comments will be 

accepted until March 1, 2010. 

ADDRESSES: Send comments to: Daniel 

T. Furlong, Executive Director, MidAtlantic Fishery Management Council, 

Room 2115, Federal Building, 300 South 

New Street, Dover, DE 19904. 


srobinson on DSKHWCL6B1PROD with NOTICES
Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Notices 4531 

1The Petitioners filed the Petition at the 

International Trade Commission (‘‘ITC’’) after 12:00 

noon on December 30, 2009, therefore, pursuant to 

19 CFR 207.10(a), the ITC deemed the Petition to 

have been filed on the next business day, December 

31, 2009. Section 732(b)(2) of the Tariff Act of 1930, 

as amended (the ‘‘Act’’) requires simultaneous 

filings of antidumping duty petitions with the 

Department and the ITC, therefore, we deem the 

Petition to have been filed with the Department on 

December 31, 2009. This file date will change the 

initiation date from January 19, 2009, to January 20, 

2009. See Memorandum to Ronald K. Lorentzen, 

entitled ‘‘Decision Memorandum Concerning 

Petitions Filing Date,’’ dated concurrently with this 

checklist. 

covered in this review, a prior review, 

or the original less-than-fair value 

investigation, but the manufacturer is, 

the cash-deposit rate will be the rate 

established for the most recent period 

for the manufacturer of the 

merchandise; and (3) the cash-deposit 

rate for all other manufacturers or 

exporters will continue to be the allothers rate of 15.67 percent, which is 

the all-others rate established in the less 

than fair value investigation. See 

Circular Welded Carbon Steel Pipes and 

Tubes from Thailand: Final 

Determination of Sales at Less Than 

Fair Value, 51 FR 3384 (January 27, 

1986). These cash deposit requirements 

shall remain in effect until further 

notice. 

Notification to Importers 

This notice also serves as a final 

reminder to importers of their 

responsibility under 19 CFR 

351.402(f)(2) to file a certificate 

regarding the reimbursement of 

antidumping duties prior to liquidation 

of the relevant entries during this 

review period. Failure to comply with 

this requirement could result in the 

Secretary’s presumption that 

reimbursement of antidumping duties 

occurred and the subsequent assessment 

of doubled antidumping duties. 

Notification Regarding Administrative 

Protective Orders 

This notice also serves as a reminder 

to parties subject to administrative 

protective orders (APO) of their 

responsibility concerning the return or 

destruction of proprietary information 

disclosed under APO in accordance 

with 19 CFR 351.305, which continues 

to govern business proprietary 

information in this segment of the 

proceeding. Timely written notification 

of the return or destruction of APO 

materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and terms of an APO is a violation that 

is subject to sanction. 

The final results of this new shipper 

review are issued and published in 

accordance with sections 751(a)(2)(B) 

and 777(i) of the Act and 19 CFR 

351.214. 

Dated: January 21, 2010. 

Ronald K. Lorentzen, 

Deputy Assistant Secretary for Import 

Administration. 

Appendix 

Comments in the Issues and Decision 

Memorandum 

Comment 1: Whether the Department Should 

Use Invoice Date as the Date of Sale for the 

U.S. Sale in the Final Results. 

Comment 2: Whether the Department Should 

Continue to Treat Home Market Pre-Sale 

Freight and Warehousing Expenses as 

Movement Expenses. 

Comment 3: Whether Pacific Pipe Has 

Established that Transportation Rates Paid 

to its Affiliated Carrier Are at Arm’s 

Length. 

[FR Doc. 2010–1783 Filed 1–27–10; 8:45 am] 

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–570–965] 

Drill Pipe from the People’s Republic 

of China: Initiation of Antidumping 

Duty Investigations 

EFFECTIVE DATE: January 28, 2010. 

FOR FURTHER INFORMATION CONTACT: Toni 

Dach or Scot T. Fullerton, AD/CVD 

Operations, Office 9, (202) 482–1655 or 

(202) 482–1386, respectively; Import 

Administration, International Trade 

Administration, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC 20230. 

SUPPLEMENTARY INFORMATION: On 

December 31, 20091, the Department of 

Commerce (the ‘‘Department’’) received 

a petition concerning imports of drill 

pipe from the People’s Republic of 

China (‘‘PRC’’) filed in proper form by 

VAM Drilling USA, Inc., Texas Steel 

Conversion, Inc., Rotary Drilling Tools, 

TMK IPSCO, and the United Steel, 

Paper and Forestry, Rubber, 

Manufacturing, Energy, Allied 

Industrial and Service Workers 

International Union, AFL–CIO-CLC 

(‘‘Petitioners’’). See ‘‘Petitions for the 

Imposition of Antidumping and 

Countervailing Duties: Drill Pipe from 

the People’s Republic of China,’’ dated 

December 31, 2009 (‘‘Petition’’). On 

January 6, 2010, the Department issued 

additional requests for information and 

clarification of certain areas of the 

Petition. Petitioners timely filed 

additional information on January 11, 

2010. See ‘‘Drill Pipe from the People’s 

Republic of China,’’ dated January 11, 

2010 (‘‘Supplement to the PRC AD 

Petition’’). In addition, Petitioners 

further timely filed additional 

information pertaining to general issues 

in the Petition on January 11, 2010. See 

‘‘Petition for the Imposition of 

Antidumping Duties on Drill Pipe from 

the PRC: Response to Department’s 

Letter of January 6, 2010,’’ dated January 

11, 2010 (‘‘Supplement to the AD/CVD 

Petitions’’). On January 14, 2010, the 

Department issued a second request for 

information and clarification of certain 

areas of the Petition. Petitioners timely 

filed additional information on January 

15, 2010. See ‘‘Petitions for the 

Imposition of Antidumping and 

Countervailing Duties: Response to the 

Department’s Letter of January 14, 

2010,’’ dated January 15, 2010 (‘‘Second 

Supplement to the AD/CVD Petitions’’); 

see also ‘‘Petitions for the Imposition of 

Antidumping and Countervailing 

Duties: Drill Pipe from the PRC: 

Response to Department’s Letter of 

January 14, 2010: Additional Affidavit, 

dated January 15, 2010 (‘‘Third 

Supplement to the AD/CVD Petitions’’). 

On January 19, 2010, Petitioners filed 

further clarifications related to general 

issues. See ‘‘Petitions for the Imposition 

of Antidumping and Countervailing 

Duties: Drill Pipe from the PRC: 

Response to the Department’s letter of 

January 14, 2010: Additional Affidavit,’’ 

dated January 19, 2010 (‘‘Fourth 

Supplement to the AD/CVD Petitions’’). 

In addition, on both January 15, and 

January 19, 2010, we received 

comments filed by Lehnardt & Lehnardt, 

LLC, on behalf of Downhole Pipe & 

Equipment, LP (‘‘Downhole Pipe’’) and 

Command Energy Services International 

(‘‘Command Energy’’), U.S. importers of 

drill pipe from China. Downhole Pipe 

and Command Energy are interested 

parties as defined by section 771(9)(A) 

of the Act. 

The period of investigation (‘‘POI’’) is 

April 1, 2009, through September 30, 

2009. See 19 CFR 351.204(b)(1). 

In accordance with section 732(b) of 

the Act, Petitioners allege that imports 

of drill pipe from the PRC are being, or 

are likely to be, sold in the United States 

at less than fair value, within the 

meaning of section 731 of the Act, and 

that such imports are materially 

injuring, or threatening material injury 

to, an industry in the United States. 

The Department finds that Petitioners 

filed the Petition on behalf of the 

domestic industry because Petitioners 

are an interested party, as defined in 

section 771(9)(C) and (D) of the Act, and 

have demonstrated sufficient industry 

support with respect to the antidumping 

duty investigation that Petitioners are 

requesting the Department to initiate 

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4532 Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Notices 

(see ‘‘Determination of Industry Support 

for the Petition’’ section below). 

Scope of the Investigation 

The product covered by this 

investigation is drill pipe from the PRC. 

For a full description of the scope of the 

investigation, please see ‘‘Scope of 

Investigation,’’ in Appendix I of this 

notice. 

Comments on Scope of the Investigation 

During our review of the Petition, we 

discussed the scope with Petitioners to 

ensure that it is an accurate reflection of 

the products for which the domestic 

industry is seeking relief. Moreover, as 

discussed in the preamble to the 

regulations (Antidumping Duties; 

Countervailing Duties; Final Rule, 62 FR 

27296, 27323 (May 19, 1997)), we are 

setting aside a period for interested 

parties to raise issues regarding product 

coverage. The Department encourages 

interested parties to submit such 

comments by Wednesday, February 10, 

2010, which is twenty calendar days 

from the signature date of this notice. 

Comments should be addressed to 

Import Administration’s APO/Dockets 

Unit, Room 1870, U.S. Department of 

Commerce, 14th Street and Constitution 

Avenue, NW, Washington, DC 20230. 

The period of scope consultations is 

intended to provide the Department 

with ample opportunity to consider all 

comments and to consult with parties 

prior to the issuance of the preliminary 

determination. 

Comments on Product Characteristics 

for Antidumping Duty Questionnaires 

We are requesting comments from 

interested parties regarding the 

appropriate physical characteristics of 

drill pipe to be reported in response to 

the Department’s antidumping 

questionnaires. This information will be 

used to identify the key physical 

characteristics of the merchandise under 

consideration in order to more 

accurately report the relevant factors 

and costs of production, as well as to 

develop appropriate product 

comparison criteria. 

Interested parties may provide 

information or comments that they 

believe are relevant to the development 

of an accurate listing of physical 

characteristics. Specifically, they may 

provide comments as to which 

characteristics are appropriate to use as: 

1) general product characteristics; and 

2) the product comparison criteria. We 

note that it is not always appropriate to 

use all product characteristics as 

product comparison criteria. We base 

product comparison criteria on 

meaningful commercial differences 

among products. In other words, while 

there may be some physical product 

characteristics utilized by 

manufacturers to describe drill pipe, it 

may be that only a select few product 

characteristics take into account 

commercially meaningful physical 

characteristics. In addition, interested 

parties may comment on the order in 

which the physical characteristics 

should be used in product matching. 

Generally, the Department attempts to 

list the most important physical 

characteristics first and the least 

important characteristics last. 

In order to consider the suggestions of 

interested parties in developing and 

issuing the antidumping duty 

questionnaires, we must receive 

comments at the above–referenced 

address by February 10, 2010. 

Additionally, rebuttal comments must 

be received by February 17, 2010. 

Determination of Industry Support for 

the Petition 

Section 732(b)(1) of the Act requires 

that a petition be filed on behalf of the 

domestic industry. Section 732(c)(4)(A) 

of the Act provides that a petition meets 

this requirement if the domestic 

producers or workers who support the 

petition account for: (i) at least 25 

percent of the total production of the 

domestic like product; and (ii) more 

than 50 percent of the production of the 

domestic like product produced by that 

portion of the industry expressing 

support for, or opposition to, the 

petition. Moreover, section 732(c)(4)(D) 

of the Act provides that, if the petition 

does not establish support of domestic 

producers or workers accounting for 

more than 50 percent of the total 

production of the domestic like product, 

the Department shall: (i) poll the 

industry or rely on other information in 

order to determine if there is support for 

the petition, as required by 

subparagraph (A); or (ii) determine 

industry support using a statistically 

valid sampling method to poll the 

industry. 

Section 771(4)(A) of the Act defines 

the ‘‘industry’’ as the producers as a 

whole of a domestic like product. Thus, 

to determine whether a petition has the 

requisite industry support, the statute 

directs the Department to look to 

producers and workers who produce the 

domestic like product. The IITC, which 

is responsible for determining whether 

‘‘the domestic industry’’ has been 

injured, must also determine what 

constitutes a domestic like product in 

order to define the industry. While both 

the Department and the ITC must apply 

the same statutory definition regarding 

the domestic like product (see section 

771(10) of the Act), they do so for 

different purposes and pursuant to a 

separate and distinct authority. In 

addition, the Department’s 

determination is subject to limitations of 

time and information. Although this 

may result in different definitions of the 

like product, such differences do not 

render the decision of either agency 

contrary to law. See USEC, Inc. v. 

United States, 132 F. Supp. 2d 1, 8 (CIT 

2001), citing Algoma Steel Corp., Ltd. v. 

United States, 688 F. Supp. 639, 644 

(CIT 1988), aff’d 865 F.2d 240 (Fed. Cir. 

1989), cert. denied 492 U.S. 919 (1989). 

Section 771(10) of the Act defines the 

domestic like product as ‘‘a product 

which is like, or in the absence of like, 

most similar in characteristics and uses 

with, the article subject to an 

investigation under this title.’’ Thus, the 

reference point from which the 

domestic like product analysis begins is 

‘‘the article subject to an investigation’’ 

(i.e., the class or kind of merchandise to 

be investigated, which normally will be 

the scope as defined in the petition). 

With regard to the domestic like 

product, Petitioners do not offer a 

definition of domestic like product 

distinct from the scope of the 

investigations. Based on our analysis of 

the information submitted on the 

record, we have determined that drill 

pipe constitutes a single domestic like 

product and we have analyzed industry 

support in terms of that domestic like 

product. For a discussion of the 

domestic like product analysis in this 

case, see Antidumping Duty 

Investigation Initiation Checklist: Drill 

Pipe from the People’s Republic of 

China (‘‘Checklist’’), at Attachment II, 

Industry Support, on file in the Central 

Records Unit, Room 1117 of the main 

Department of Commerce building. 

In determining whether Petitioners 

have standing under section 

732(c)(4)(A) of the Act, we considered 

the industry support data contained in 

the Petition with reference to the 

domestic like product as defined in the 

‘‘Scope of Investigations’’ section above. 

To establish industry support, 

Petitioners provided their production of 

the domestic like product in 2008, and 

compared this to the estimated total 

production of the domestic like product 

for the entire domestic industry. See 

Volume I of the Petition at 2–3; see also 

Supplement to the AD/CVD Petitions at 

6–13 and Exhibit 3; Second Supplement 

to the AD/CVD Petitions at 1–4 and 

Exhibits 1–3; Third Supplement to the 

AD/CVD Petitions at Exhibit 1; and 

Fourth Supplement to the AD/CVD 

Petitions at Exhibit 1. To estimate 2008 

production of the domestic like product, 

Petitioners used their own data and 

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Notices 4533 

industry specific knowledge. See 

Second Supplement to the AD/CVD 

Petitions at 1–4 and Exhibits 1–3; see 

also Checklist at Attachment II. We have 

relied upon data Petitioners provided 

for purposes of measuring industry 

support. For further discussion, see 

Checklist at Attachment II. 

Based on information provided in the 

Petition, supplemental submissions, and 

other information readily available to 

the Department, we determine that the 

domestic producers and workers have 

met the statutory criteria for industry 

support under section 732(c)(4)(A)(i) of 

the Act because the domestic producers 

(or workers) who support the Petition 

account for at least 25 percent of the 

total production of the domestic like 

product. Because the Petition and 

supplemental submissions did not 

establish support from domestic 

producers (or workers) accounting for 

more than 50 percent of the total 

production of the domestic like product, 

the Department was required to take 

further action in order to evaluate 

industry support. See section 

732(c)(4)(D) of the Act. In this case, the 

Department was able to rely on other 

information, in accordance with section 

732(c)(4)(D)(i) of the Act, to determine 

industry support. See Checklist at 

Attachment II. Based on information 

provided in the Petition and other 

submissions, the domestic producers 

and workers have met the statutory 

criteria for industry support under 

section 732(c)(4)(A)(ii) of the Act 

because the domestic producers (or 

workers) who support the Petition 

account for more than 50 percent of the 

production of the domestic like product 

produced by that portion of the industry 

expressing support for, or opposition to, 

the Petition. Accordingly, the 

Department determines that the Petition 

was filed on behalf of the domestic 

industry within the meaning of section 

732(b)(1) of the Act. See Checklist at 

Attachment II. 

The Department finds that Petitioners 

filed the Petition on behalf of the 

domestic industry because it is an 

interested party as defined in section 

771(9)(C) and (D) of the Act and it has 

demonstrated sufficient industry 

support with respect to the antidumping 

duty investigations that it is requesting 

the Department initiate. Id. 

Allegations and Evidence of Material 

Injury and Causation 

Petitioners allege that the U.S. 

industry producing the domestic like 

product is being materially injured, or is 

threatened with material injury, by 

reason of the imports of the subject 

merchandise sold at less than normal 

value (‘‘NV’’). In addition, Petitioners 

allege that subject imports exceed the 

negligibility threshold provided for 

under section 771(24)(A) of the Act. 

Petitioners contend that the industry’s 

injured condition is illustrated by 

reduced market share, reduced 

production, reduced shipments, 

reduced capacity and capacity 

utilization, underselling and price 

depression or suppression, reduced 

employment, hours worked, and wages 

paid, decline in financial performance, 

lost sales and revenue, and increase in 

import penetration. See Vol. I of the 

Petition, at 13–25. We have assessed the 

allegations and supporting evidence 

regarding material injury, threat of 

material injury, and causation, and we 

have determined that these allegations 

are properly supported by adequate 

evidence and meet the statutory 

requirements for initiation. See 

Checklist at Attachment III, Injury. 

Allegations of Sales at Less Than Fair 

Value 

The following is a description of the 

allegations of sales at less than fair value 

upon which the Department based its 

decision to initiate this investigation of 

imports of drill pipe from the PRC. The 

sources of data for the deductions and 

adjustments relating to the U.S. price 

and the factors of production are also 

discussed in the initiation checklist. See 

Checklist. 

U.S. Price 

Petitioners calculated export price 

(‘‘EP’’) based on documentation of offers 

for sale obtained from a confidential 

source. See Checklist; see also Vol. II of 

the Petition, at 2–4 and Exhibits II–3–B 

and II–3–C. Based on the terms of sale, 

Petitioners adjusted the export price for 

brokerage and handling and foreign 

domestic inland freight. See Checklist; 

see also Supplement to the AD PRC 

Petition at 4–5 and Exhibit 5. 

Petitioners also calculated margins 

based on the weighted average unit 

value data for the POI of imports from 

the PRC of drill pipe. Based on the 

terms of sale, Petitioners adjusted the 

export price for brokerage and handling 

and foreign domestic inland freight. Id. 

Normal Value 

Petitioners claim the PRC is a non– 

market economy (‘‘NME’’) country and 

that no determination to the contrary 

has been made by the Department. See 

Vol. I of the Petition, at 1. In accordance 

with section 771(18)(C)(i) of the Act, the 

presumption of NME status remains in 

effect until revoked by the Department. 

The presumption of NME status for the 

PRC has not been revoked by the 

Department and, therefore, remains in 

effect for purposes of the initiation of 

this investigation. Accordingly, the NV 

of the product for the PRC investigation 

is appropriately based on factors of 

production valued in a surrogate 

market–economy country in accordance 

with section 773(c) of the Act. In the 

course of this investigation, all parties, 

including the public, will have the 

opportunity to provide relevant 

information related to the issue of the 

PRC’s NME status and the granting of 

separate rates to individual exporters. 

Petitioners contend that India is the 

appropriate surrogate country for the 

PRC because: 1) it is at a level of 

economic development comparable to 

that of the PRC and 2) it is a significant 

producer and exporter of comparable 

merchandise. See Vol. II of the Petition, 

at 1–2. Based on the information 

provided by Petitioners, we believe that 

it is appropriate to use India as a 

surrogate country for initiation 

purposes. After initiation of the 

investigation, interested parties will 

have the opportunity to submit 

comments regarding surrogate country 

selection and, pursuant to 19 CFR 

351.301(c)(3)(i), will be provided an 

opportunity to submit publicly available 

information to value factors of 

production within 40 days after the date 

of publication of the preliminary 

determination. 

Petitioners calculated NV and the 

dumping margins using the 

Department’s NME methodology as 

required by 19 CFR 351.202(b)(7)(i)(C) 

and 19 CFR 351.408. Petitioners 

calculated NV based on consumption 

rates of the factors of production on the 

average consumption rates of a drill 

pipe producer in the United States 

(‘‘Surrogate Domestic Producer’’) for 

identical or similar merchandise. See 

Vol. II of the Petition, at 5–6 and Exhibit 

II–1–B. In calculating NV, Petitioners 

based the quantity of each of the inputs 

used to manufacture drill pipe in the 

PRC on product–specific production 

costs and/or consumption rates of the 

Surrogate Domestic Producer during the 

POI. See Vol. II of the Petition, at 6–12 

and Exhibits II–1–B, II–4. Petitioners 

state that the actual usage rates of the 

foreign manufacturers of drill pipe are 

not reasonably available; however, 

Petitioners note that according to the 

information available, the production of 

drill pipe relies on similar production 

methods to the Surrogate Domestic 

Producer. See Vol. II of the Petition, at 

5; see also Supplement to the AD/CVD 

Petitions at 3–4. 

As noted above, Petitioners 

determined the consumption quantities 

of all raw materials based on the 

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4534 Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Notices 

2Petitioners also provided NV calculations based 

on their purchase price for tool joints. Id; see also 

Checklist for more discussion on these calculations, 

as well as the ‘‘Fair-Value Comparison’’ section 

below. 

3We adjusted Petitioners’ data to exclude the 

inflators used to inflate the contemporaneous GTA 

data. 

production experience of the Surrogate 

Domestic Producer. Petitioners valued 

the factors of production based on 

reasonably available, public surrogate 

country data, specifically, Indian import 

statistics from the Global Trade Atlas 

(‘‘GTA’’).2 See Vol. II of the Petition, at 

6; see also Supplement to the AD/CVD 

Petitions at 5 and Exhibit 5. Petitioners 

excluded from these import statistics 

imports from countries previously 

determined by the Department to be 

NME countries. Petitioners also 

excluded import statistics from 

Indonesia, the Republic of Korea, and 

Thailand, as the Department has 

previously excluded prices from these 

countries because they maintain broadly 

available, non–industry-specific export 

subsidies.3 Id. In addition, Petitioners 

made currency conversions, where 

necessary, based on the POI–average 

rupee/U.S. dollar exchange rate, as 

reported on the Department’s web site. 

See Vol. II of the Petition, at Exhibit II– 

5. Petitioners determined labor costs 

using the labor consumption, in hours, 

derived from the Surrogate Domestic 

Producer’s experience. See Vol. II of the 

Petition, at 12 and Exhibit II–4–C–1. 

Petitioners valued labor costs using the 

Department’s NME Wage Rate for the 

PRC at http://ia.ita.doc.gov/wages/ 

07wages/final/final–2009–2007– 

wages.html. Id. For purposes of 

initiation, the Department determines 

that the surrogate values used by 

Petitioners are reasonably available and, 

thus, acceptable for purposes of 

initiation. 

Petitioners determined electricity 

costs using the electricity consumption, 

in kilowatt hours, derived from the 

Surrogate Domestic Producer’s 

experience. See Vol. II of the Petition, at 

11–12 and Exhibit II–4–C–1; see also 

Supplement to the AD/CVD Petitions at 

3 and Exhibit 3. Petitioners valued 

electricity using the Indian electricity 

rate reported by the Central Electric 

Authority of the Government of India. 

See Vol. II of the Petition, at 11–12 and 

Exhibit II–4–C–2. 

Petitioners did not identify packing 

materials used in preparing finished 

drill pipe. Consequently, Petitioners did 

not include packing materials in its 

calculation of normal value. See Second 

Supplement to the AD/CVD Petitions at 

5. 

Petitioners based factory overhead, 

selling, general and administrative, and 

profit on data from Oil Country Tubular 

Ltd., a producer of similar merchandise, 

for the 2008 – 2009 fiscal year. See Vol. 

II of the Petition, at 12 and Exhibit II4–D–1. 

Fair–Value Comparisons 

Based on the data provided by 

Petitioners, there is reason to believe 

that imports of drill pipe from the PRC 

are being, or are likely to be, sold in the 

United States at less than fair value. 

Based on a comparison of U.S. prices 

and NV calculated in accordance with 

section 773(c) of the Act, the estimated 

dumping margins for drill pipe from the 

PRC, using GTA values for all inputs, 

range from 429.53 percent to 496.93 

percent. See Checklist and Second 

Supplement to the AD/CVD Petitions at 

Exhibit 5. In addition, Petitioners 

provided estimated dumping margins 

using POI average–unit values for 

imports of PRC–origin drill pipe into the 

United States, and Petitioners’ own cost 

data for tool joints. See Checklist at 10. 

Initiation of Antidumping Investigation 

Based upon the examination of the 

Petition on drill pipe from the PRC, the 

Department finds the Petition meets the 

requirements of section 732 of the Act. 

Therefore, we are initiating an 

antidumping duty investigation to 

determine whether imports of drill pipe 

from the PRC are being, or are likely to 

be, sold in the United States at less than 

fair value. In accordance with section 

733(b)(1)(A) of the Act and 19 CFR 

351.205(b)(1), unless postponed, we will 

make our preliminary determinations no 

later than 140 days after the date of this 

initiation. 

Targeted–Dumping Allegations 

On December 10, 2008, the 

Department issued an interim final rule 

for the purpose of withdrawing 19 CFR 

351.414(f) and (g), the regulatory 

provisions governing the targeteddumping analysis in antidumping duty 

investigations, and the corresponding 

regulation governing the deadline for 

targeted–dumping allegations, 19 CFR 

351.301(d)(5). See Withdrawal of the 

Regulatory Provisions Governing 

Targeted Dumping in Antidumping 

Duty Investigations, 73 FR 74930 

(December 10, 2008). The Department 

stated that ‘‘withdrawal will allow the 

Department to exercise the discretion 

intended by the statute and, thereby, 

develop a practice that will allow 

interested parties to pursue all statutory 

avenues of relief in this area.’’ Id. at 

74931. 

In order to accomplish this objective, 

if any interested party wishes to make 

a targeted- dumping allegation in either 

of these investigations pursuant to 

section 777A(d)(1)(B) of the Act, such 

allegations are due no later than 45 days 

before the scheduled date of the 

preliminary determination. 

Respondent Selection 

For this investigation, the Department 

will request quantity and value 

information from known exporters and 

producers identified with complete 

contact information in the Petition. The 

quantity and value data received from 

NME exporters/producers will be used 

as the basis to select the mandatory 

respondents. 

The Department requires that the 

respondents submit a response to both 

the quantity and value questionnaire 

and the separate–rate application by the 

respective deadlines in order to receive 

consideration for separate–rate status. 

See Circular Welded Austenitic 

Stainless Pressure Pipe from the 

People’s Republic of China: Initiation of 

Antidumping Duty Investigation, 73 FR 

10221, 10225 (February 26, 2008); 

Initiation of Antidumping Duty 

Investigation: Certain Artist Canvas 

From the People’s Republic of China, 70 

FR 21996, 21999 (April 28, 2005). On 

the date of the publication of this 

initiation notice in the Federal Register, 

the Department will post the quantity 

and value questionnaire along with the 

filing instructions on the Import 

Administration web site at http:// 

ia.ita.doc.gov/ia–highlights-and– 

news.html, and a response to the 

quantity and value questionnaire is due 

no later than February 11, 2010. Also, 

the Department will send the quantity 

and value questionnaire to those PRC 

companies identified in the Petition at 

Exhibit I–7 and in the Second 

Supplement to the AD/CVD Petitions at 

Exhibit 4. 

Interested parties must submit 

applications for disclosure under APO 

in accordance with 19 CFR 351.305. 

Instructions for filing such applications 

may be found on the Department’s web 

site at http://ia.ita.doc.gov/apo. 

Separate Rates Application 

In order to obtain separate–rate status 

in NME investigations, exporters and 

producers must submit a separate–rate 

status application. See Policy Bulletin 

05.1: Separate–Rates Practice and 

Application of Combination Rates in 

Antidumping Investigations involving 

Non–Market Economy Countries, dated 

April 5, 2005 (‘‘Policy Bulletin’’), 

available on the Department’s web site 

at http://ia.ita.doc.gov/policy/bull05– 

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Federal Register / Vol. 75, No. 18 / Thursday, January 28, 2010 / Notices 4535 

4Prior to February 2, 2007, these imports entered 

under different tariff classifications, including 

7304.21.3000, 7304.21.6030, 7304.21.6045, and 

7304.21.6060. 

1.pdf. Based on our experience in 

processing the separate–rate 

applications in previous antidumping 

duty investigations, we have modified 

the application for this investigation to 

make it more administrable and easier 

for applicants to complete. See, e.g., 

Initiation of Antidumping Duty 

Investigation: Certain New Pneumatic 

Off–the-Road Tires From the People’s 

Republic of China, 72 FR 43591, 43594– 

95 (August 6, 2007). The specific 

requirements for submitting the 

separate–rate application in this 

investigation are outlined in detail in 

the application itself, which will be 

available on the Department’s web site 

at http://ia.ita.doc.gov/ia–highlightsand–news.html on the date of 

publication of this initiation notice in 

the Federal Register. The separate–rate 

application will be due 60 days after 

publication of this initiation notice. For 

exporters and producers who submit a 

separate–rate status application and 

subsequently are selected as mandatory 

respondents, these exporters and 

producers will no longer be eligible for 

consideration for separate rate status 

unless they respond to all parts of the 

questionnaire as mandatory 

respondents. As noted in the 

‘‘Respondent Selection’’ section above, 

the Department requires that 

respondents submit a response to both 

the quantity and value questionnaire 

and the separate rate application by the 

respective deadlines in order to receive 

consideration for separate–rate status. 

Use of Combination Rates in an NME 

Investigation 

The Department will calculate 

combination rates for certain 

respondents that are eligible for a 

separate rate in this investigation. The 

Policy Bulletin states: 

{W}hile continuing the practice of 

assigning separate rates only to 

exporters, all separate rates that the 

Department will now assign in its 

NME investigations will be specific 

to those producers that supplied the 

exporter during the period of 

investigation. Note, however, that 

one rate is calculated for the 

exporter and all of the producers 

which supplied subject 

merchandise to it during the period 

of investigation. This practice 

applies both to mandatory 

respondents receiving an 

individually calculated separate 

rate as well as the pool of non– 

investigated firms receiving the 

weighted–average of the 

individually calculated rates. This 

practice is referred to as the 

application of ‘‘combination rates’’ 

because such rates apply to specific 

combinations of exporters and one 

or more producers. The cash– 

deposit rate assigned to an exporter 

will apply only to merchandise 

both exported by the firm in 

question and produced by a firm 

that supplied the exporter during 

the period of investigation. 

See Policy Bulletin at 6 (emphasis 

added). 

Distribution of Copies of the Petition 

In accordance with section 

732(b)(3)(A) of the Act and 19 CFR 

351.202(f), copies of the public versions 

of the Petition have been provided to 

the representatives of the Government of 

the PRC. Because of the large number of 

producers/exporters identified in the 

Petition, the Department considers the 

service of the public version of the 

Petition to the foreign producers/ 

exporters satisfied by the delivery of the 

public version to the Government of the 

PRC, consistent with 19 CFR 

351.203(c)(2). 

ITC Notification 

We have notified the ITC of our 

initiations, as required by section 732(d) 

of the Act. 

Preliminary Determinations by the ITC 

The ITC will preliminarily determine, 

no later than February 16, 2010, 

whether there is a reasonable indication 

that imports of drill pipe from the PRC 

are materially injuring, or threatening 

material injury to a U.S. industry. A 

negative ITC determination will result 

in the investigation being terminated; 

otherwise, this investigation will 

proceed according to statutory and 

regulatory time limits. 

This notice is issued and published 

pursuant to section 777(i) of the Act. 

Dated January 20, 2010. 

Ronald K. Lorentzen, 

Deputy Assistant Secretary for Import 

Administration. 

Appendix I 

Scope of the Investigation 

The products covered by the 

investigation are steel drill pipe, and 

steel drill collars, whether or not 

conforming to American Petroleum 

Institute (API) or non–API 

specifications, whether finished or 

unfinished (including green tubes 

suitable for drill pipe), without regard to 

the specific chemistry of the steel (i.e., 

carbon, stainless steel, or other alloy 

steel), and without regard to length or 

outer diameter. The scope does not 

include tool joints not attached to the 

drill pipe, nor does it include 

unfinished tubes for casing or tubing 

covered by any other antidumping or 

countervailing duty order. 

The subject products are currently 

classified in the following Harmonized 

Tariff Schedule of the United States 

(HTSUS) categories: 7304.22.0030, 

7304.22.0045, 7304.22.0060, 

7304.23.3000, 7304.23.6030, 

7304.23.6045, 7304.23.6060, 

8431.43.8040 and may also enter under 

8431.43.8060, 8431.43.4000, 

7304.39.0028, 7304.39.0032, 

7304.39.0036, 7304.39.0040, 

7304.39.0044, 7304.39.0048, 

7304.39.0052, 7304.39.0056, 

7304.49.0015, 7304.49.0060, 

7304.59.8020, 7304.59.8025, 

7304.59.8030, 7304.59.8035, 

7304.59.8040, 7304.59.8045, 

7304.59.8050, and 7304.59.8055.4

While HTSUS subheadings are 

provided for convenience and Customs 

purposes, the written description of the 

scope of the investigation is dispositive. 

[FR Doc. 2010–1795 Filed 1–27–10; 8:45 am] 

BILLING CODE 3510–DS–S 

DEPARTMENT OF COMMERCE 

National Oceanic and Atmospheric 

Administration 

RIN 0648–XU07 

Fisheries of the Gulf of Mexico; 

Southeast Data, Assessment, and 

Review (SEDAR); data workshop for 

yellowedge grouper and tilefish. 

AGENCY: National Marine Fisheries 

Service (NMFS), National Oceanic and 

Atmospheric Administration (NOAA), 

Commerce. 

ACTION: Notice of SEDAR Data 

Workshop for Gulf of Mexico 

yellowedge grouper and tilefish. 

SUMMARY: The SEDAR assessments of 

the Gulf of Mexico stocks of yellowedge 

grouper and tilefish will consist of a 

series of workshops and webinars: a 

Data Workshop, a series of Assessment 

webinars, and a Review Workshop. This 

is the twenty-second SEDAR. See 

SUPPLEMENTARY INFORMATION. 

DATES: The Data Workshop will take 

place March 15–19, 2010. See 

SUPPLEMENTARY INFORMATION for specific 

dates and times. 

ADDRESSES: The Data Workshop will be 

held at Quorum Hotel Tampa, 700 N. 

Westshore Blvd, Tampa, FL; telephone: 

(813) 289–8200.

mstockstill on DSKH9S0YB1PROD with NOTICES

 
APPENDIX B

CONFERENCE WITNESSES

B-1

CALENDAR OF PUBLIC CONFERENCE

Those listed below appeared as witnesses at the United States International Trade

Commission’s conference:

Subject: Drill Pipe and Drill Collars from China

Inv. Nos.: 701-TA-474 and 731-TA-1176 (Preliminary)

Date and Time: January 21, 2010- 9:30 a.m.

The conference in connection with these investigations was held in Court Room A, 500 E

Street, SW, Washington, D.C.

OPENING REMARKS:

Petitioners (Roger B. Schagrin, Schagrin Associates)

Respondents (Mark B. Lehnardt, Lehnardt & Lehnardt, LLC)

In Support of the Imposition of 

Antidumping Duties and Countervailing Duties:

Schagrin Associates

Washington, DC

 on behalf of

VAM Drilling

Texas Steel Conversion, Inc.

Rotary Drilling Tools

TMK IPSCO 

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied

Industrial and Service Workers International Union, AFL-CIO-CLC

B-3
In Support of the Imposition of – Continued

Antidumping Duties and Countervailing Duties:

Doug Fields, President, 

VAM Drilling USA

Kevin Parks, Vice President of Sales, 

VAM Drilling USA

Steve Williamson, Director of Strategic Development, 

VAM Drilling USA

James Brand, Product Manager, 

Texas Steel Conversion, Inc.

Sealy Morris, President, 

Rotary Drilling Tools

Mike Ramsey, Product Manager, Seamless Industrial Products, 

TMK IPSCO 

Linda Andros, Legislative Counsel, 

United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied

Industrial and Service Workers International Union, AFL-CIO-CLC

Roger B. Schagrin, Esq. )

John W. Bohn, Esq. ) – OF COUNSEL

Paul W. Jameson, Esq. )

B-4
In Opposition to the Imposition of

Antidumping Duties and Countervailing Duties:

Lehnardt & Lehnardt, LLC

Liberty, MO

 on behalf of

Command Energy Services, Ltd.

Downhole Pipe & Equipment, L.P.

Charlie Garvey, CEO, 

Command Energy Services, Ltd.

Jim Mostoway, VP Product Control,

Command Energy Services, Ltd.

David Lesco, General Manager, 

Downhole Pipe & Equipment, L.P.

Bruce P. Malashevich, President

Economic Consulting Services, LLC

Mark B. Lehnardt, Esq. )

Mark D. Davis, Esq. ) – OF COUNSEL

Irene H. Chen, Esq. )

REBUTTAL/CLOSING REMARKS:

Petitioners (Roger B. Schagrin, Schagrin Associates)

Respondents (Mark B. Lehnardt, Lehnardt & Lehnardt, LLC)

B-5
 
APPENDIX C

SUMMARY DATA

C-1

Table C-1

Unfinished drill pipe: Summary data concerning the U.S. market, 2006-08, January-September 2008, and January-September 2009

(Quantity=short tons, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per short ton; period changes=percent, except where noted)

Reported data Period changes

January-September Jan.-Sept.

Item 2006 2007 2008 2008 2009 2006-08 2006-07 2007-08 2008-09

U.S. consumption quantity:

 Amount . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. consumption value:

 Amount . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All other sources:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All sources:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

U.S. producers':

 Average capacity quantity . . . . . 166,721 172,147 158,236 120,556 104,110 -5.1 3.3 -8.1 -13.6

 Production quantity . . . . . . . . . . 88,383 75,724 90,830 69,734 5,016 2.8 -14.3 19.9 -92.8

 Capacity utilization (1) . . . . . . . . 53.0 44.0 57.4 57.8 4.8 4.4 -9.0 13.4 -53.0

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . *** *** *** *** *** *** *** *** ***

 Inventories/total shipments (1) . *** *** *** *** *** *** *** *** ***

 Production workers . . . . . . . . . . 163 176 202 176 38 23.9 8.0 14.8 -78.4

 Hours worked (1,000s) . . . . . . . 380 364 426 318 59 12.1 -4.2 17.0 -81.4

 Wages paid ($1,000s) . . . . . . . . 8,240 7,420 10,005 7,324 1,285 21.4 -10.0 34.8 -82.5

 Hourly wages . . . . . . . . . . . . . . . $21.68 $20.38 $23.49 $23.03 $21.78 8.3 -6.0 15.2 -5.4

 Productivity (tons/1,000 hours) . 232.6 208.0 213.2 219.3 85.0 -8.3 -10.6 2.5 -61.2

 Unit labor costs . . . . . . . . . . . . . $93.23 $97.99 $110.15 $105.03 $256.18 18.1 5.1 12.4 143.9

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . 83,628 78,561 90,178 67,865 7,823 7.8 -6.1 14.8 -88.5

 Value . . . . . . . . . . . . . . . . . . . . 119,719 117,252 178,647 128,608 12,672 49.2 -2.1 52.4 -90.1

 Unit value . . . . . . . . . . . . . . . . . $1,432 $1,492 $1,981 $1,895 $1,620 38.4 4.3 32.7 -14.5

 Cost of goods sold (COGS) . . . . 84,646 82,356 116,292 87,926 13,878 37.4 -2.7 41.2 -84.2

 Gross profit or (loss) . . . . . . . . . 35,073 34,896 62,355 40,682 (1,206) 77.8 -0.5 78.7 (3)

 SG&A expenses . . . . . . . . . . . . 6,312 6,468 9,039 6,052 1,751 43.2 2.5 39.7 -71.1

 Operating income or (loss) . . . . 28,761 28,428 53,316 34,630 (2,957) 85.4 -1.2 87.5 (3)

 Capital expenditures . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . $1,012 $1,048 $1,290 $1,296 $1,774 27.4 3.6 23.0 36.9

 Unit SG&A expenses . . . . . . . . . $75 $82 $100 $89 $224 32.8 9.1 21.7 151.0

 Unit operating income or (loss) . $344 $362 $591 $510 ($378) 71.9 5.2 63.4 (3)

 COGS/sales (1) . . . . . . . . . . . . . 70.7 70.2 65.1 68.4 109.5 -5.6 -0.5 -5.1 41.1

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . 24.0 24.2 29.8 26.9 (23.3) 5.8 0.2 5.6 -50.3

 (1) "Reported data" are in percent and "period changes" are in percentage points.

 (2) Not applicable/not available.

 (3) Undefined.

Note.--Financial data are reported on a fiscal year basis and may not necessarily be comparable to data reported on a calendar year basis. Because of rounding,

figures may not add to the totals shown. Unit values and shares are calculated from the unrounded figures.

Source: Compiled from data submitted in response to Commission questionnaires.

C-3
Table C-2

Finished drill pipe: Summary data concerning the U.S. market, 2006-08, January-September 2008, and January-September 2009

(Quantity=short tons, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per short ton; period changes=percent, except where noted)

Reported data Period changes

January-September Jan.-Sept.

Item 2006 2007 2008 2008 2009 2006-08 2006-07 2007-08 2008-09

U.S. consumption quantity:

 Amount . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. consumption value:

 Amount . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All other sources:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All sources:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

U.S. producers':

 Average capacity quantity . . . . . 189,393 239,046 241,203 186,574 191,268 27.4 26.2 0.9 2.5

 Production quantity . . . . . . . . . . 182,560 216,718 193,827 143,847 88,485 6.2 18.7 -10.6 -38.5

 Capacity utilization (1) . . . . . . . . 96.4 90.7 80.4 77.1 46.3 -16.0 -5.7 -10.3 -30.8

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . 135,667 167,827 121,092 88,761 49,858 -10.7 23.7 -27.8 -43.8

 Value . . . . . . . . . . . . . . . . . . . . 635,689 927,758 738,658 527,289 310,723 16.2 45.9 -20.4 -41.1

 Unit value . . . . . . . . . . . . . . . . . $4,686 $5,528 $6,100 $5,941 $6,232 30.2 18.0 10.3 4.9

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . 42,316 47,562 67,553 46,988 31,071 59.6 12.4 42.0 -33.9

 Value . . . . . . . . . . . . . . . . . . . . 222,219 318,066 474,369 335,166 241,497 113.5 43.1 49.1 -27.9

 Unit value . . . . . . . . . . . . . . . . . $5,251 $6,687 $7,022 $7,133 $7,772 33.7 27.3 5.0 9.0

 Ending inventory quantity . . . . . 12,814 14,142 19,325 22,240 26,882 50.8 10.4 36.6 20.9

 Inventories/total shipments (1) . 7.2 6.6 10.2 12.3 24.9 3.0 -0.6 3.7 12.6

 Production workers . . . . . . . . . . 1,138 1,335 1,377 1,404 1,083 21.0 17.3 3.1 -22.9

 Hours worked (1,000s) . . . . . . . 3,017 3,595 3,596 2,525 1,860 19.2 19.2 0.0 -26.3

 Wages paid ($1,000s) . . . . . . . . 46,783 59,106 63,623 42,721 28,868 36.0 26.3 7.6 -32.4

 Hourly wages . . . . . . . . . . . . . . . $15.51 $16.44 $17.69 $16.92 $15.52 14.1 6.0 7.6 -8.3

 Productivity (tons/1,000 hours) . 60.5 60.3 53.9 57.0 47.6 -10.9 -0.4 -10.6 -16.5

 Unit labor costs . . . . . . . . . . . . . $256.26 $272.73 $328.25 $296.99 $326.25 28.1 6.4 20.4 9.9

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . 177,983 216,390 188,644 135,750 80,929 6.0 21.6 -12.8 -40.4

 Value . . . . . . . . . . . . . . . . . . . . 857,907 1,245,824 1,213,027 862,455 552,221 41.4 45.2 -2.6 -36.0

 Unit value . . . . . . . . . . . . . . . . . $4,820 $5,757 $6,430 $6,353 $6,824 33.4 19.4 11.7 7.4

 Cost of goods sold (COGS) . . . . 567,517 758,482 736,955 504,909 434,447 29.9 33.6 -2.8 -14.0

 Gross profit or (loss) . . . . . . . . . 290,390 487,342 476,072 357,546 117,774 63.9 67.8 -2.3 -67.1

 SG&A expenses . . . . . . . . . . . . 25,642 30,940 42,863 29,521 36,598 67.2 20.7 38.5 24.0

 Operating income or (loss) . . . . 264,748 456,402 433,209 328,025 81,176 63.6 72.4 -5.1 -75.3

 Capital expenditures . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . $3,189 $3,505 $3,907 $3,719 $5,368 22.5 9.9 11.5 44.3

 Unit SG&A expenses . . . . . . . . . $144 $143 $227 $217 $452 57.7 -0.8 58.9 108.0

 Unit operating income or (loss) . $1,487 $2,109 $2,296 $2,416 $1,003 54.4 41.8 8.9 -58.5

 COGS/sales (1) . . . . . . . . . . . . . 66.2 60.9 60.8 58.5 78.7 -5.4 -5.3 -0.1 20.1

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . 30.9 36.6 35.7 38.0 14.7 4.9 5.8 -0.9 -23.3

 (1) "Reported data" are in percent and "period changes" are in percentage points.

 (2) Not available.

Note.--Financial data are reported on a fiscal year basis and may not necessarily be comparable to data reported on a calendar year basis. Because of rounding,

figures may not add to the totals shown. Unit values and shares are calculated from the unrounded figures.

Source: Compiled from data submitted in response to Commission questionnaires.

C-4
Table C-3

Unfinished drill collars: Summary data concerning the U.S. market, 2006-08, January-September 2008, and January-September 2009

(Quantity=short tons, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per short ton; period changes=percent, except where noted)

Reported data Period changes

January-September Jan.-Sept.

Item 2006 2007 2008 2008 2009 2006-08 2006-07 2007-08 2008-09

U.S. producers':

 Average capacity quantity . . . . . *** *** *** *** *** *** *** *** ***

 Production quantity . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Capacity utilization (1) . . . . . . . . *** *** *** *** *** *** *** *** ***

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . . *** *** *** *** *** *** *** *** ***

 Inventories/total shipments (1) . *** *** *** *** *** *** *** *** ***

 Production workers . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Hours worked (1,000s) . . . . . . . *** *** *** *** *** *** *** *** ***

 Wages paid ($1,000s) . . . . . . . . *** *** *** *** *** *** *** *** ***

 Hourly wages . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Productivity (tons/1,000 hours) . *** *** *** *** *** *** *** *** ***

 Unit labor costs . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Cost of goods sold (COGS) . . . . *** *** *** *** *** *** *** *** ***

 Gross profit or (loss) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 SG&A expenses . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Operating income or (loss) . . . . *** *** *** *** *** *** *** *** ***

 Capital expenditures . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit SG&A expenses . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit operating income or (loss) . *** *** *** *** *** *** *** *** ***

 COGS/sales (1) . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 (1) "Reported data" are in percent and "period changes" are in percentage points.

Note.--Financial data are reported on a fiscal year basis and may not necessarily be comparable to data reported on a calendar year basis. Because of rounding,

figures may not add to the totals shown. Unit values and shares are calculated from the unrounded figures.

Note.--***.

Source: Compiled from data submitted in response to Commission questionnaires.

C-5
Table C-4

Finished drill collars: Summary data concerning the U.S. market, 2006-08, January-September 2008, and January-September 2009

(Quantity=short tons, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per short ton; period changes=percent, except where noted)

Reported data Period changes

January-September Jan.-Sept.

Item 2006 2007 2008 2008 2009 2006-08 2006-07 2007-08 2008-09

U.S. consumption quantity:

 Amount . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. consumption value:

 Amount . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Producers' share (1) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 All other sources . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Total imports . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

U.S. imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All other sources:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All sources:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit value . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

U.S. producers':

 Average capacity quantity . . . . . 45,551 53,369 57,688 43,266 43,266 26.6 17.2 8.1 0.0

 Production quantity . . . . . . . . . . 38,106 51,212 44,175 28,880 19,080 15.9 34.4 -13.7 -33.9

 Capacity utilization (1) . . . . . . . . 83.7 96.0 76.6 66.7 44.1 -7.1 12.3 -19.4 -22.7

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . 25,660 38,143 23,049 17,267 9,986 -10.2 48.6 -39.6 -42.2

 Value . . . . . . . . . . . . . . . . . . . . 74,131 123,398 92,013 66,121 33,104 24.1 66.5 -25.4 -49.9

 Unit value . . . . . . . . . . . . . . . . . $2,889 $3,235 $3,992 $3,829 $3,315 38.2 12.0 23.4 -13.4

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . 8,799 8,850 14,937 10,123 10,177 69.8 0.6 68.8 0.5

 Value . . . . . . . . . . . . . . . . . . . . 26,628 31,014 57,202 41,276 35,252 114.8 16.5 84.4 -14.6

 Unit value . . . . . . . . . . . . . . . . . $3,026 $3,504 $3,830 $4,077 $3,464 26.5 15.8 9.3 -15.0

 Ending inventory quantity . . . . . 14,999 19,081 24,807 19,506 21,791 65.4 27.2 30.0 11.7

 Inventories/total shipments (1) . 43.5 40.6 65.3 53.4 81.1 21.8 -2.9 24.7 27.6

 Production workers . . . . . . . . . . 162 204 207 199 148 27.8 25.9 1.5 -25.6

 Hours worked (1,000s) . . . . . . . 410 517 547 350 279 33.4 26.1 5.8 -20.3

 Wages paid ($1,000s) . . . . . . . . 8,595 11,767 12,855 8,647 5,565 49.6 36.9 9.2 -35.6

 Hourly wages . . . . . . . . . . . . . . . $20.96 $22.76 $23.50 $24.71 $19.95 12.1 8.6 3.3 -19.3

 Productivity (tons/1,000 hours) . 92.9 99.1 80.8 82.5 68.4 -13.1 6.6 -18.5 -17.1

 Unit labor costs . . . . . . . . . . . . . $225.56 $229.77 $291.00 $299.41 $291.67 29.0 1.9 26.6 -2.6

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . 34,459 46,993 37,986 27,389 20,163 10.2 36.4 -19.2 -26.4

 Value . . . . . . . . . . . . . . . . . . . . 100,759 154,411 149,215 107,397 68,357 48.1 53.2 -3.4 -36.4

 Unit value . . . . . . . . . . . . . . . . . $2,924 $3,286 $3,928 $3,921 $3,390 34.3 12.4 19.5 -13.5

 Cost of goods sold (COGS) . . . . 72,272 98,228 102,084 68,403 55,796 41.2 35.9 3.9 -18.4

 Gross profit or (loss) . . . . . . . . . 28,487 56,183 47,131 38,994 12,561 65.4 97.2 -16.1 -67.8

 SG&A expenses . . . . . . . . . . . . 5,462 8,972 11,179 8,072 5,217 104.7 64.3 24.6 -35.4

 Operating income or (loss) . . . . 23,025 47,211 35,952 30,922 7,344 56.1 105.0 -23.8 -76.2

 Capital expenditures . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . $2,097 $2,090 $2,687 $2,497 $2,767 28.1 -0.3 28.6 10.8

 Unit SG&A expenses . . . . . . . . . $159 $191 $294 $295 $259 85.7 20.5 54.1 -12.2

 Unit operating income or (loss) . $668 $1,005 $946 $1,129 $364 41.6 50.4 -5.8 -67.7

 COGS/sales (1) . . . . . . . . . . . . . 71.7 63.6 68.4 63.7 81.6 -3.3 -8.1 4.8 17.9

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . 22.9 30.6 24.1 28.8 10.7 1.2 7.7 -6.5 -18.0

 (1) "Reported data" are in percent and "period changes" are in percentage points.

Note.--Financial data are reported on a fiscal year basis and may not necessarily be comparable to data reported on a calendar year basis. Because of rounding,

figures may not add to the totals shown. Unit values and shares are calculated from the unrounded figures.

Note.--***.

Source: Compiled from data submitted in response to Commission questionnaires.

C-6
Table C-5

Finished drill pipe and drill collars: Summary data concerning the U.S. market, 2006-08, January-September 2008, and January-September 2009

(Quantity=short tons, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per short ton; period changes=percent, except where noted)

Reported data Period changes

January-September Jan.-Sept.

Item 2006 2007 2008 2008 2009 2006-08 2006-07 2007-08 2008-09

U.S. consumption quantity:

 Amount . . . . . . . . . . . . . . . . . . . 186,777 239,484 185,561 128,773 80,419 -0.7 28.2 -22.5 -37.5

 Producers' share (1) . . . . . . . . . 86.4 86.0 77.7 82.3 74.4 -8.7 -0.4 -8.3 -7.9

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . 11.5 11.6 20.9 16.1 22.9 9.3 0.1 9.3 6.8

 All other sources . . . . . . . . . . . 2.1 2.4 1.5 1.5 2.7 -0.6 0.3 -0.9 1.1

 Total imports . . . . . . . . . . . . . 13.6 14.0 22.3 17.7 25.6 8.7 0.4 8.3 7.9

U.S. consumption value:

 Amount . . . . . . . . . . . . . . . . . . . 812,308 1,198,293 1,022,655 711,679 431,854 25.9 47.5 -14.7 -39.3

 Producers' share (1) . . . . . . . . . 87.4 87.7 81.2 83.4 79.6 -6.2 0.3 -6.5 -3.8

 Importers' share (1):

 China . . . . . . . . . . . . . . . . . . . . 9.9 9.5 16.6 14.3 16.7 6.7 -0.4 7.1 2.5

 All other sources . . . . . . . . . . . 2.7 2.8 2.2 2.3 3.7 -0.6 0.1 -0.6 1.3

 Total imports . . . . . . . . . . . . . 12.6 12.3 18.8 16.6 20.4 6.2 -0.3 6.5 3.8

U.S. imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . 21,561 27,773 38,694 20,750 18,434 79.5 28.8 39.3 -11.2

 Value . . . . . . . . . . . . . . . . . . . . 80,424 113,974 169,996 101,548 72,249 111.4 41.7 49.2 -28.9

 Unit value . . . . . . . . . . . . . . . . . $3,730 $4,104 $4,393 $4,894 $3,919 17.8 10.0 7.1 -19.9

 Ending inventory quantity . . . . 4,764 6,850 11,896 5,441 15,414 149.7 43.8 73.7 183.3

 All other sources:

 Quantity . . . . . . . . . . . . . . . . . . 3,889 5,741 2,726 1,995 2,141 -29.9 47.6 -52.5 7.3

 Value . . . . . . . . . . . . . . . . . . . . 22,064 33,163 21,988 16,721 15,778 -0.3 50.3 -33.7 -5.6

 Unit value . . . . . . . . . . . . . . . . . $5,673 $5,777 $8,066 $8,381 $7,369 42.2 1.8 39.6 -12.1

 Ending inventory quantity . . . . 772 825 1,265 1,395 2,123 63.9 6.9 53.3 52.2

 All sources:

 Quantity . . . . . . . . . . . . . . . . . . 25,450 33,514 41,420 22,745 20,575 62.8 31.7 23.6 -9.5

 Value . . . . . . . . . . . . . . . . . . . . 102,488 147,137 191,984 118,269 88,027 87.3 43.6 30.5 -25.6

 Unit value . . . . . . . . . . . . . . . . . $4,027 $4,390 $4,635 $5,200 $4,278 15.1 9.0 5.6 -17.7

 Ending inventory quantity . . . . 5,536 7,675 13,161 6,836 17,537 137.7 38.6 71.5 156.5

U.S. producers':

 Average capacity quantity . . . . . 234,944 292,415 298,891 229,840 234,534 27.2 24.5 2.2 2.0

 Production quantity . . . . . . . . . . 220,666 267,930 238,002 172,727 107,565 7.9 21.4 -11.2 -37.7

 Capacity utilization (1) . . . . . . . . 93.9 91.6 79.6 75.2 45.9 -14.3 -2.3 -12.0 -29.3

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . 161,327 205,970 144,141 106,028 59,844 -10.7 27.7 -30.0 -43.6

 Value . . . . . . . . . . . . . . . . . . . . 709,820 1,051,156 830,671 593,410 343,827 17.0 48.1 -21.0 -42.1

 Unit value . . . . . . . . . . . . . . . . . $4,400 $5,103 $5,763 $5,597 $5,745 31.0 16.0 12.9 2.7

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . 51,115 56,412 82,490 57,111 41,248 61.4 10.4 46.2 -27.8

 Value . . . . . . . . . . . . . . . . . . . . 248,847 349,080 531,571 376,442 276,749 113.6 40.3 52.3 -26.5

 Unit value . . . . . . . . . . . . . . . . . $4,868 $6,188 $6,444 $6,591 $6,709 32.4 27.1 4.1 1.8

 Ending inventory quantity . . . . . 27,813 33,223 44,132 41,746 48,673 58.7 19.5 32.8 16.6

 Inventories/total shipments (1) . 13.1 12.7 19.5 19.2 36.1 6.4 -0.4 6.8 16.9

 Production workers . . . . . . . . . . 1,300 1,539 1,584 1,603 1,231 21.8 18.4 2.9 -23.2

 Hours worked (1,000s) . . . . . . . 3,427 4,112 4,143 2,875 2,139 20.9 20.0 0.8 -25.6

 Wages paid ($1,000s) . . . . . . . . 55,378 70,873 76,478 51,368 34,433 38.1 28.0 7.9 -33.0

 Hourly wages . . . . . . . . . . . . . . . $16.16 $17.24 $18.46 $17.87 $16.10 14.2 6.7 7.1 -9.9

 Productivity (tons/1,000 hours) . 64.4 65.2 57.4 60.1 50.3 -10.8 1.2 -11.8 -16.3

 Unit labor costs . . . . . . . . . . . . . $250.96 $264.52 $321.33 $297.39 $320.11 28.0 5.4 21.5 7.6

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . 212,442 263,383 226,630 163,139 101,092 6.7 24.0 -14.0 -38.0

 Value . . . . . . . . . . . . . . . . . . . . 958,666 1,400,235 1,362,242 969,852 620,578 42.1 46.1 -2.7 -36.0

 Unit value . . . . . . . . . . . . . . . . . $4,513 $5,316 $6,011 $5,945 $6,139 33.2 17.8 13.1 3.3

 Cost of goods sold (COGS) . . . . 639,789 856,710 839,039 573,312 490,243 31.1 33.9 -2.1 -14.5

 Gross profit or (loss) . . . . . . . . . 318,877 543,525 523,203 396,540 130,335 64.1 70.4 -3.7 -67.1

 SG&A expenses . . . . . . . . . . . . 31,104 39,912 54,042 37,593 41,815 73.7 28.3 35.4 11.2

 Operating income or (loss) . . . . 287,773 503,613 469,161 358,947 88,520 63.0 75.0 -6.8 -75.3

 Capital expenditures . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . $3,012 $3,253 $3,702 $3,514 $4,849 22.9 8.0 13.8 38.0

 Unit SG&A expenses . . . . . . . . . $146 $152 $238 $230 $414 62.9 3.5 57.4 79.5

 Unit operating income or (loss) . $1,355 $1,912 $2,070 $2,200 $876 52.8 41.2 8.3 -60.2

 COGS/sales (1) . . . . . . . . . . . . . 66.7 61.2 61.6 59.1 79.0 -5.1 -5.6 0.4 19.9

 Operating income or (loss)/

 sales (1) . . . . . . . . . . . . . . . . . . 30.0 36.0 34.4 37.0 14.3 4.4 5.9 -1.5 -22.7

 (1) "Reported data" are in percent and "period changes" are in percentage points.

Note.--Financial data are reported on a fiscal year basis and may not necessarily be comparable to data reported on a calendar year basis. Because of rounding,

figures may not add to the totals shown. Unit values and shares are calculated from the unrounded figures.

Source: Compiled from data submitted in response to Commission questionnaires.

C-7
Table C-6

Drill pipe and drill collars, both unfinished and finished: Selected summary data concerning the U.S. market, 2006-08, January-September 2008, and January-September 2009

(Quantity=short tons, value=1,000 dollars, unit values, unit labor costs, and unit expenses are per short ton; period changes=percent, except where noted)

Reported data Period changes

January-September Jan.-Sept.

Item 2006 2007 2008 2008 2009 2006-08 2006-07 2007-08 2008-09

U.S. imports from:

 China:

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All other sources: 

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 All sources: 

 Quantity . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Value . . . . . . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Ending inventory quantity . . . . *** *** *** *** *** *** *** *** ***

 

U.S. producers':

 Ending inventory quantity . . . . . *** *** *** *** *** *** *** *** ***

 Production workers . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Hours worked (1,000s) . . . . . . . *** *** *** *** *** *** *** *** ***

 Wages paid ($1,000s) . . . . . . . . *** *** *** *** *** *** *** *** ***

 Hourly wages . . . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Gross profit or (loss) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Operating income or (loss) . . . . *** *** *** *** *** *** *** *** ***

 Capital expenditures . . . . . . . . . *** *** *** *** *** *** *** *** ***

 (1) "Reported data" are in percent and "period changes" are in percentage points.

Note.--Financial data are reported on a fiscal year basis and may not necessarily be comparable to data reported on a calendar year basis. Because of rounding,

figures may not add to the totals shown. Unit values and shares are calculated from the unrounded figures.

Source: Compiled from data submitted in response to Commission questionnaires.

C-8
APPENDIX D

SUPPLEMENTAL LIKE PRODUCT INFORMATION

D-1

Physical Characteristics and Uses

* * * * * * *

Interchangeability

* * * * * * *

Manufacturing Processes

* * * * * * *

Channels of Distribution

* * * * * * *

Customer and Producer Perceptions

* * * * * * *

Price

* * * * * * *

Notes

* * * * * * *

D-3
 
APPENDIX E

NONSUBJECT PRICES

E-1

Weighted-average prices of products imported from Austria oversold the U.S. products in 36 out

of 43 quarterly comparisons and undersold the U.S. products in the remaining 7 instances. Prices of

imports from Austria oversold products imported from China in 26 out of 36 quarterly comparisons and

undersold the imports from China in the remaining 10 instances. 

Weighted-average prices of products imported from France oversold the U.S. products in 8 out of

12 quarterly comparisons and undersold the U.S. products in the remaining 4 instances. Prices of imports

from France oversold products imported from China in 5 out of 9 quarterly comparisons and undersold

the imports from China in the remaining 4 instances. 

Weighted-average prices of products imported from the UAE oversold the U.S. products in 4 out

of 7 quarterly comparisons and oversold the U.S. products in the remaining 3 instances. Prices of imports

from the UAE undersold products imported from China in 5 out of 7 quarterly comparisons and oversold

the imports from China in the remaining 2 instances. 

Weighted-average prices of products imported from Singapore oversold the U.S. products in both

of their quarterly comparisons. Prices of imports from Singapore oversold products imported from China 

in both of their quarterly comparisons. 

Figure E-1

Drill pipe: Weighted-average f.o.b. prices of domestic and imported product 1, by quarters,

January 2006-September 2009

* * * * * * *

Figure E-2

Drill pipe: Weighted-average f.o.b. prices of domestic and imported product 2, by quarters,

January 2006-September 2009

* * * * * * *

Figure E-3

Drill pipe: Weighted-average f.o.b. prices of domestic and imported product 3, by quarters,

January 2006-September 2009

* * * * * * *

Figure E-4

Drill collars: Weighted-average f.o.b. prices of domestic and imported product 4, by quarters,

January 2006-September 2009

* * * * * * *

E-3