U.S. International Trade Commission

Publication 4213 February 2011

Washington, DC 20436

Drill Pipe and Drill Collars from China

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

COMMISSIONERS 

 

Deanna Tanner Okun, Chairman 

Irving A. Williamson, Vice Chairman 

Charlotte R. Lane 

Daniel R. Pearson 

Shara L. Aranoff 

Dean A. Pinkert

Karen Laney

Staff assigned

Address all communications to 

Secretary to the Commission 

United States International Trade Commission 

Washington, DC 20436

Acting Director of Operations

Nathanael Comly, Investigator 

 Norman VanToai, Industry Analyst 

 Amelia Preece, Economist 

 David Boyland, Accountant 

 David Goldfine, Attorney 

 Lemuel Shields, Statistician 

 Douglas Corkran, Supervisory Investigator

Special assistance from

Angela Newell, Investigator 

Keysha Martinez, Investigator 

Russell Duncan, Investigator 

Cindy Cohen, Economist 

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

Washington, DC 20436 

www.usitc.gov

Publication 4213 February 2011

Drill Pipe and Drill Collars from China

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

Page

Determinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

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

Dissenting Views of Chairman Deanna Tanner Okun, Commissioner Daniel R. Pearson, and

Commissioner Shara L. Aranoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

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

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

Statutory criteria and organization of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

Statutory criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-2

Organization of the report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

U.S. market summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-3

Summary data and data sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-4

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

Nature and extent of subsidies and sales at LTFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

Sales at LTFV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-6

The subject merchandise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

Commerce’s scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

Tariff treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-7

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

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

Description and applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-11

Manufacturing processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-12

Domestic like product issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-18

Drill pipe and drill collars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-19

Premium drill pipe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-23

Intermediate products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-26

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

U.S. market characteristics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Regional availability ........................................................ II-1

Lead times . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1

Channels of distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-3

Supply and demand considerations ................................................ II-6

Supply ................................................................... II-6

Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-11

Substitutability issues .......................................................... II-19

Factors affecting purchasing decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-19

Comparison of domestic product and imports ..................................... II-22

Elasticity estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-25

U.S. supply elasticity ........................................................ II-25

U.S. demand elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-25

Substitution elasticity ....................................................... II-26

i
CONTENTS

Page

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-7

U.S. producers’ inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . III-11

U.S. producers’ imports and purchases ............................................. III-13

U.S. employment, wages, and productivity ......................................... III-14

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

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

U.S. imports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-5

Critical circumstances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-7

Negligibility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-7

Apparent U.S. consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-8

U.S. market shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-9

Ratio of imports to U.S. production . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IV-10

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-3

Price leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-3

Add-ons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-4

Price lags . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-5

Price trends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-6

Price comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-10

Lost revenues and lost sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . V-11

Part VI: Financial experience 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-3

Unfinished and finished drill collar operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-14

Capital expenditures, research and development expenses, assets, and return on investment . . . VI-15

Capital and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VI-15

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-4

U.S. importers’ inventories of drill pipe and drill collars ............................... VII-9

U.S. importers’ current orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-10

Antidumping investigations in third-country markets ................................. VII-10

Information on nonsubject countries .............................................. VII-11

Supply considerations ....................................................... VII-11

Demand considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-11

Leading nonsubject countries ................................................. VII-12

Austria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-15

France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-16

Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-17

Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-17

Mexico . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . VII-18

Appendixes

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

B. Hearing witnesses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1

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

D. Data on premium pipe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

E. Supplemental like product information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1

F. Comparison of finished and unfinished drill pipe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1

G. Additional pricing data for drill pipe and drill collars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . G-1

H. Nonsubject country price data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . H-1

I. Capital and investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-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

asterisks.

iii
 
UNITED STATES INTERNATIONAL TRADE COMMISSION

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

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 705(b) and 735(b) of the Tariff Act of

1930 (19 U.S.C. § 1671d(b)) and (19 U.S.C. § 1673d(b)) (the Act), that an industry in the United States is

threatened with material injury by reason of imports of drill pipe and drill collars from China, provided

for in subheadings 7304.22, 7304.23, and 8431.43 of the Harmonized Tariff Schedule of the United

States, that the U.S. Department of Commerce has determined are subsidized and sold in the United States

at less than fair value (“LTFV”).2 3

BACKGROUND

The Commission instituted these investigations effective December 31, 2009, following receipt of

a petition 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. The final phase of the

investigations was scheduled by the Commission following notification of preliminary determinations by

Commerce that imports of drill pipe and drill collars from China were subsidized within the meaning of

section 703(b) of the Act (19 U.S.C. § 1671b(b)) and dumped within the meaning of 733(b) of the Act

(19 U.S.C. § 1673b(b)). Notice of the scheduling of the final phase of the Commission’s investigations

and of a public hearing 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 on September 9, 2010 (75 FR 54912). The hearing was held in

Washington, DC, on January 5, 2011, 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 Deanna Tanner Okun, Commissioner Daniel R. Pearson, and Commissioner Shara L. Aranoff

dissenting.

 3

 Vice Chairman Irving A. Williamson, Commissioner Charlotte R. Lane, and Commissioner Dean A. Pinkert 

determine that they would not have found material injury but for the suspension of liquidation.
 
VIEWS OF THE COMMISSION

Based on the record in the final phase of these investigations, we find 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 sold in the United States at less than fair value and subsidized by the Government of

China.1

I. BACKGROUND

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

producers VAM Drilling USA Inc. (“VAM”), Houston, Texas; Rotary Drilling Tools (“RDT”), Beasley,

Texas; Texas Steel Conversions, Inc. (“TSC”), Houston, Texas; TMK IPSCO (“TMK”), Downers Grove,

Illinois, and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and

Service Workers International Union, AFL-CIO-CLC (“Union”), Pittsburgh, Pennsylvania (collectively,

“Petitioners”).2

 Petitioners appeared at the hearing and filed prehearing and posthearing briefs. 

Representatives of U.S. Steel Corporation (“U.S. Steel”), a domestic producer of unfinished drill pipe,

also appeared at the hearing and filed prehearing and posthearing briefs. 

Witnesses for two respondent importers appeared at the hearing: Command Energy Services,

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

importers filed joint prehearing and posthearing briefs. In addition, two witnesses appeared at the hearing

from Chinese producer DP-Master Manufacturing Co., Ltd. (“DP-Master”). 

The Commission issued questionnaires to 38 firms identified as potential U.S. producers of drill

pipe and/or drill collars and received 13 useable responses to its producers’ questionnaire.3

 The

responding U.S. producers accounted for the vast majority of U.S. drill pipe and drill collar production in

2009.4

The Commission issued questionnaires to 107 firms identified as potential importers of subject

drill pipe and drill collars, based on information provided in the petition, information provided by U.S.

Customs and Border Protection, and information provided by two commercial import monitoring

services.5

 Useable questionnaire responses were received from 33 companies.6 Questionnaire responses

were received from U.S. importers believed to account for more than 90 percent of U.S. imports of

subject merchandise from China during the period for which data were collected.7

 

The Commission received useable questionnaire responses from ten manufacturers/exporters in

China.8

 These included 7 of the 12 firms identified by responding Chinese producers as the largest

producers of drill pipe in China, and 5 of the 12 firms identified as the largest producers of drill collars in

 1 Chairman Deanna Tanner Okun and Commissioners Daniel R. Pearson and Shara L. Aranoff find that the

domestic industry is neither materially injured nor threatened with material injury by reason of subject imports from

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

 2

 CR/PR at I-1.

 3

 CR/PR at III-1. 

 4

 CR/PR at III-1.

 5

 CR/PR at IV-1.

 6

 Forty-three companies certified that they have not imported drill pipe or drill collars since January 1, 2007. 

CR/PR at IV-1, n.2.

 7

 CR/PR at IV-1.

 8

 CR/PR at Table VII-2.

3
China.9

 Responding firms claimed to account for approximately *** percent of total production of

unfinished drill pipe in China in 2009, *** percent of finished drill pipe production in China in 2009, ***

percent of unfinished drill collar production in China in 2009, and *** percent of finished drill collar

production in China in 2009.10

II. 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.”11 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.”12 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.”13

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.14 No single factor is dispositive, and the Commission

may consider other factors it deems relevant based on the facts of a particular investigation.15 The

Commission looks for clear dividing lines among possible like products and disregards minor variations.16

Although the Commission must accept the determination of the U.S. Department of Commerce

 9 CR at VII-6 n.27; PR at VII-4 n.27. 

 10 CR at VII-6; PR at VII-4.

 11 19 U.S.C. § 1677(4)(A).

 12 19 U.S.C. § 1677(4)(A).

 13 19 U.S.C. § 1677(10).

 14 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).

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

 16 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.”).

4
(“Commerce”) as to the scope of the imported merchandise subsidized or sold at LTFV,17 the Commission

determines what domestic product is like the imported articles Commerce has identified.18

B. Scope

Commerce has defined the scope of these investigations as follows:

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. Included are finished drill pipe and drill collars 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. Also included are

unfinished drill collars (including all drill collar green tubes) and unfinished drill

pipe (including drill pipe green tubes, which are tubes meeting the following

description: seamless tubes with an outer diameter of less than or equal to 6 5/8

inches (168.28 millimeters), containing between 0.16 and 0.75 percent

molybdenum, and containing between 0.75 and 1.45 percent chromium). 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.19

The products that are the focus of this proceeding consist of drill pipe and drill collars, two of the

many tools used on drilling rigs (particularly those intended for oil and gas production). In general,

drilling rigs consist of a support structure such as a derrick (for onshore drilling) or a platform (for

offshore drilling); power and mechanical systems; rotating equipment; and lining and circulation

equipment.20 A central element of the rotating equipment, in turn, is the drill string, which transmits

power from the drilling motor above the surface to the drill bit below, and which conducts drilling mud to

the drill bit to flush drill cuttings through the space between the drill string and the casing lining the hole

to the surface.21 The upper portion of the drill string consists in large part of drill pipe. The lower portion

of the drill string, or bottom hole assembly, typically includes heavy-weight drill pipe (serving as a

transition between the conventional drill pipe and the drill collars); crossovers or subs (typically short

accessories used to join different components or to join components with different diameters or thread

types); drill collars (required to place additional weight on the drill bit); and the drill bit itself.22 23

 17 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).

 18 Hosiden Corp. v. Advanced Display Mfrs., 85 F.3d 1561, 1568 (Fed. Cir. 1996) (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 Commission determination of six like products in investigations where Commerce

found five classes or kinds).

 19 76 Fed. Reg. 1966 (Jan. 11, 2011); 76 Fed. Reg. 1971 (Jan. 11, 2011).

 20 CR at I-11 & I-12; PR at I-8.

 21 CR at I-12; PR at I-8. 

 22 CR at I-12; PR at I-8.

 23 Drill pipe and drill collars are classifiable in the Harmonized Tariff Schedule (“HTS”) under subheadings

7304.22, 7304.23, and 8431.43. Drill pipe, other than that fitted with tool joints, is covered by the following HTS

(continued...)

5
1. Drill Pipe

A single length (or joint) of drill pipe comprises a hollow tube, usually 30-31 feet long, with a

wall thickness of less than 0.5 inch and a tool joint connection on each end.24 Because drill pipe is subject

to torsional stresses and fatigue during drilling operations, it must be seamless and heat-treated to meet or

exceed API specifications.25 

The subject product includes finished drill pipe as well as unfinished pipe used in the

manufacturing of finished drill pipe.26 Such unfinished pipe is known as “green tube” and is produced by

seamless pipe mills.27 Producers of finished drill pipe heat treat and forge (upset) the green tube so that

they can weld separately manufactured tool joints (steel components with a rotary shoulder connection) to

either end.28 The tool joint itself is a heavy coupling element with robust, tapered threads.29 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.30 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 subject to stress caused by shear and

vibration, and consequently fatigue.31

Heavy-weight drill pipe (“HWDP”) is characterized by thicker walls and longer tool joints than

conventional drill pipe.32 This intermediate-weight pipe has a wall thickness of approximately one inch

and has an integral wear pad in the middle.33 HWDP is designed to provide a gradual transition from the

lighter, thinner-walled conventional drill pipes to the heavier drill collars to help reduce drill pipe fatigue

or failure and prevent stress concentration at the top of the drill collar.34 HWDP also allows drilling at

higher speeds, reducing torque and differential pressure sticking.35 HWDP is well-suited for directional

drilling because it bends easily, simplifies directional control, and minimizes connection fatigue problems

common to high-angle or horizontal drilling.36

 23 (...continued)

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 covered by HTS statistical reporting number 8431.43.8040, while drill collars are covered by HTS statistical

reporting number 8431.43.8060 (a broad category that includes a substantial volume of nonsubject merchandise). 

The current tariff rates for drill pipe and drill collars are free. CR at I-10; PR at I-7.

 24 CR at I-15; PR at I-11.

 25 CR at I-15; PR at I-11.

 26 CR at I-15; PR at I-11.

 27 CR at I-15; PR at I-11. 

 28 CR at I-15; PR at I-11. 

 29 CR at I-15; PR at I-11. 

 30 CR at I-15; PR at I-11. 

 31 CR at I-15; PR at I-11. 

 32 CR at I-15; PR at I-11. 

 33 CR at I-15; PR at I-11. 

 34 CR at I-15-16; PR at I-11. 

 35 CR at I-16; PR at I-11. 

 36 CR at I-16; PR at I-11

6
Premium drill pipe is specifically designed for drilling conditions that require properties

surpassing those specified by the API standards.37 As such, premium drill pipe typically contains alloy

additions that enhance its toughness, a necessary feature for sour service or for drilling under harsh

conditions.38 Premium drill pipe has the same physical dimensions (including length and diameter) as

standard drill pipe but may also have different thread designs from API standards for certain operational

conditions.39 As such, “premium” drill pipe is manufactured to proprietary, sometimes patented,

specifications.40 41

2. Drill Collars

Drill collars are heavy, thick-walled, machined products that are designed to guide, stabilize,

provide stiffness, and add weight to the drill bit to drill a more vertical hole, but are not necessary for

horizontal drilling.42 Most drill collars are round with lengths of about 30 feet.43 The inside diameter

(I.D.) of a drill collar ranges from two inches to three inches, and the outside diameter (O.D.) ranges from

four 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.44

C. Domestic Like Product Issues

With respect to the domestic like product in the final phase of these investigations, we have

considered two issues: (1) whether unfinished drill pipe and unfinished drill collars should be treated as a

separate domestic like product from finished drill pipe and finished drill collars, and (2) whether premium

drill pipe and standard drill pipe constitute two separate domestic like products.45

1. Whether Green Tubes Are a Separate Domestic Like Product from Finished

Drill Pipe46

In the preliminary phase of these investigations, the Commission addressed the issue of whether

green tubes were a separate domestic like product from finished drill pipe. Applying a semi-finished like

 37 CR at I-16; PR at I-11

 38 CR at I-16; PR at I-11

 39 CR at I-16; PR at I-11-12. 

 40 CR at I-16; PR at I-12.

 41 This range of drill pipe, however, should not be confused with premium used drill pipe, a term which generally

refers to used drill pipe with substantial wear remaining on its body walls. CR at I-16; PR at I-12.

 42 CR at I-17; PR at I-12.

 43 CR at I-17; PR at I-12.

 44 CR at I-17; PR at I-12.

 45 In the preliminary phase of these investigations, the Commission declined to treat drill pipe and drill collars as

separate domestic like products. See e.g., USITC Pub. No. 4127 at 10. Absent party argument to the contrary in the

final phase of these investigations, we do not depart from the Commission’s prior finding on this issue.

 46 We note that the scope of Commerce’s investigations and final determinations includes unfinished drill pipe, a

stage of production that includes drill pipe green tube. While Commerce’s description of drill pipe green tube is

more narrow than the product offerings of certain U.S. mills (see, e.g., CR at I-38 n. 73; PR at I-26 n.73), we have

continued to treat drill pipe that has not been heat-treated or upset as “unfinished drill pipe.”

7
product analysis, the Commission found that, for purposes of the preliminary phase of these

investigations, green tubes were not a separate domestic like product from finished drill pipe.47 

Although Respondents argued in their prehearing brief that the Commission should find green

tubes to be a separate domestic like product,48 Respondents assert unequivocally in their posthearing brief

that “the Commission should find one domestic like product consisting of a continuum of drill pipe and

drill collar products.”49 Petitioners agree that the Commission should find a single domestic like product

consisting of both green tubes and finished drill pipe, as it found in the preliminary phase.50

As discussed above, unfinished drill pipe is a precursor to finished drill pipe. In cases where an

issue is presented as to whether articles at different stages of processing should be included in the same

like product, the Commission has stated that it will use a semi-finished like product analysis.51 In its

preliminary views, the Commission found that, “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 semi-finished product analysis is more appropriate than

application of the Commission’s six-factor analysis.”52 

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 in seamless

pipe mills.53 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.54 They then roll the shell to size in a sizing or stretch-reducing mill.55 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 tool

 47 USITC Pub. No. 4127 at 11.

 48 In presenting the argument in their prehearing brief that the Commission find green tube to be a separate

domestic like product, Respondents pointed out that “[i]nformation regarding downstream products submitted to the

Commission since the preliminary phase demonstrates that green tube can be, and has been used to produce both

drill pipe and OCTG products.” Respondents’ Prehearing Br. at 43. They also noted that, “[t]he responses of green

tube producers indicate that green tube suitable for drill pipe is also suitable for OCTG products,” and that

“[a]dditional information on the record regarding the physical and mechanical properties of green tube demonstrates

that green tube is a separate like product.” Respondents’ Prehearing Br. at 43. 

 49 Respondents’ Posthearing Br. at 3.

 50 Petitioners’ Prehearing Br. at 16. 

 51 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.”).

 52 USITC Pub. No. 4127 at 17. 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, Inv. Nos. 731-TA1111-1113 (Prelim.), USITC Pub. No. 3921 at 7 (May 2007); Artists’ Canvas from China, Inv. No. 731-TA-1091

(Final), USITC Pub. No. 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. No. 3533 at 7 (Aug. 2002).

 53 See, e.g., CR at I-17; PR at I-13.

 54 See, e.g., CR at I-17; PR at I-13.

 55 See, e.g., CR at I-17; PR at I-13.

8
joint.56 After being heat treated by one of several possible methods to meet the desired grade,57 the pipes

go through a finishing phase, in which they are heat-treated, inspected, and straightened.58 Processors

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

welding.59 Drill pipe (with tool joints attached) subsequently will undergo an additional heat treatment

with a polymer quenching agent so that it cools gradually.60 The pipe then undergoes an additional

finishing process where it is machined smooth and inspected.61 As a share of the finished drill pipe by

weight, the unfinished product accounts for approximately two-thirds, with the tool joints accounting for

approximately one-third.62

Drill collars are produced from solid steel bars that undergo a heat treatment process, and then are

drilled, bored, or trepanned.63 Following the formation of the central cavity, the unfinished drill collar

may be referred to as a drill collar “blank.” Subsequently, spiral grooves may be applied and then threads

cut directly into each end of the thick-walled drill collar so that it can be connected to other collars.64 65 

Whether the upstream article is dedicated to the production of the downstream article. “Green

tube” is a term that can apply to unfinished, non-heat-treated tube bodies for casing and tubing or for drill

pipe.66 The scope of these investigations, however, focuses on the latter form of green tube.67 From the

perspective of at least two leading processors, the green tubes they use are dedicated to finished drill pipe. 

VAM, 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 ensures a superior product.”68

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.”69

 56 See, e.g., CR at I-18; PR at I-13.

 57 See, e.g., CR at I-18; PR at I-13.

 58 See, e.g., CR at I-18; PR at I-13.

 59 See, e.g., CR at I-18; PR at I-13. 

 60 See, e.g., CR at I-18; PR at I-13.

 61 See, e.g., CR at I-18; PR at I-13.

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

 63 See, e.g., CR at I-20; PR at I-14.

 64 See, e.g., CR at I-20; PR at I-14. This method does not require tool joints. Id. 

 65 Not all drill collars pass through a discrete “blank” stage. Larger producers shift overflow drilling or boring to

operations such as Timken’s TBS facility, but also maintain their own trepanning capability. See e.g., CR at I-20 &

III-7 n.10; PR at I-14 & III-6 n.10. Another consideration is the operational sequence required to produce drill

collars. Drill collars are frequently produced from bars that are fully heat-treated before the formation of the central

cavity. Thus, a high-value-added operation takes place in its entirety before the product ever becomes “unfinished”

drill collar, rather than in multiple stages (as is the case with drill pipe). See e.g., CR/PR at Figure I-5; CR at I-20;

PR at I-14. In turn, this is consistent with differences in the average unit values of unfinished and finished drill

collars that are far less pronounced than those for finished and unfinished drill pipe (CR/PR at Table VI-2b); why

*** would characterize the finishing process as “straightforward” and *** would consider the value added from

finishing as *** less than that required for drill pipe (CR/PR at Appendix F); and why Sunbelt Steel Texas would not

even be able to segregate its finished and unfinished drill collar operations. See e.g., Hearing Tr. at 191 (Rutledge). 

 66 CR at I-39; PR at I-26.

 67 CR at I-39; PR at I-26.

 68 CR at I-39; PR at I-26.

 69 CR at I-39; PR at I-26-27.

9
At present, three U.S. mills produce unfinished drill pipe domestically: TMK and U.S. Steel,

both of which also produce casing and tubing, and Timken, which does not.70 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.”71 According to Timken, ***.72 U.S. Steel’s online product catalogue

identifies drill pipe as a distinct entry,73 although 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.74 

Responding U.S. producers that addressed the Commission’s question regarding whether the

upstream article is dedicated to the production of the downstream article categorically indicated that both

green tube and unfinished drill collars are dedicated to the production of finished drill pipe and drill

collars and identified no other commercial application during the period for which data were collected.75

U.S. purchasers provided similar observations.76

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

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

length), so the upstream products necessarily impart certain characteristics to the downstream drill pipes. 

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 joint that is

characteristic of finished drill pipe. By heat-treating and other such operations, processors do not change

the appearance of the product but do alter the green tube’s microstructure or mechanical properties to

yield finished drill pipes of a specific grade. 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. The addition of tool joints alters the appearance of the pipes and provides

functionality unavailable from green tubes; finished drill pipes with tool joints can be connected to other

drill pipes to form a drill string for use in oil and gas drilling applications.77

In their questionnaire responses, U.S. producers that addressed the Commission’s question

regarding whether there are differences in the physical characteristics and functions of the upstream and

downstream articles emphasized both similarities and differences.78 Similarities included the steel

chemistry and certain physical characteristics such as length.79 Differences for finished drill pipe

included heat treating, end finishing, and the presence of the tool joint. Differences for finished drill

collars, however, were less pronounced, and generally involved certain exterior machining and the

addition of threaded connectors.80 U.S. purchasers focused on the lack of connectors on unfinished drill

 70 CR at I-39; PR at I-27.

 71 CR at I-39-40; PR at I-27.

 72 CR at I-40; PR at I-27. 

 73 CR at I-40; PR at I-27.

 74 CR at I-40; PR at I-27.

 75 CR at I-40; PR at I-27.

 76 CR at I-41; PR at I-27.

 77 See, e.g., CR at I-41; PR at I-28; USITC Pub. No. 4127 at 9-10.

 78 CR at I-41; PR at I-28.

 79 CR at I-41; PR at I-28.

 80 CR at I-41; PR at I-28.

10
pipe and unfinished drill collars, and generally observed that, in the absence of such connectors,

downhole use was precluded.81

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.82 No U.S. mills that produce green tubes for drill pipe manufacture finished drill pipe.83 No

U.S. processors that make finished drill pipe manufacture green tubes for drill pipes, although drill pipe

processors occasionally produce and sell drill pipe that has been upset and heat treated, but not tool

joined.84 Whereas *** unfinished drill pipe in its green stage is sold exclusively to the processors that

provide heat treatment, upsetting, and tool joining, the finished drill pipe is sold by the processors largely

to end users and the remainder sold to distributors.85 

Responding U.S. producers that addressed the Commission’s question regarding whether there

are perceived to be separate markets for the upstream and downstream articles generally indicated that the

markets were the same.86 Responding U.S. producers that focused on the customer base for unfinished

and finished drill pipe, however, reiterated that the former is sold to processors and the latter is sold

(directly or indirectly) to end users such as drilling contractors.87 Purchasers largely share this view,

generally reporting that they purchase only finished drill pipe or drill collars.88 89

Differences in costs or value of the vertically differentiated articles. 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.90 Questionnaire respondents reported average unit values for

unfinished drill pipe that ranged from a low of $*** per short ton in 2007 to a peak of $*** per short ton

in 2008 whereas reported average unit values for finished drill pipes ranged from a low of $5,193 per

short ton in 2007 to a peak of $6,253 per short ton in 2009.91 Evidence in the record indicates that the

attachment of tool joints accounts for approximately 30 percent of the production cost of finished drill

pipe.92 In contrast, *** indicated that unfinished drill collars constitute the large majority of the value of

finished drill collars (*** percent, according to ***).93

Conclusion. As in the preliminary phase, the available information on this issue is mixed. 

Nevertheless, under our semi-finished product criteria, there does not appear to be a clear dividing line

between drill pipe and drill collars. Therefore, we are not persuaded to depart from the Commission’s

prior finding of a single domestic like product in these final phase investigations. Accordingly, we again

 81 CR at I-41; PR at I-28.

 82 See e.g., CR at I-17 to I-18; PR at I-12-13.

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

 84 See, e.g., CR at III-5 n.4; PR at III-4 n.4.

 85 See, e.g., CR/PR at Table I-4; CR at I-40; PR at I-27.

 86 CR at I-41; PR at I-27.

 87 CR at I-41; PR at I-27-28.

 88 CR at I-41; PR at I-28.

 89 Commissioner Pinkert finds that the markets for finished and unfinished drill pipe products are distinct but that

there is a single market for finished and unfinished drill collars. With respect to the former, he notes that finished

and unfinished drill pipe products are made by different producers, sold to different customers, and face competition

from different types of subject imports. 

 90 CR at I-43; PR at I-29.

 91 CR/PR at Table I-5.

 92 CR at I-42 n.88; PR at I-28 n.88.

 93 CR at I-42; PR at I-28.

11
find a single domestic like product consisting of both green tubes and finished drill pipe, which is

coextensive with Commerce’s scope of investigation. 

2. Whether the Commission Should Find Premium Drill Pipe to be a Separate

Domestic Like Product from API-Grade Drill Pipe

Although not raised by the parties in the preliminary phase and not addressed by the Commission

in its preliminary views, the parties disagree in the final phase of these investigations as to whether the

Commission should find premium drill pipe to be a separate domestic like product from API-grade drill

pipe. Petitioners contend that premium drill pipe is a separate like product from API-grade drill pipe.94 

Respondents argue that premium drill pipe is part of a continuum and is not a separate like product.95

Physical characteristics and uses. API-grade and premium drill pipe are both derived from green

tubes.96 In their questionnaire responses, responding U.S. producers typically indicated that there was a

commonality between premium and API-grade drill pipe in terms of appearance, shape, size, and uses.97

Premium drill pipe typically contains alloy additions that enhance its toughness, and may also have thread

designs that differ from API standards for certain operational conditions.98 U.S. producers indicated that

premium drill pipe can outperform API-grade drill pipe insofar as high-risk drilling utilizes premium drill

pipe for extreme reach drilling projects, high pressure or high temperature wells, and deep water drilling

environments.99 Nevertheless, there is a continuum in terms of yield strength in API-grade drill pipe,

blurring any distinction between it and premium drill pipe.100 U.S. purchasers identified similar

applications for premium drill pipe.101

Common manufacturing facilities and employees. Similar production processes are used to

produce both premium and API-grade drill pipe, although premium drill pipe may be subjected to more

extensive heat-treating processes and more rigorous testing procedures than API-grade drill pipe.102

There is overlap between domestic producers of both premium and API-grade drill pipe, and producers

use the same facilities for producing both premium and API-grade drill pipe.103 In their questionnaire

responses, U.S. producers generally agreed that premium drill pipe and API-grade drill pipe use the same

overall manufacturing processes, although specific additional steps may be required for premium pipe.104

U.S. purchaser responses were sparse, but generally similar in indicating a commonality in production

processes.105

Interchangeability. As we consider the extent to which premium and API-grade drill pipe is

interchangeable, we bear in mind that API-grade drill pipe of differing grades is generally not

 94 Petitioners’ Prehearing Br. at 29.

 95 Respondents’ Prehearing Br. at 45. 

 96 CR at I-15 & I-19; PR at I-11 & I-13. 

 97 CR at I-33; PR at I-24.

 98 CR at I-16; PR at I-11. 

 99 CR at I-33-34; PR at I-24.

 100 Respondents’ Posthearing Br. at 45-47. 

 101 CR at I-34; PR at I-24.

 102 CR at I-19; PR at I-14. 

 103 See e.g., CR/PR at Appendix D.

 104 CR at I-34; PR at I-24.

 105 CR at I-34; PR at I-24.

12
interchangeable.106 In their questionnaire responses, responding U.S. producers generally agreed that

premium drill pipe and API-grade drill pipe are not interchangeable.107 U.S. purchasers tended to hold

similar views regarding the limitations in interchangeability between premium and API-grade drill pipe,

although several noted that one-way interchangeability was possible.108

Customer and producer perceptions. As discussed above, both Petitioners and Respondents

contend that premium drill pipe is perceived to be of a higher quality, but Respondents argue that this

does not provide a clear dividing line. In their questionnaire responses, U.S. producers generally agreed

that premium drill pipe is perceived to be a more technically advanced product or an upgrade to APIgrade drill pipe.109 U.S. purchasers focused on higher performance and quality, with some noting that

premium drill pipe would only be used when required by drilling conditions.110 In this respect, customers

and producers likewise perceive that drill pipe of different API grades is distinct, given that they differ in

tensile strength.111

Channels of distribution. API-grade drill pipe is sold mostly to end users with almost all of the

remaining share sold to distributors.112 Similarly, although to a lesser extent, premium drill pipe is sold to

end users with the remaining share to distributors.113 

Price. Average unit values (“AUVs”) for premium drill pipe exceeded those for API-grade drill

pipe throughout the period examined, with a differential of more than $3,000 in 2009.114 However, even

prices for API-grade drill pipe can vary widely depending upon differing API specifications, tending to

blur distinctions between the prices for premium and API-grade drill pipe.115

Conclusion. We find that premium drill pipe is not a separate domestic like product from APIgrade drill pipe because, under our six-factor analysis, there does not appear to be any clear dividing line

between them. On balance, based upon the record in the final phase of these investigations, we find a

single like product consisting of a continuum of both API-grade drill pipe (finished and unfinished) and

premium drill pipe, which is coextensive with Commerce’s scope. Notwithstanding differences in price

and customer and producer perceptions and limited interchangeability,116 the record reflects substantial

similarities between API-grade and premium drill pipe with respect to physical characteristics and uses,

 106 CR at I-15 n.17, PR at I-11 n.17 (noting for API grades of standard drill pipe differing in tensile strength, the

pulling force at which the material will fail). See e.g., Respondents’ Prehearing Br. at 45-46. 

 107 CR a I-34; PR at I-24.

 108 CR at I-34-35; PR at I-24. 

 109 CR at I-35; PR at I-24. 

 110 CR at I-35; PR at I-24. 

 111 CR at I-15 n.7; PR at I-11 n.17; Respondents’ Prehearing Br. at 45-46.

 112 CR/PR at Table I-6.

 113 CR/PR at Table I-6. 

 114 See e.g., CR/PR at Table I-7. 

 115 Compare CR/PR at Table V-2 (5'' G-105 drill pipe) with CR/PR at Table V-4 (5'' S-135 drill pipe).

 116 In a prior case, the Commission stated that “a lack of interchangeability among products comprising a

continuum is not unexpected and not inconsistent with finding a single like product.” Carbon and Certain Alloy

Steel Wire Rod from China, Germany, and Turkey, Inv. Nos. 731-TA-1099-1101 (Preliminary), USITC Pub. 3832

(January 2006) at 10; Stainless Steel Bar from France, Germany, Italy, Korea, and the United Kingdom, Inv. Nos.

701-TA-413 (Final) and 731-TA-913-916 and 918 (Final), USITC Pub. 3488 (February 2002) at 6-7; Certain 

Cold-Rolled Steel Products from Argentina, Australia, Belgium, Brazil, China, France, Germany, India, Japan,

Korea, the Netherlands, New Zealand, Russia, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and

Venezuela, USITC Pub. 3471 (November 2001) at 7; Carbon and Certain Alloy Steel Wire Rod from Brazil,

Canada, Egypt, Germany, Indonesia, Mexico, Moldova, South Africa, Trinidad and Tobago, Turkey, Ukraine, and

Venezuela, Inv. Nos. 701-TA-417-421 (Preliminary) and 731-TA-953-963 (Preliminary), USITC Pub. 3456

(October 2001) at 6. 

13
production processes, and channels of distribution. Accordingly, we find a single domestic like product,

consisting of API-grade and premium drill pipe, which is coextensive with Commerce’s scope. 

D. Conclusion

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

drill collars, whether in finished or unfinished forms, including green tubes, which is coextensive with the

scope of these investigations. 

III. 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.”117 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.

In the preliminary phase of these investigations, the parties agreed, and the Commission found,

that U.S. operations processing 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. In

reaching that conclusion, the Commission noted that drill pipe finishers have substantial capital

investments and use significant technical expertise and a large number of employees in the production of

drill pipe, and that the parties agreed that finishing operations add significant value to green tubes

processed into drill pipe.118 No party challenges this conclusion and there are no new facts that would call

it into question. Accordingly, we again find that U.S. operations processing 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).

B. 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.119 Exclusion

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

investigation.120 121

 117 19 U.S.C. § 1677(4)(A).

 118 See e.g., USITC Pub. 4127 at 13-14. 

 119 19 U.S.C. § 1677(4)(B). 

 120 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.

(continued...)

14
1. Preliminary Phase Determinations

In the preliminary phase of these investigations, the Commission found that domestic producer

*** was a related party because it was an importer of subject merchandise from China.122 The

Commission also found, however, that appropriate circumstances did not exist to exclude *** from the

domestic industry as a related party because its U.S. production operations of finished drill pipe and drill

collars were quite large, its imports of subject merchandise were relatively small compared to its U.S.

production, and the record did not show, based upon its financial performance during the period

examined, that the domestic operations of *** derived a significant benefit from its importation of

relatively limited quantities of subject merchandise from China.123 Moreover, given that *** was the ***

producer of finished drill pipe in the United States, and the *** of finished drill collars, the Commission

concluded that excluding *** from the domestic industry would skew the data.124 

2. Parties’ Arguments

Petitioners argue that the Commission ***.125 Petitioners argue that *** “directs its Chinese

exports to increase profits of its own U.S. operations and decrease other U.S. producers profits,” and

benefits from its imports of “low-cost subsidized green tube from China.”126

Respondents Downhole and Command argue that the Commission should not exclude *** from

the domestic industry.127 They contend that the record in these final phase investigations shows

 120 (...continued)

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”).

 121 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 n. 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.

 122 USITC Pub. 4127 at 16.

 123 USITC Pub. 4127 at 16.

 124 USITC Pub. 4127 at 16. The Commission also found that two U.S. producers that purchased subject imports

from China during the period examined, ***, did not qualify as related parties. USITC Pub. 4127 at 16 n.101.

 125 See, e.g., Petitioners’ Prehearing Br. at 47-53; Petitioners’ Posthearing Br. at 5-7.

 126 Petitioners’ Posthearing Br. at 6. 

 127 Respondents’ Posthearing Br. at 14-16.

15
“conclusively that *** is primarily a domestic producer, not an importer.”128 They claim that “there is no

evidence that *** derived any significant benefit from the importation of subject merchandise.”129 

3. Analysis

*** qualifies as a related party because it was an importer of subject merchandise from China and

***.130 ***.131 

*** reported importing unfinished drill pipe from China in order to make finished drill pipe and

finished heavy-weight drill pipe.132 It also imports some subject finished drill pipe that it sells to its

customers.133 The combined tonnage of its imports of unfinished and finished subject merchandise from

China was equivalent to the following percentages of the tonnage of its domestic production of finished

drill pipe: *** percent in 2007, *** percent in 2008, *** percent in 2009, *** percent in interim 2009,

and *** percent in interim 2010.134 The ***.135

***. Taken together, ***.136 *** also owns *** that reportedly provided ***.137

*** is *** producer of finished drill pipe in the United States, accounting for *** percent of

domestic production in 2009.138 It is the ***, accounting for *** percent of reported U.S. finished drill

collar production in 2009.139

As indicated above, imports of subject merchandise by *** were substantially less than its

production of the domestic like product. Additionally, unfinished drill pipe accounted for most of the

subject merchandise imported by ***, which it used to produce the domestic like product.140

Accordingly, we conclude that the producer’s interests lie primarily in domestic production rather than in

the importation of the subject merchandise.

Evaluating the extent to which the domestic operations of *** benefit from, or are shielded by,

***, is challenging. The quantity of its subject imports, while substantial, is dwarfed by the output of its

U.S. production operations.141 With respect to ***, although the company could structure *** so as to

avoid inflicting harm upon its U.S. operations, the company’s *** accounted for only a small portion of

subject imports of finished and unfinished drill pipe during the period examined.142

 128 Respondents’ Posthearing Br. at 14.

 129 Respondents’ Posthearing Br. at 15.

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

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

 132 See, e.g., CR/PR at Table III-7a n.1.

 133 See, e.g., CR at III-7b n.1.

 134 Derived from CR/PR at Tables III-7a & III-7b. *** also produces finished drill collars, but does not import

unfinished or finished drill collars. *** unfinished drill pipe in the United States. 

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

 136 CR/PR at Table VII-2.

 137 CR/PR at Table VII-2.

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

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

 140 CR/PR at Table III-7a & n.1 and Table III-7b.

 141 *** importation of unfinished drill pipes from its *** is significantly larger, but these imports are not relevant

to the question of whether to exclude *** as a related party. See e.g., CR/PR at Table VI-2a. 

 142 See e.g., CR/PR at Table VII-2; Foreign Producer Questionnaire Response of ***.

16
In terms of its U.S. (finished) drill pipe operations, *** financial performance during the period

examined was just moderately above the industry average.143 144 *** operating profit ratios were ***,145

although it is difficult to draw too many conclusions by comparing individual producers’ performances in

this industry, due to differences in production size, product mix, and other factors.

In conclusion, we acknowledge that the combination of ***, and its imports of subject unfinished

and finished drill pipe, arguably place *** in a somewhat different position than other domestic

producers. Nevertheless, we do not find that these facts rise to a level of significance that would justify

exclusion of *** from the domestic industry. *** U.S. production operations of finished drill pipe and

drill collars are quite large, its imports of subject merchandise ***, the ***, and there is no clear evidence

of a benefit to its domestic operations from its relationship to subject production and merchandise.146

C. Conclusion

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

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

IV. LEGAL STANDARDS

A. In General

In the final phase of antidumping and countervailing duty investigations, the Commission

determines whether an industry in the United States is materially injured or threatened with material

injury by reason of the imports under investigation.147 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

 143 Consistent with her practice in past investigations and reviews, Commissioner Aranoff 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. Ordinarily, she does not rely on individual-company

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. 

Here, however, the data relating to *** domestic production operations are affected by subject unfinished drill pipe

imported from China. Like her colleagues, she finds that the benefit from these importations is relatively small,

given that subject merchandise from China accounts for a small share of the unfinished drill pipe that *** consumes

in its finished drill pipe production operations.

 144 Commissioner Pinkert does not rely upon financial performance as a factor in determining whether

appropriate circumstances exist to exclude *** from the domestic industry. He notes in this regard the difficulty in

identifying any benefit it might have received from importing unfinished drill pipe from subject sources. CR/PR at

Table III-7a. 

 145 See, e.g., CR/PR at Table VI-2a (unfinished and finished drill pipe: results of operations, by firm). This

comparison does not include ***. When these are included, the firm’s operating results are *** than the rest of the

industry in 2009.

 146 One domestic producer, ***, purchased subject imports of unfinished drill pipe from China during the period

examined. The purchases made by *** were extremely small in 2009 and *** did not make any such purchases in

interim 2010, although they were larger earlier in the period examined. See e.g., CR/PR at Table III-1. We do not

find that *** is a related party in the absence of any indication that it controls large volumes of subject imports via

its purchases. 

 147 19 U.S.C. §§ 1671d(b), 1673d(b).

17
operations.148 The statute defines “material injury” as “harm which is not inconsequential, immaterial, or

unimportant.”149 In assessing whether the domestic industry is materially injured by reason of subject

imports, we consider all relevant economic factors that bear on the state of the industry in the United

States.150 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.”151

Although the statute requires the Commission to determine whether the domestic industry is

“materially injured or threatened with material injury by reason of” unfairly traded imports,152 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.153 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.154

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.155 In performing its examination, however, the Commission need not

 148 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 ... and explain in full its relevance to the determination.” 

19 U.S.C. § 1677(7)(B).

 149 19 U.S.C. § 1677(7)(A).

 150 19 U.S.C. § 1677(7)(C)(iii).

 151 19 U.S.C. § 1677(7)(C)(iii).

 152 19 U.S.C. §§ 1671d(a), 1673d(a).

 153 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’d, 944 F. Supp. 943, 951 (Ct. Int’l Trade

1996).

 154 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

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).

 155 SAA at 851-52 (“{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

(continued...)

18
isolate the injury caused by other factors from injury caused by unfairly traded imports.156 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.157 It is clear that the existence of

injury caused by other factors does not compel a negative determination.158

Assessment of whether 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 imports.”159 160 Indeed, the

 155 (...continued)

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

 156 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, Invs. 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.”).

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

 158 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.”).

 159 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.

 160 Commissioner Pinkert does not join this paragraph or the following three 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

when considering present material injury, to undertake a particular kind of analysis of nonsubject imports, albeit

without reliance upon presumptions or rigid fomulas. 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 nonsubject 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. Commissioner Pinkert notes that such an analysis is unnecessary here because, without resorting to

it, he finds an absence of present material injury by reason of subject imports. 

19
Federal Circuit has examined and affirmed various Commission methodologies and has disavowed “rigid

adherence to a specific formula.”161

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.162 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.163 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.

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

non-attribution issues when it performs its causation analysis.164 165

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

institutional expertise in resolving injury issues.167

 161 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.”).

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

 163 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).

 164 Commissioner Lane also refers to her dissenting views in Polyethylene Terephthalate Film, Sheet, and Strip

from Brazil, China, Thailand, and the United Arab Emirates, Invs. Nos. 731-TA-1131 to 1134 (Final), USITC Pub.

4040 (Oct. 2008), for further discussion of Mittal Steel.

 165 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.

 166 We provide in our respective discussions of volume, price effects, and impact a full analysis of other factors

alleged to have caused any material injury experienced by the domestic industry.

 167 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.”).

20
B. Material Injury by Reason 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.”168

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.169

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.”170 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

are considered “within the context of the business cycle and conditions of competition that are distinctive

to the affected industry.”171

C. Threat of Material Injury by Reason of Subject Imports

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.”172 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.173 In making our

determination, we consider all statutory threat factors that are relevant to these investigations.174

 168 19 U.S.C. § 1677(7)(C)(i).

 169 19 U.S.C. § 1677(7)(C)(ii).

 170 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.”). 

 171 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 Pub. 3155 at 25 n.148 (Feb. 1999).

 172 19 U.S.C. § 1677(7)(F)(ii).

 173 19 U.S.C. § 1677(7)(F)(ii).

 174 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,

(continued...)

21
V. CONDITIONS OF COMPETITION AND THE BUSINESS CYCLE

The following conditions of competition inform our analysis of whether there is material injury or

threat of material injury by reason of subject imports.

A. Data Considerations175

1. Use of Questionnaire Data in Lieu of Official U.S. Import Statistics

Petitioners contend that it is not appropriate to use data from importers’ questionnaire responses

because they are not sufficiently complete, when considered in relation to official Census Bureau Import

Statistics.176 Respondents Downhole and Command urge the Commission to use data from importer

questionnaire responses and to cross-reference PIERS data with Customs data.177

Our normal practice is to collect import data both through importer questionnaires and from

official import statistics, and we determine our preferred data source on a case-by-case basis. Here, we

 174 (...continued)

(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,

(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). In the analyses of both the majority and dissenting Commissioners, the applicable

statutory threat factors are discussed using the same volume/price/impact framework that applies to the analysis of

material injury. 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 this investigation. 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).

 175 In addition to the issues discussed in this section, we note that there is an additional issue as to *** reported

financial data, including its recognition of various costs. This issue is addressed below in both the majority and

dissenting views respectively. 

 176 See, e.g., Petitioners’ Prehearing Br. at 28-35. 

 177 See, e.g., Respondents’ Prehearing Br. at 40. 

22
elect to rely on importer questionnaire data for subject import volume. Our rate of coverage is estimated

to exceed 90 percent of U.S. imports of drill pipe and drill collars,178 and we find that official import

statistics are not sufficiently accurate to be the best available data source.179

2. ***’s Finishing Operations in ***

A portion of *** finished drill pipe was ***.180

Petitioners argue that the Commission should treat finished drill pipe ***.181 Respondents

Downhole and Command agreed with Petitioners that tool-joining operations substantially transform

unfinished drill pipe into finished drill pipe but did not specifically address *** should be treated as

nonsubject merchandise.182

We have treated these products as nonsubject merchandise ***, not domestic production.183

Attaching a tool joint to an unfinished drill pipe is a technically complicated operation requiring

 178 The Staff Report explains our methodology for calculating the coverage estimate for subject imports based

upon questionnaire data as follows:

Staff’s coverage estimate began with official import statistics by value (since quantity is not

collected using a uniform standard). Staff subtracted from this figure imports from China of

casing, tubing, and tubing spools, tubing and casing heads and valve bodies recorded in Customs

drill pipe data for the following companies: ***. No data were excluded simply on the basis of a

“No” questionnaire response; all exclusions were based on a combination of documentation or

follow-up telephone interviews. Then, Staff subtracted the value of ***. Next, Staff added the

value of reported imports of drill pipe that were entered under incorrect HTS statistical reporting

numbers. Then, Staff evaluated these data against questionnaire value data for unfinished and

finished drill pipe from China, and calculated a coverage figure for drill pipe from China.

After calculating the questionnaire coverage for drill pipe from China, Staff estimated that the

value of imports of drill collars from China was 10 percent of the target figure for drill pipe, based

on estimates by market participants that drill collars account for 5-10 percent of the combined

length of drill pipe and drill collars on the drill string. Staff believes this to be a conservative

estimate, but official import statistics are not available for drill collars. Finally, Staff calculated

coverage based on the combined importer questionnaire responses for drill pipe and drill collars

from China relative to the target level of drill pipe imports plus 10 percent. The result of this

estimate is over 90 percent coverage.

CR at IV-2 n.4; PR at IV-1-2 n.4.

 179 According to Customs data and official import statistics, certain importers accounting for a large portion of

imports from China in 2008-2009 certified that they did not import as much, and in some cases, any, drill pipe as

reported in the official import statistics. Instead, many of these entries were forms of OCTG now covered by

antidumping and countervailing duties. CR/PR at IV-1 n.3; CR at II-12 n.13; PR at II-9 n.13. In addition, a

substantial volume of drill pipe was mis-classified in 2010, distorting the official import statistics upon which the

Commission might have otherwise relied. Because of these inconsistencies, which resulted in a mis-statement of the

volume of imports captured by the official import statistics, and since the questionnaire responses are a more

accurate reflection of the volume of imports with more than 90 percent coverage, we rely on importer questionnaire

responses instead of official import statistics to measure imports. See e.g., CR/PR at IV-1. 

 180 See e.g., CR at IV-7 n.8; PR at IV-6 n.8.

 181 Petitioners’ Prehearing Br. at 53-57. 

 182 Hearing Tr. at 229. 

 183 See e.g., CR at IV-7 n.8; PR at IV-6 n.8.

23
significant capital and adding substantial value. The merchandise at issue does not become finished drill

pipe until tool joints are added ***. 

B. Demand Conditions

Because drill pipe and drill collars are used in the drilling activity related to oil and natural gas

wells, U.S. demand for drill pipe is closely linked to demand for those products.184 One indicator of such

demand are the prices for oil and gas. Monthly prices for oil and gas increased irregularly from January

2007 through June 2008, and then generally declined during the remainder of 2008.185 The price of oil

has recovered somewhat from the low level reached in early 2009, but the price of natural gas has

generally remained relatively lower throughout 2009 and the early months of 2010 compared to earlier in

the period examined.186

Another indicator of U.S. demand for oil and natural gas, and the related demand for drill pipe

and drill collars, is the extent of new drilling activity.187 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.188 During the period examined, drilling activity for oil and natural gas (as measured by footage

drilled) generally increased between January 2007 and October 2008, after which it declined sharply until

May 2009, then returned to close to 2007 levels by 2010.189 Based on an analysis of active rigs, the

partial recovery in drilling activity in 2010 reflects relatively greater activity in land-based rigs drilling

for oil, as well as a growing emphasis on horizontal drilling operations. Drilling activity in shale regions

for oil and gas has contributed importantly to these trends, offsetting a decline in offshore drilling

activity.190

Finally, demand for drill pipe and drill collars is influenced by the useful life of the merchandise.

Drill pipe has an average useful life of two to three years, which is far beyond the normal period of time

for drilling a well, and can often be refurbished and reused in drilling another well.191 Moreover, drill

pipe and drill collars on idled rigs can be transferred to active rigs.192 Thus, when rig activity declines,

large contractors and rental companies can be left with inventories of drill pipe, thus lowering their

demand for replacement drill pipe.193

Most responding U.S. producers (12 of 13), importers (21 of 24), and purchasers (30 of

33) reported that demand had decreased or fluctuated during the period examined.194 Apparent U.S.

consumption of finished drill pipe and collars declined by *** percent from 2007 to 2009, and was ***

percent lower in January-June 2010 than in January-June 2009.195 Apparent U.S. consumption of

 184 See, e.g., CR at II-18-20; PR at II-11-13.

 185 CR/PR at Figures II-3 & II-4.

 186 CR/PR at Figures II-3 & II-4.

 187 CR at II-19; PR at II-13.

 188 See, e.g., Confer. Tr. at 106-107 (Fields, Morris, Williamson)

 189 CR/PR at Figure II-2.

 190 CR/PR at Figures II-3, II-4, II-5, and II-6; CR at II-24, PR at II-15.

 191 See, e.g., CR at II-19; PR at II-13; Hearing Tr. at 267-270.

 192 See, e.g., Confer. Tr. at 66-67 (Schagrin, Fields); Hearing Tr. at 267 (Mostwoway).

 193 See, e.g., Hearing Tr. at 67 (Fields), 73-74 (Morris), 110-112 (Schagrin, Brand, and Morris), 124 (Chen), and

146-147 (Lesco).

 194 CR at II-22; PR at II-15. 

 195 See e.g., CR/PR at Table C-2. Apparent U.S. consumption of finished drill pipe and drill collars was ***

short tons in 2007, *** short tons in 2008, *** short tons in 2009, *** short tons in January-June 2009, and ***

(continued...)

24
unfinished drill pipe and collars declined by *** percent from 2007 to 2009, and was *** percent lower

in January-June 2010 than in January-June 2009.196 

C. 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.197 Although nonsubject imports of finished

drill pipe and drill collars were an important factor in the U.S. market during 2007 and into 2008, they

played a diminishing role thereafter.198 The presence of nonsubject imports of unfinished drill pipe in the

U.S. market, in contrast, was substantial throughout the period examined.199

U.S. producers’ market share for finished drill pipe and drill collars was *** percent in 2007, ***

percent in 2008, *** percent in 2009, *** percent in interim 2009, and *** percent in interim 2010.200

The market share of subject imports from China of finished drill pipe and drill collars was *** percent in

2007, *** percent in 2008, *** percent in 2009, *** percent in interim 2009, and *** percent in interim

2010.201 The market share for nonsubject imports of finished drill pipe and drill collars was *** percent

in 2007, *** percent in 2008, *** percent in 2009, *** percent in interim 2009, and *** percent in

interim 2010.202

U.S. producers’ market share for unfinished drill pipe and drill collars was *** percent in 2007,

*** percent in 2008, *** percent in 2009, *** percent in interim 2009, and *** percent in interim

2010.203 The market share of subject imports from China of unfinished drill pipe and drill collars was ***

percent in 2007, *** percent in 2008, *** percent in 2009, *** percent in interim 2009, and *** percent

in interim 2010.204 The market share for nonsubject imports of unfinished drill pipe and drill collars was

*** percent in 2007, *** percent in 2008, *** percent in 2009, *** percent in interim 2009, and ***

percent in interim 2010.205

The leading U.S. producer of finished drill pipe is NOV Grant Prideco, followed by RDT, Smith,

TSC, and VAM.206 The leading U.S. producer of finished drill collars is Smith followed by NOV Grant

 195 (...continued)

short tons in January-June 2010. CR/PR at Table C-2. 

 196 See e.g., CR/PR at Table C-1. Apparent U.S. consumption of unfinished drill pipe and drill collars was ***

short tons in 2007, *** short tons in 2008, *** short tons in 2009, *** short tons in January-June 2009, and ***

short tons in January-June 2010. CR/PR at Table C-1. 

 197 Imports of unfinished drill collars from any source are believed to have been limited. See, e.g., CR/PR at

Table IV-2a, Table IV-2b, and Table IV-2d.

 198 See, e.g., CR/PR at Table C-2. The market share of nonsubject imports of finished drill pipe and drill collars

was *** percent of apparent U.S. consumption in 2007, *** percent in 2008, *** percent in 2009, *** percent of

apparent U.S. consumption in interim 2009, and *** percent in interim 2010. Id. 

 199 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 2007, *** percent in 2008, *** percent in 2009, *** percent in interim

2009, and *** percent in interim 2010. Id. 

 200 See, e.g., CR/PR at Table C-2.

 201 See, e.g., CR/PR at Table C-2.

 202 See, e.g., CR/PR at Table C-2.

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

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

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

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

25
Prideco.207 The leading U.S. producer of unfinished drill pipe is Timken, followed by U.S. Steel and

TMK.208 The only reporting U.S. producers of unfinished drill collars are Timken and Sunbelt.209

Supply constraints existed early in the period examined but these were eased substantially as

demand for drill pipe and drill collars declined sharply in 2009 and remained lower in 2010. For U.S.

producers of finished drill pipe in 2007 and 2008, unused capacity was limited, inventories were low,

order books were strong, and lead times were extended.210 By contrast, in 2009 U.S. order books were

nearly empty, capacity utilization was low, lead times had fallen and inventory levels had risen

(particularly as a share of total shipments).211 In first-half 2010, U.S. producer order books and lead times

ticked upward but capacity utilization remained anemic.212

D. Substitutability

There is a moderate to high degree of interchangeability among the domestic like product, subject

imports, and nonsubject imports for products of the same type.213 The vast majority of U.S. producers,

importers and purchasers reported that products from domestic, subject, and nonsubject sources were

always or frequently interchangeable. 214 Most purchasers ranked quality, price, and availability as the

most important factors in purchasing decisions.215 216

The fact that some domestic producers produce premium drill pipe products but subject producers

in China do not is a limitation on the substitutability of domestic and subject imported products. During

the period examined, premium products grew as a share of finished goods consumption from less than

*** percent in 2007 to more than *** percent in 2009, before falling back below *** percent in the first

half of 2010.217 The remainder of the U.S. market is nonpremium API-grade drill pipe.

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

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

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

 210 Discounting the data of a single small company that reported anomalous capacity, the domestic industry’s

capacity utilization for finished drill pipe was *** percent in 2007 and *** percent in 2008. CR/PR at Table III-1

and questionnaire response of ***. See also, CR/PR at Table III-6b. (US. producers’ inventories of finished drill

pipe); CR/PR at Table III-5 (order books); and CR/PR at Tables II-1 & II-2 (lead times).

 211 See, e.g., CR/PR at Tables C-1, C-2, II-1, II-2, III-3b, III-5, & III-6b.

 212 See, e.g., CR/PR at Tables C-1, C-2, II-1, II-2, III-3b, III-5, & III-6b.

 213 CR at II-27; PR at II-19. 

 214 Ten of twelve U.S. producers (when comparing drill pipe) and six of eight producers (when comparing drill

collars) reported that U.S.-produced drill pipe and drill collars and imports from China are always or frequently

interchangeable. Fourteen of 17 U.S. importers (when comparing drill pipe) and 13 of 17 importers (when

comparing drill collars) reported that U.S.-produced drill pipe and drill collars and imports from China are always or

frequently interchangeable. Eighteen of 20 U.S. purchasers (when comparing drill pipe) and 16 of 19 purchasers

(when comparing drill collars) reported that U.S.-produced drill pipe and drill collars and imports from China are

always or frequently interchangeable. See, e.g., CR/PR at Table II-7.

 215 See, e.g., CR/PR at Table II-5. Quality was the most frequently reported “most important” factors; price was

the most frequently reported second “most important” factor; and availability was the most frequently reported third

“most important” factor. CR/PR at Table II-5.

 216 See, e.g., CR/PR at Table II-5.

 217 See, e.g., CR/PR at Tables C-2, D-1, & D-2.

26
E. Raw Material Costs

The key raw materials for drill pipe and drill collar production include steel billets, bars, tube

bodies, and tool joints.218 Raw materials as a share of cost of goods sold for U.S. producers of finished

drill pipe and drill collars increased slightly from 64.1 percent in 2007 to 68.2 percent in 2008, decreased

to 66.5 percent in 2009, and was 68.5 percent in the first half of 2010.219 Raw materials as a share of cost

of goods sold for U.S. producers of unfinished drill pipe and drill collars dropped from *** percent in

2007 to *** percent in 2008 to *** percent in 2009, and was *** percent in the first half of 2010.220 The

price of scrap used to make billets, bars, tube bodies, and tool joints was relatively stable during 2007.221

It doubled over the first three quarters of 2008 before decreasing below early 2007 levels in the final

quarter of 2008, and then increased irregularly in 2009 and 2010.222

VI. THREAT OF MATERIAL INJURY BY REASON OF SUBJECT IMPORTS223

Based on the record in the final phase of these investigations, we find that an industry in the

United States is threatened with material injury by reason of imports of drill pipe and drill collars from

China that Commerce has found are sold at LTFV and subsidized by the Government of China.

A. Likely Volume of Subject Imports from China224 225

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 *** short tons in 2007 to *** short tons in 2008, and then, when the U.S. drill

 218 See, e.g., CR at V-1.

 219 Derived from CR/PR at Tables VI-1b & VI-1d.

 220 Derived from CR/PR at Tables VI-1a & VI-1c.

 221 See, e.g., CR/PR at V-1 & Figure V-1.

 222 See, e.g., CR/PR at V-1 & Figure V-1.

 223 Negligibility under 19 U.S.C. § 1677(24) is not an issue in these investigations, as the volume of subject

imports is well above the statute’s three percent negligibility level. See e.g., CR at IV-12. 

 224 In its final countervailing duty determination regarding imports of drill pipe and drill collars from China,

Commerce assigned a countervailable subsidy rate of 18.18 percent ad valorem for both specific Chinese producers

and for “all others.” Commerce also determined in its final determination that certain producers in China were

selling drill pipe and drill collars in the U.S. market at less than fair value. Commerce found that dumping margins

were de minimus for two Chinese producers/exporters of drill pipe and drill collars, calculated a dumping margin of

69.32 percent ad valorem for specific Chinese producers of drill pipe and drill collars, and a dumping margin of

429.95 percent ad valorem for “all others.” ” See e.g., CR/PR at Tables I-2 to I-3; 76 Fed. Reg. 1971 (Jan. 11,

2011); 76 Fed. Reg. 1966 (Jan. 11, 2011).

 225 For purposes of these final determinations, we cross-cumulate the dumped subject imports from China with

the 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 that have

been dumped and/or subsidized are the subject of investigations that resulted from petitions filed the same day, none

of the exceptions to cumulation apply, and there is no question that the identical dumped and subsidized imports

compete with each other and the domestic like product.

27
pipe market contracted due to the global economic downturn, dropped to *** short tons in 2009. Subject

imports of finished product were *** short tons in interim 2009 and *** short tons in interim 2010.226 227

The U.S. market share of imports of finished drill pipe and drill collars from China fluctuated

during the period examined, ended higher than where it started, and was significant throughout. The

market share of Chinese imports of finished drill pipe and drill collars increased irregularly between 2007

and 2009, growing from *** percent in 2007 to *** percent in 2008, and then dropping to *** percent in

2009, although remaining above 2007 levels.228 Subject finished market share was *** percent in interim

2009 and *** percent in interim 2010, although, as discussed below, subject imports sharply increased

from the second half of 2009 to the first half of 2010.229 Subject imports of finished drill pipe and drill

collars from China maintained a much larger share of the U.S. market than did such imports from all

nonsubject countries combined after 2007.230

The participation of suppliers of Chinese product in the U.S. market has evolved and grown over

the period in ways that indicate further expansion is imminent. During the preliminary phase of these

investigations importer respondents indicated that subject imports were limited to sales to smaller

customers to whom domestic producers had no interest in making sales.231 Information on the record in

the final phase of these investigations shows this is no longer the case. Importers of Chinese product have

 226 Our determination of threat of material injury is based on a consideration of both finished drill pipe and

collars and unfinished drill pipe and collars, all of which are part of a single domestic like product. Much of the data

has been compiled separately for finished and unfinished products to avoid double-counting.

 Our discussion most often focuses on the market for finished drill pipe and collars because in terms of key

factors such as number of employees, and the value of consumption, the portion of the market for finished drill pipe

and collars is much larger than the portion for unfinished drill pipe and collars. The parties have similarly focused

their arguments mainly on the finished products. Nevertheless, we also consider and evaluate the market relating to

unfinished drill pipe and collars.

 In absolute terms, the volume of subject unfinished drill pipe and drill collars increased from *** short tons in

2007 to *** short tons in 2008, and then fell to *** short tons in 2009. Subject imports of unfinished drill pipe and

drill collars were *** short tons in interim 2009 and *** short tons in interim 2010. See e.g., CR/PR at Table C-1. 

 227 U.S. importers’ reported orders for future imports of finished drill pipe from China were *** short tons for

July-September 2010, and *** for the next three quarters. U.S. importers’ orders for future imports of drill collars

and unfinished drill pipe from China were *** for July 2010 through June 2011. CR/PR at Table VII-5. We find

that this cessation of orders for future imports is explained by Commerce’s preliminary subsidy and LTFV 

determinations, which occurred in June and August, 2010, respectively. Importers entering subject merchandise

subsequent to these determinations were required to post a cash deposit or bond in the amount of the preliminary

margins; such a requirement adds a cost to imports and would be expected to suppress import quantities. We

therefore do not find the reported limited future order quantities by U.S. importers to be indicative of likely future

volumes of subject imports in the absence of countervailing duty or antidumping duty orders.

 228 CR/PR at Table C-2. 

 229 See, e.g., CR/PR at Table C-2. 

 230 See, e.g., CR/PR at Table C-2. The market share of subject imports of unfinished drill pipe and drill collars

was *** percent in 2007, *** percent in 2008, *** percent in 2009, and *** percent in interim 2010. Market share

of nonsubject imports of unfinished drill pipe and drill collars was *** percent in 2007, *** percent in 2008, ***

percent in 2009, and *** percent in interim 2010. See e.g., CR/PR at Table C-1. Thus, the nonsubject imports of

unfinished drill pipe and drill collars possessed a much larger share of the U.S. market than did subject imports of

unfinished drill pipe and drill collars during the period examined. 

 231 See, e.g., USITC Pub. No. 4127 at 30 n.226; See also, Testimony of Irene Chen: “(S)ubject imports don't even

compete with the U.S. producers for the same customers. ... The U.S. producers completely dominate sales of drill

pipe to the large drilling contractors. I believe there's only a few, a handful, about five or six, and their supply is

locked up through long term, high volume contracts.” Conf. Tr. at 130; Testimony of Charlie Garvey: “Our

customers generally are small, independently owned companies in Canada and the United States.” Conf. Tr. at 135.

.

28
recorded sales to the largest U.S. purchasers. By the end of the period examined, most of the largest U.S.

customers for drill pipe and drill collars reported purchasing subject merchandise.232 233

Subject suppliers’ emergence as providers to even the largest U.S. purchasers is consistent with

the most recent import and market share data. After declining from *** short tons in first-half 2009 to

*** short tons in second-half 2009, subject import volume rebounded in first-half 2010 to *** short tons. 

Subject import market share fell from a period-high *** percent in first-half 2009 to *** percent in

second-half 2009, and then rose to *** percent in first-half 2010.234 The fact that suppliers of Chinese

product have broken through a major prior limitation on their reach in the U.S. market is an indication

that their U.S. market share is poised to increase. 

The presence of subject imports in the United States has grown in other ways as well. New

importers have entered the U.S. market during the period examined, including at least one that is affiliated

with a large Chinese producer of drill pipe.235 The number of importers holding inventories of finished

drill pipe grew from five at the end of 2009 to seven at the end of June 2010.236

U.S. importers have increased their inventories of Chinese product over the period examined even

as the U.S. market for drill pipe and collars has shrunk. Subject inventories of finished drill pipe and

drill collars increased by *** percent from 2007 to 2009 and remained at near period-high levels through

the first half of 2010.237 U.S. importers’ inventories of subject imports were *** short tons in 2007, ***

short tons in 2008, *** short tons in 2009, and remained at *** short tons in the first half of 2010.238

Although the volume of importer inventories may have been somewhat modest in the context of robust

market conditions early in the period, their significance grew as U.S. demand dropped. As of June 30,

2010, U.S. importers held subject imports of finished drill pipe and drill collars equivalent to almost ***

percent of annualized 2010 apparent U.S. consumption.239 In a recovering market, these aggressively

priced subject imports will be attractive to U.S. purchasers.240

We find further support for the imminent likely expansion of subject import market presence in

the fact that the industry in China is large and growing. Data reported in questionnaire responses by

 232 See, e.g., CR at II-7; PR at II-6 (four of the top six purchasers by rig ownership, and five of six by purchase

value, reported purchasing or importing directly subject merchandise from China). ***. CR at V-23; PR at V-10.

 233 Commissioner Pinkert notes that subject imports of unfinished drill pipe sharply increased their share of the

U.S. market from *** percent in 2007 to *** percent in 2009, before dropping in interim 2010 to *** percent. 

CR/PR at C-1. 

 234 The Commission compiled half-year data in order to ensure a full understanding of the changing economic

conditions, including conditions related to the recession, relevant to the market for drill pipe and collars at the end of

the period examined. We note that there is no indication that the market for drill pipe and collars is seasonal in a

way that could distort comparisons based on half-year increments. 

 235 CR at IV-8, n.9; PR at IV-6, n.9. *** is a significant Chinese producer of drill pipe, but did not provide a

foreign producer questionnaire response.

 236 CR at VII-14; PR at VII-9.

 237 See, e.g., CR/PR at Table C-2.

 238 See, e.g., CR/PR at Table C-2.

 239 Derived from CR/PR at Table C-2. We note that the URAA amended the statute to “mak[e] it clear that the

Commission will consider inventories of the subject merchandise wherever they are located.” SAA at 854.

 240 Respondents Command and Downhole assert that their U.S. inventories of subject product have decreased in

second-half 2010, after our period of investigation. Respondents’ Posthearing Brief at 13. We find that any decline

in subject import inventory levels in second-half 2010 is the natural result of Commerce’s preliminary subsidy and

LTFV determinations in mid-2010; as noted above, Commerce’s preliminary determinations imposed deposit or

bond requirements on subsequent subject imports. With the pipeline of new imports constricted, a decline in the

stocks of previously entered imports is to be expected. We find inventory levels prior to Commerce’s preliminary

determinations to be more probative of market conditions absent the pending investigations.

29
subject producers/exporters in China indicate that capacity to produce finished drill pipe and collars in

China increased by *** percent from *** short tons in 2007 to *** short tons in 2009.241 Responding

producers of finished drill pipe and collars in China operated at a fairly high utilization level in 2007 (***

percent), but their reported capacity utilization declined to *** percent in 2008, and fell sharply to ***

percent in 2009.242 In interim 2010, reported capacity utilization was only *** percent.243 Reported

unused Chinese capacity in just the first six months of 2010 *** than the volume of total subject finished

drill pipe and collar imports in 2009, the last full year of the period examined.244 Thus, the reported data

suggest large drill pipe and collar production capacity and large available unused capacity in China in the

imminent future.

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 substantial, accounting for about 70 percent of subject imports during the period examined,245 we did

not receive questionnaire responses from significant Chinese drill pipe and drill collar producers.246 A

substantial additional segment of the Chinese industry, including two of the largest producers ***,

participates in the U.S. market but is unaccounted for in our data.247 We conclude that available capacity

in China is large and supports a finding that the likely imminent volume of subject imports will be

significant.248

 241 Derived from CR/PR at Tables VII-3b & VII-3d. Data reported in questionnaire responses by subject

producers/exporters indicate that capacity to produce unfinished drill pipe in China increased by *** short tons

between 2007 and 2009, although the data is limited given the number of questionnaire responses. See e.g., CR/PR

at Table VII-3a. 

 242 Derived from CR/PR at Tables VII-3b & VII-3d. 

 243 Derived from CR/PR at Tables VII-3b & VII-3d. Reporting drill pipe and drill collar producers in China

projected operating at *** percent capacity utilization in full-year 2010 and *** percent capacity utilization in 2011. 

Derived from CR/PR at Tables VII-3b & VII-3d. 

 244 Compare CR/PR at Tables VII-3b & VII-3d (*** tons available capacity in interim 2010) with CR/PR at

Table IV-2b, IV-2d (subject drill pipe and collar imports of *** tons in 2009).

 245 See e.g., CR/PR at VII-7 n.34.

 246 CR at VII-6 n.27; PR at VII-4 n.27 (Commission did not receive responses from 5 of 12 firms identified by

responding Chinese producers as the largest producers of drill pipe in China, and 7 of 12 firms identified as the

largest producers of drill collars in China).

 247 See e.g., CR at VII-9 n.32; PR at VII-6 n.32; see also Petitioners’ Posthearing Br. at Exh. 1 & 2 (analysis by

industry expert of available Chinese production capacity). 

 248 Respondents have argued that the Chinese industry’s ability to export drill pipe to the United States is

constrained by several factors. See e.g., Respondents’ Posthearing Br. at 10-12. We have examined these factors

and find that they do not represent impediments that are likely to prevent a significant quantity of subject imports in

the imminent future.

 First, respondents assert that future imports will be hampered by Chinese producers’ inability to produce drill

pipe of the quality demanded by U.S. (or Chinese) purchasers. We find that petitioners submitted credible

information indicating that a significant number of Chinese producers have been certified by the Chinese stateowned drilling companies either at the national or regional levels, which is an indication of likely acceptability by

many U.S. purchasers. See Petitioners’ Posthearing Brief at Exhibits 1 & 2. We find the less detailed information

supplied by respondents to be less probative. See Respondents’ Posthearing Brief at Exhibit 24. Moreover, we find

that even the Chinese producers that have participated in the U.S. market to date are able to supply a significant

volume of subject imports in the imminent future.

 Second, respondents claim that there are few Chinese mills that can supply Chinese finished drill pipe

producers with green tubes of sufficient quality to make a finished product suitable for the U.S. market. The fact

that subject imports of finished goods exceeded *** short tons as recently as 2008 refutes the argument that green

(continued...)

30
Chinese producers’ interest in the U.S. market is not surprising given the Chinese industry’s

export-oriented posture. Responding Chinese manufacturers/exporters’ total exports of finished drill pipe

and collars, as a percent of their total shipments, increased from *** percent in 2007 to *** percent in

2008 and *** percent in 2009.249 The percentage of their total shipments that was exported was

somewhat lower in interim 2010 (*** percent) than in interim 2009 (*** percent).250 Chinese producers’

exports to the United States, as a percent of their total shipments, increased from *** percent in 2007 to

*** percent in 2009 and were *** percent in interim 2009 and *** percent in interim 2010.251 In short,

Chinese production far outpaces home market sales, necessitating substantial exports, and Chinese

producers have an established track record of exporting large quantities of the product to global

markets.252 Chinese drilling activity is projected to grow only modestly in the imminent future, thus

indicating that the Chinese market is not nearly large enough to absorb China’s current or imminent

future production capacity.253

The 2010 U.S. countervailing and antidumping duty orders on oil- and gas-well casing and tubing

from China provide an incentive for Chinese producers of these products to shift to greater production of

unfinished drill pipe.254 Producers of unfinished drill pipe and drill collars typically use some of the

 248 (...continued)

tube supply in China prevents significant growth in subject imports from the recession-affected lower levels of 2009

and first-half 2010.

 Third, respondents posit that inconsistent natural gas supply in China hampers Chinese producers’ ability to

operate at significant utilization levels. Whether or not inadequate natural gas supply constrains Chinese production,

Chinese producers reported production of nearly *** short tons of finished drill pipe and collars in 2008, an amount

that is only about *** percent below total apparent U.S. consumption of finished drill pipe and collars in that year. 

Compare CR/PR Table VII-3b and Table VII-3d with Table C-2. More broadly, China accounted for the majority of

the entire world’s production of seamless tubular products in 2007-2009, indicating that China’s energy supplies

enable its companies to carry out significant production operations. CR/PR at Table VII-1. 

 Fourth, and finally, we note that any technical constraints on Chinese capacity did not impede the expansion

of subject import volume, market share, and end-of-period inventories of finished drill pipe and drill collars from

2007 to 2008, or of subject import volume and market share of unfinished drill pipe and drill collars. See e.g.,

CR/PR at Tables C-1 & C-2.

 249 Derived from CR/PR at Tables VII-3b & VII-3d.

 250 Derived from CR/PR at Tables VII-3b & VII-3d.

 251 Derived from CR/PR at Tables VII-3b & VII-3d.

 252 Chinese producers’ inventories provide another source of increased exports of subject product to the United

States. Chinese producers’ end-of-period inventories of finished drill pipe and drill collars were *** short tons in

2007, increased to *** short tons in 2008, then decreased to *** short tons in 2009, and were *** short tons in

January-June 2009 and *** short tons in January-June 2010. Derived from CR/PR at Table VII-3b and VII-3d. 

Chinese producers’ reported end-of-period inventories of (*** short tons) in June 2010 were equivalent to ***

percent of annualized 2010 apparent U.S. consumption of finished drill pipe and drill collars. CR/PR at Tables VII3b and C-2.

 253 Analyst Spears projects that Chinese rig count and wells drilled will grow by two percent growth in 2010 and

one percent in 2011. Petitioners’ Posthearing Brief at Exhibit 1. See also CR/PR at VII-3 to VII-4 (some indications

of growing Chinese drilling activity). Respondents claim that available capacity will be directed to growing sales in

third-country markets. Respondents’ Posthearing Brief at 12-13. Although Chinese producers reported a significant

volume of shipments to non-U.S. markets, they also reported substantial available capacity, and we do not find that

this situation will change in the imminent future. See e.g., CR/PR at Table VII-3b. 

 254 See e.g., Oil Country Tubular Goods from China, USITC Pub. 701-TA-463, 731-TA-1159 (Final) (May

2010); Oil Country Tubular Goods from China, USITC Pub. 4124, Inv. Nos. 701-TA-469 (Final) (Jan. 2010) (those

investigations covered casing, tubing and coupling stock).

31
same equipment and facilities to produce other tubular products, such as casing and tubing.255 The

tonnage of imports of Chinese seamless casing and tubing affected by the antidumping and countervailing

duty orders is many times greater than the total tons of drill pipe and drill collars sold in the U.S. market. 

Accordingly, the U.S. antidumping and countervailing duty orders on casing and tubing 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 for sale in the U.S. market.256

We have analyzed the likely future volume of imports in the context of expected U.S. market

demand in the imminent future. As noted previously, demand for drill pipe and drill collars fell abruptly

between 2008 and 2009. Apparent U.S. consumption of finished drill pipe and drill collars in first-half

2010 was lower than in first-half 2009 and only marginally above the period-low level of second-half

2009.257 Thus, data through the end of the period examined show no upturn in the consumption of drill

pipe or collars. Apparent U.S. consumption remained near period-low levels in first-half 2010 even

though U.S. rig count, a key indicator of demand, bottomed out in second-quarter 2009 and then rose

steadily through mid-2010 (and beyond).258 The lag in drill pipe consumption compared to rig count may

be because drilling companies have been able to put idled drill strings back into service, or make use of

other drill pipe and collar inventories, rather than purchase new drill pipe and collars.259 Rig activity is

projected to be higher in 2011 than in 2010 which, in our view, will lead to some increase in consumption

of new drill pipe and collars.260 Even with projected growth, however, rig counts are unlikely to return to

the 2008 peak levels.261 

In sum, we conclude that subject imports will increase significantly in absolute terms and relative

to domestic consumption and production in the imminent future, based on the record information showing

the following: subject imports held a substantial share of the U.S. market throughout the period examined,

a share that grew in first-half 2010; importers of subject merchandise have now become suppliers to even

the largest U.S. purchasers and thus have demonstrated access to the full range of the API-grade drill pipe

and collar market; U.S. importers have increased their quantities of inventories of Chinese product to

levels that are particularly significant in the context of current market conditions; and the Chinese

industry is very large and growing, is export-oriented, possesses substantial unused capacity, and has an

incentive to increase its production and U.S. exports of unfinished drill pipe in response to the 2010 U.S.

antidumping and countervailing duty orders on Chinese casing and tubing products. As described in the

following section, we find that Chinese drill pipe and collars are likely to significantly undersell

domestically made product in the imminent future, which will further increase the attractiveness of the

Chinese product to U.S. purchasers.

 255 See, e.g., CR at II-12; PR at II-9. 

 256 An additional incentive for Chinese producers to shift from producing other seamless products to making

unfinished drill pipe is the European Union’s action in October 2009 imposing definitive antidumping duties ranging

from 17 to 39 percent on seamless pipe (including unfinished drill pipe) from China. See. e.g., CR at VII-17; PR at

VII-10.

 257 CR/PR at Table C-2.

 258 CR/PR at Figures II-3 and II-4.

 259 As discussed earlier, drill pipe generally has a useful life of two to three years and can often be refurbished

and reused.

 260 Several forecasts of 2011 rig count range from 1750 to 1800, as compared to rig counts of approximately

1200 to 1700 in 2010; analysts expect relatively high oil prices but continued weakness in natural gas prices. 

Petitioners’ Posthearing Brief at A-16, Exhibits 1 & 14. CR at II-20 n.32; PR at II-13 n.32; CR/PR at Figures II-3 &

II-4. How much of the new activity can be accommodated by existing drill pipe and collars is not clear.

 261 See, e.g., CR at II-20 n.32; PR at II-13 n.32; CR/PR at Figures II-2 to II-6. 

32
B. 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 U.S. market

conditions, including the nature of competition between subject imports and domestic product. A large

majority of domestic purchasers reported drill pipe and drill collars produced in China and in the United

States to be “always interchangeable.”262 Purchasers most often listed quality as the most important

buying factor, price as the second most important factor, and availability as the third most important

factor.263 Drill pipe and collars are generally sold on a spot sales basis.264 The above-cited factors all

make for an environment in which price-competitive subject imports have the ability to take sales from

domestic producers and/or place downward pressure on domestic prices.265

The Commission collected quarterly pricing data for six representative products covering a

sizable share of sales of both domestic production and subject imports.266 For the period examined as a

whole, subject imports were more often priced higher than domestic products. Subject imports undersold

the domestic like product in 25 out of 62 quarterly comparisons, by margins ranging from 0.2 percent to

31.1 percent.267 The prices of imports from China were higher than U.S. producers’ prices in 37 out of 62

quarterly comparisons, by margins ranging from 0.5 to 45.9 percent.268 

The pattern of over- and under-selling was not uniform throughout the period examined; rather,

overselling was particularly concentrated in the early years and underselling began to predominate later in

the period. In 2007 and 2008, subject imports oversold domestic product in 26 of 38 (68 percent) of price

comparisons. This overselling occurred at a time when demand for drill pipe and collars was strong,

domestic producers were operating at relatively high capacity utilization levels, and some purchasers

reported turning to imports due to long lead times for obtaining domestic product. In 2009, when the U.S.

market contracted sharply, the pricing comparisons were approximately evenly split between over- and

under-selling (nine versus eight comparisons). In first-half 2010, when consumption was still very weak,

subject imports undersold domestic product in six of eight comparisons. The underselling that occurred

at the end of the period is consistent with the views expressed by U.S. purchasers, most of whom reported

 262 See, e.g., CR/PR at Table II-7.

 263 See, e.g., CR/PR at Table II-5.

 264 See, e.g., CR/PR at V-2 to V-3.

 265 Confirmation of several allegations by the domestic industry of sales lost to suppliers of Chinese product

provides some concrete examples of the effects of lower-priced subject imports on U.S. producers. See, e.g.,

CR/PR at Table V-11; CR at V-26-V-34; PR at V-11 to V-12. As discussed above, we find that the transactions in

which *** were, in substance, sales made on the basis of price; as such we consider *** sales of subject imports to

*** as confirmed lost sales. CR at V-31; PR at V-12.

 266 These products included one unfinished drill pipe product and the following five finished products: two drill

pipe products of 5-inch outside diameter, one drill pipe product of 41⁄2-inch outside diameter, one heavy-weight drill

pipe product, and one drill collar product. CR at V-7 to V-8; PR at V-5 to V-6. 

 Pricing data reported for finished drill pipe products (products 1-3 and 5) accounted for *** percent of the

value of U.S. producers’ U.S. shipments of finished drill pipe and *** percent of the value of U.S. importers’ U.S.

shipments of finished drill pipe from China during January 2007-June 2010. Pricing data reported for the unfinished

drill pipe product (product 4) accounted for *** percent of the value of U.S. producers’ U.S. shipments of unfinished

drill pipe and *** percent of the value of U.S. importers’ U.S. shipments of unfinished drill pipe from China. 

Pricing data reported for the finished drill collar product (product 6) accounted for *** percent of the value of U.S.

producers’ U.S. shipments of finished drill collars and *** percent of the value of U.S. importers’ U.S. shipments of

finished drill collars from China. See e.g., CR at V-8; PR at V-6. 

 267 See, e.g., CR/PR at Table V-9.

 268 See, e.g., CR/PR at Table V-9.

33
that subject imports were lower-priced than domestic product.269 We see no basis to conclude that the

clear shift from overselling to underselling as the period has progressed will be reversed in the imminent

future. Thus, we find that subject imports are likely to undersell domestic prices significantly in the

imminent future. 

Continued underselling will be particularly significant given that there is evidence that subject

imports have already had some negative effects on the price levels of domestic drill pipe and collars. 

Prices of domestic finished drill pipe and collar products generally increased between 2007 and 2008, and

generally declined in 2009 and interim 2010, ending below their levels from the beginning of the

period.270 Prices for the subject imports from China for these products followed a similar overall trend

and generally declined in 2009 and interim 2010.271

The increase in subject imports at increasingly low prices and substitutable with domestic product

toward the end of the period examined indicates that the subject imports played a role in the decline in

domestic prices, particularly in interim 2010. Thus, although the sluggish U.S. market was one of the

reasons why domestic prices fell at the end of the period examined, we find some evidence of price

depression by subject imports. Continued or even intensified underselling by subject imports will

 put significant downward pressure on domestic prices in the imminent future, causing significant price

depression or suppression.272 Underselling by subject imports is also likely to increase the attractiveness

of those imports to domestic purchasers relative to domestic production.

In short, we conclude that, in the imminent future, the aggressive price competition demonstrated

by subject imports at the end of the period examined will likely continue, and the introduction of

increased quantities of subject imports, aggressively priced in an effort to gain market share, will put

pressure on domestic producers to lower prices in a market recovering from depressed demand. 

Accordingly, we find that subject imports are likely to enter at prices that will have significant pricedepressing and/or price-suppressing effects.

 269 Fifteen of 34 responding U.S. purchasers reported that Chinese product was offered at the lowest price, 11

reported that U.S. product was offered at the lowest price, and 8 gave other responses. Of the 15 purchasers that

purchased Chinese product, 9 reported that Chinese product was offered at the lowest price and 1 reported that U.S.

product was offered at the lowest price. See e.g, CR at V-4. See also, CR/PR at Table II-9 (8 purchasers indicated

that subject imports of drill pipe were lower-priced than U.S. drill pipe, 7 indicated that they were comparablypriced, and 3 indicated that they were higher-priced).

 270 See, e.g., CR/PR at Tables V-2 to V-4 & V-6 to V-8 (Products, 1-3, 5, 6). 

 271 See, e.g., CR/PR at Tables V-2 to V-4 & V-6 to V-7. Regarding the one unfinished drill pipe pricing product

(Product 4), domestic prices increased overall during the period examined, although there was ***. Chinese

unfinished drill pipe ***. See, e.g., CR/PR at Table V-5. 

 272 To the extent that increasing demand naturally buoys market prices for drill pipe and collars, we would expect

the price effects by subject imports to take the form of significant price suppression – i.e., preventing domestic price

increases that would otherwise occur, to a significant degree. 

 The current and imminent future competitive environment in the U.S. market differs in at least two important

respects from that which existed in 2007 and 2008, when rising volumes of subject imports had more limited effects

on U.S. prices. First, the type of robust demand conditions that existed previously are unlikely to return in the

imminent future. Second, suppliers of subject imports are now positioned to supply a much greater portion of the

market for API-grade drill pipe and collars than previously. 

34
C. Likely Impact Of The Subject Imports On The Domestic Industry

In assessing the likely impact of subject imports, we first consider the state of the domestic

industry.273 From 2007 to 2009, domestic producers of finished drill pipe and collars as a whole suffered

substantial, frequently double-digit, percentage declines in production,274 shipments,275 capacity

utilization,276 net sales,277 production workers,278 hours worked,279 worker productivity,280 wages paid,281

operating income,282 and capital expenditures.283 In first-half 2010, most of the domestic industry’s

performance indicia were not generally improved relative to either first-half or second-half 2009 and

remained at near-period lows.284 With respect to unfinished drill pipe and collars, apparent U.S.

 273 A threshold data issue concerns the financial information submitted by ***. The staff report sets out

alternative figures for the company that differ primarily as to whether or not certain ***. See e.g., CR/PR at Table

VI-1b n. 1; Table VI-1d n.1; Table VI-2a n.3; Table VI-2b n.3; Table VI-5 n.2. These ***. We believe that ***, as

it recognizes in SEC filings. CR at VI-33 n.22; PR at VI-12 n.22. We note that *** and therefore relevant to the

overall condition of the industry in the imminent future. Moreover, the absence of these *** yields an incomplete

picture of the industry's financial condition during the period examined. 

 The profit-and-loss data we have used for ***, which include the ***, are set out in Table VI-2a, n.3 and Table

VI-2b n.3. The profit-and-loss data we have used for the U.S. industry as whole producing finished drill pipe and

collars, which data include *** described above, are set out in Revised Table C-2 (financial), i.e., the combination of

Tables VI-d and VI-b financial results adjusted for the above-referenced ***. We did not use the adjusted input cost

data that are also included in the notes to some of the tables cited in the above paragraph (Tables VI-1b, VI-2a, and

VI-5); *** reported the input costs in the manner requested by the Commission. 

 274 The domestic industry’s production declined by 48.1 percent from 2007 to 2009, from 266,343 short tons in

2007 to 248,454 short tons in 2008 and 138,155 short tons in 2009. CR/PR at Table C-2. 

 275 The domestic industry’s U.S. shipment quantity declined by 53.8 percent from 2007 to 2009, from 197,609

short tons in 2007 to 148,327 short tons in 2008 and 91,363 short tons in 2009. CR/PR at Table C-2. 

 276 The domestic industry’s capacity utilization dropped from 77.5 percent in 2007 to 69.2 percent in 2008 to 37.4

percent in 2009. CR/PR at Table C-2. 

 277 By quantity, the domestic industry’s net sales declined by 43.8 percent from 2007 to 2009, falling from

261,487 short tons in 2007 to 146,871 short tons in 2009. By value, the domestic industry’s net sales declined by

33.4 percent from 2007 to 2009, falling from $1.31 billion in 2007 to $869.5 million in 2009. CR/PR at Table C-2

and Revised Table C-2 (financial). 

 278 Between 2007 and 2009, the number of production related workers (“PRWs”) declined by 27.1 percent, from

1,650 PRWs in 2007 to 1,204 PRWs in 2009. CR/PR at Table C-2.

 279 Between 2007 and 2009, hours worked (1,000) fell by 28.4 percent and were 4,329 in 2007, 4,520 in 2008

and 3,098 in 2009. CR/PR at Table C-2. 

 280 Worker productivity fell from 61.3 short tons per 1,000 hours in 2007 to 44.4 short tons per 1,000 hours in

2009. CR/PR at Table C-2.

 281 Between 2007 and 2009, wages paid by the domestic industry declined by 28.0 percent and were $*** in

2007, $*** in 2008, and $*** in 2009. CR/PR at Table C-2. 

 282 The domestic industry’s operating income declined from $*** in 2007 to *** in 2008 and then further

declined to an operating loss of *** in 2009. Its operating income as a ratio of net sales declined from *** percent

in 2007 to *** percent in 2008, and then to an operating loss ratio of *** percent in 2009. Revised Table C-2

(financial). 

 283 The domestic industry’s capital expenditures decreased from *** in 2007 to *** in 2009. CR/PR at Table C2. 

 284 CR/PR at Table C-2 and Revised Table C-2 (financial). The domestic industry’s profitability fell sharply in

the first half of 2009, when it experienced an *** and an operating margin of *** percent. After that, its profitability

recovered, and then fell again, although it remained profitable. In the second half of 2009, the domestic industry had

(continued...)

35
consumption in 2009 was less than one-third of the levels of 2007 and 2008; as a result, domestic

producers experienced severe declines in virtually all performance factors.285 Accordingly, we find that

the industry is in a weakened state and therefore vulnerable to material injury by reason of subject

imports.

We have found above that, in the imminent future, subject imports are likely to increase, take

market share from domestic producers, and depress or suppress domestic prices significantly. Lost

business will negatively affect the industry’s production, shipments, employment, and inventories. 

Suppressed or depressed prices will negatively affect the industry’s revenues, profits, and ability to make

capital improvements.286

We acknowledge two factors in particular that would tend to suggest a more limited effect of

subject imports in the imminent future but conclude that these factors are not so significant as to make

material injury unlikely. First, while improving U.S. market conditions will mitigate the effects of subject

imports to some degree, we do not find that the rebound from depressed end-of-period conditions, which

persisted through at least mid-2010, will be sharp in the imminent future. This market improvement will

not be sufficient to avert damage to the domestic industry from the reduced sales volumes and lower

prices that are likely to be caused by subject imports.

Second, the market for premium pipe represents an important limitation on the reach of subject

imports but is not so paramount as to prevent subject imports from having a significant negative impact

on domestic suppliers. During the period examined, premium products grew as a share of finished goods

consumption from less than *** percent in 2007 to more than *** percent in 2009, before falling back

below *** percent in the first half of 2010.287 Premium drill pipe and collars remain an important and

growing part of the U.S. market that has been served nearly exclusively by domestic suppliers during the

period examined, and we would not expect that situation to change in the imminent future.288

Nevertheless, the vast majority of the U.S. market consists of API-grade product that is produced

and sold by domestic producers and producers in China. These non-premium drill pipe and collars are a

substantial enough part of the U.S. market such that significant negative effects caused by subject imports

in that portion of the market will be significant in the context of the U.S. market as a whole.

 284 (...continued)

an operating income of *** and an operating margin of *** percent; however, in the first half of 2010, it had an

operating income of $*** and an operating margin of *** percent. Revised Table C-2 (financial)

 Domestic industry order books were extremely weak in first-half 2009 and second-half 2009. Although order

books improved in the first three quarters of 2010, the data for two of those quarters (ending June 30 and September

30, respectively) were likely affected by the Commerce’s preliminary determinations in mid-June and mid-August;

as described above, the Commerce determinations also likely explain the decline in future orders for subject imports. 

As such, we place limited weight on order book information for June 30 and September 30, 2010. Data for the one

remaining quarter, ending March 31, shows a level that is higher than any in 2009 but lower than any in 2007 and

2008. CR/PR at Table III-5.

 285 CR/PR at Table C-1. Apparent U.S. consumption of unfinished products remained very low in interim 2010. 

Most indicators of domestic producers’ performance, including market share, were higher in interim 2010 than in

interim 2009, although on an annualized basis the figures were generally well below those of 2007 or 2008. 

Producers’ operating profit ratio was positive in interim 2010, while operating profits themselves were only a

fraction of those in 2007 or 2008.

 286 Notably, *** it indicated that it anticipated negative effects caused by subject imports on its growth,

investment, ability to raise capital, existing development and production efforts, and the scale of capital investments. 

The company stated that “[i]mports from China are growing and pricing is below market.” CR, PR at Appendix I.

 287 CR/PR at Tables C-2, D-1, and D-2.

 288 There were limited volumes of subject imports of premium drill pipe during the period examined, although

imports from China maintained a market presence during 2007-2009. See e.g., CR/PR at Table D-1.

36
We have also considered whether other factors, including demand changes and nonsubject

imports, will likely have an imminent adverse impact on the domestic industry, but conclude that the

impact of these other factors will be limited. We have recognized the impact of the decline in demand on

the domestic industry’s performance in 2009 and first-half 2010. We expect U.S. demand to be on an

improving track in the imminent future although it will remain below peak demand conditions

experienced in 2007 and much of 2008. Thus, while continued depressed demand will be detrimental to

the industry, changes in demand going forward will likely be to the benefit of the domestic industry. 

Thus demand changes are not a credible alternative cause of future injury.

Nonsubject imports were a factor in the U.S. market during the period examined, but their

presence was overshadowed by subject imports. Throughout the period examined, the volume of

nonsubject imports of finished drill pipe and drill collar was lower (and after 2007, considerably lower)

than the volume of subject imports, and nonsubject imports largely entered the United States through

domestic producers themselves in response to changing market conditions.289 Nonsubject import prices

tended to be higher than subject import prices.290 Accordingly, nonsubject imports are not likely to take

significant market share or sales from the domestic industry, or depress or suppress domestic prices, in the

imminent future.

Given that the industry is already in a weakened state, we conclude that, unless antidumping duty

and countervailing duty orders are issued, significant volumes of dumped and subsidized imports will

gain additional U.S. market share in the imminent future and material injury by reason of subject imports

will occur. We therefore find that there is a likely causal relationship between the subject imports and an

imminent adverse impact on the domestic industry. Accordingly, we determine that the domestic industry

is threatened with material injury by reason of subject imports from China.291

VII. NO PRESENT MATERIAL INJURY BY REASON OF SUBJECT IMPORTS FROM

CHINA

In the final phase of antidumping duty and countervailing duty investigations, the Commission

determines whether an industry in the United States is materially injured by reason of the imports under

investigation.292 In making this determination, the Commission must consider the volume of 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.293 The statute defines

“material injury” as “harm which is not inconsequential, immaterial, or unimportant.”294 In assessing

whether the domestic industry is materially injured by reason of subject imports, we consider all relevant

economic factors that bear on the state of the industry in the United States.295 No single factor is

dispositive, and all relevant factors are considered “within the context of the business cycle and

 289 See, e.g., CR/PR at Table C-2 & IV-2b. Nonsubject imports of unfinished drill pipe were substantial, and

competitively priced, (see CR/PR at Table H-2) but did not prevent subject imports from gaining market share from

2007 to 2009, and would not impede additional imports of unfinished drill pipe in the future. 

 290 See, e.g., CR/PR at Appendix H.

 291 We do not find that we would have found material injury but for the suspension of liquidation on subject

imports. See 19 U.S.C. §§ 1671d(b)(4)(B), 1673d(b)(4)(B).

 292 19 U.S.C. §§ 1671d(b) and 1673d(b).

 293 19 U.S.C. 5 1677(7)(B)(i). The Commission “may consider such other economic factors as

are relevant to the determination” but shall ‘‘identify each [such] factor . . . [and explain in full its

relevance to the determination.’’ 19 U.S.C. 4 1677(7)(B). See also Angus Chemical Co. v. United States,

140 F.3d 1478 (Fed. Cir. 1998).

 294 19 U.S.C. § 1677(7)(A).

 295 19 U.S.C. § 1677(7)(C)(iii).

37
conditions of competition that are distinctive to the affected industry.”296

The data relevant to our determination of material injury has been discussed above in the section

on threat of material injury. In this section we summarize the basis of our determination that the domestic

industry producing drill pipe and drill collars is not presently materially injured by reason of subject

imports from China. 

With respect to volume, section 1677(7)(C)(i) of the 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.” Based on the

data discussed above, we find that the volume of subject imports, and the increase in that volume relative

to domestic consumption and production, are significant.

With respect to prices, section 771(7)(C)(ii) of the 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.297

We have discussed pricing information in detail in our threat of material injury determination. As

described above, subject imports generally oversold domestic product in 2007 and 2008, showed mixed

results in 2009, and generally undersold in first-half 2010. On balance, we do not find significant

underselling over the period examined. We explained above how subject imports had some price

depressing effects at the end of the period examined, but this was particularly pronounced only in interim

2010. We acknowledge a substantial increase in the COGS/sales ratio from 2008 to 2009, but do not find

significant price suppression with respect to the finished products given the simultaneous decrease in

demand.298 299

In examining the impact of the subject imports on the domestic industry, we consider all relevant

economic factors that bear on the state of the industry in the United States.300 These factors include

output, sales, inventories, capacity utilization, market share, employment, wages, productivity, profits,

cash flow, return on investment, ability to raise capital, and research and development. 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.”301

As set forth above, over the period examined the domestic industry suffered significant declines

in a number of basic indicators, including production, shipments, sales, and employment. The industry’s

 296 19 U.S.C. § 1677(7)(C)(iii).

 297 19 U.S.C. § 1677(7)(C)(ii).

 298 CR/PR at Table C-2.

 299 Commissioner Pinkert notes that, under normal business conditions, U.S. producers of the finished products

should have been able due to inelastic U.S. demand and elastic U.S. supply to pass through to their purchasers the

vast majority of the *** per ton 2008-2009 increase in COGS. The *** percent decrease in apparent consumption at

that time, however, is sufficient to explain why the impact on net sales unit values of the increase in costs was

limited to *** per ton. CR/PR at Table C-2. 

 300 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.” SAA at

885.).

 301 19 U.S.C. § 1677(7)(C)(iii).

38
operating profits were solid in 2007 and 2008, dropped sharply in 2009 (as adjusted) to an overall loss,

then improved in first-half 2010 to a level below the levels of 2007 and 2008.302 Subject imports played a

role in these declines but we cannot find their role to be significant given the substantial market turmoil

that occurred in 2009 and first-half 2010. Accordingly, we do not find that subject imports had a

significant negative impact on the domestic industry.

CONCLUSION

For the foregoing reasons, we determine that the domestic industry producing drill pipe and drill

collars is threatened with material injury by reason of subject imports from China that are sold at LTFV

and subsidized by the Government of China.

 302 A key reason for the industry’s weaker financial performance starting in 2009 is *** that are not linked to the

effects of subject imports. See e.g., CR/PR at Tables VI-1b n.1 & VI-1d n.1.

39
 
DISSENTING VIEWS OF CHAIRMAN DEANNA TANNER OKUN, COMMISSIONER DANIEL

R. PEARSON, AND COMMISSIONER SHARA L. ARANOFF

Based on the record in the final phase of these investigations, we find that an industry in the

United States is neither materially injured nor threatened with material injury by reason of imports of drill

pipe and drill collars from China that Commerce has found are sold at LTFV and subsidized by the

Government of China.

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 material injury and threat of material injury by reason of the subject imports. For the

reasons discussed below, we find that an industry in the United States producing drill pipe and drill

collars is neither materially injured nor threatened with material injury by reason of subject imports from

China.

A. Volume of the Subject Imports1

1. Analysis of Material Injury by Reason 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.”2

The volume of subject imports of drill pipe and drill collars (unfinished and finished combined)

increased between 2007 and 2008, rising from *** short tons to *** short tons, before falling steeply in

2009 to just *** short tons, a level only slightly more than *** their level at the beginning of the period. 

These imports were lower still in interim 2010 compared with interim 2009.3

 Nonsubject imports of drill

pipe and drill collars (unfinished and finished combined) declined throughout the period examined,

including between 2007 and 2008. Relative to subject imports, however, nonsubject imports of these

products were consistently significantly higher in volume.4

 

As a share of apparent U.S. consumption, shipments of subject imports of finished drill pipe and

drill collars gained *** percentage points from 2007 to 2008, but lost *** points of market share in 2009,

 1 In its final countervailing duty determination regarding imports of drill pipe and drill collars from China,

Commerce calculated an ad valorem rate of 18.18 percent for all firms investigated and all others. CR/PR at Table I2. 

 Commerce also determined that certain producers in China were selling drill pipe and drill collars in the U.S.

market at less than fair value. Commerce calculated dumping margins ranging from de minimis to 69.32 percent ad

valorem for certain Chinese producers of drill pipe and drill collars and a dumping margin of 429.95 percent ad

valorem for the PRC-wide entity. CR/PR at Table I-3.

 2 19 U.S.C. § 1677(7)(C)(i).

 3 CR/PR at Table C-3. The volume of subject imports of unfinished and finished products combined were ***

short tons in January-June 2010 compared with *** short tons in January-June 2009.

 4 CR/PR at Table C-3. The volume of nonsubject imports of unfinished and finished products combined was ***

short tons in 2007, *** short tons in 2008, *** short tons in 2009, *** short tons in January-June 2009, and ***

short tons in January-June 2010.

41
for an overall increase over the three-year period of only *** percentage points.5

 Such imports held a

***-percent share of the market in interim 2010, compared with their ***-percent share of the market in

interim 2009. In contrast, shipments of subject imports of unfinished drill pipe and drill collars gained

*** percentage points of market share from 2007 to 2008, and then *** their market share in 2009, for an

overall increase over the three-year period of *** percentage points.6

 These imports’ market share was

*** percent in interim 2010, compared with *** percent in interim 2009.

Viewed on a consolidated basis (unfinished and finished drill pipe and drill collars), we find the

volume of subject imports to be significant in absolute terms and that by 2009, subject imports held a

significant share (*** percent for unfinished products and *** percent for finished products) of apparent

U.S. consumption. Nevertheless, we also find it significant that subject imports of finished products

(which were the bulk of the subject imports during the period examined) closely followed demand

conditions in the U.S. market.7

 In particular, during 2007 and most of 2008, a period characterized by

robust demand and reported supply tightness in the U.S. market, subject imports of finished product

increased, albeit moderately, from *** short tons to *** short tons, while increasing their market share by

just over *** percentage points.8

 In 2009, after demand had declined dramatically, subject imports of

finished product fell sharply to *** short tons, and their share of the market declined as well, to ***

percent, a level that was only slightly higher than that at the start of the period. In fact, U.S. producers of

finished drill pipe and drill collars actually increased their share of the U.S. market over the three-year

period, as their market share increased from *** percent in 2007 to *** percent in 2009. Moreover, we

note that, although the share of subject imports of the unfinished products increased from 2008 to 2009,

the share of nonsubject imports of unfinished products in the U.S. market increased even more

 5 CR/PR at Table C-2. Subject imports’ market share for finished drill pipe and drill collars was *** percent in

2007, *** percent in 2008, and *** percent in 2009.

 6 CR/PR at Table C-1. Subject imports’ market share of unfinished drill pipe and drill collars was *** percent in

2007, *** percent in 2008, and *** percent in 2009.

 7 With regard to subject imports, imports of finished products were *** percent of total subject imports in 2007,

*** percent in 2008, *** percent in 2009, ***percent in January-June 2009, and *** percent in January-June 2010. 

Derived from CR/PR at Tables C-2 and C-3.

 8 For finished products, from 2007 to 2008, demand, as measured by apparent U.S. consumption, decreased by

*** percent from *** short tons in 2007 to *** short tons in 2008. CR/PR at Table C-2. Domestic producers’

capacity utilization for finished products was *** percent in 2007 and *** percent in 2008. CR/PR at Table C-2.

Supply tightness is evidenced by record data on lead times. For finished drill pipe, average lead times for

merchandise produced to order in 2007 were 225 days (approximately 7 months) from U.S. producers, with some

shipments from U.S. producers stretched out to as long as *** (approximately *** months). CR/PR at Table II-1. In

contrast, lead times in 2007 on purchases of finished drill pipe from U.S. importers averaged only 130 days (just

over 4 months). The spread in lead times between U.S. producers and importers narrowed considerably after 2007,

but we find that the spread in 2007 likely created an incentive for finished drill pipe customers to purchase from U.S.

importers and contributed to the modest increase in subject imports of finished drill pipe in calendar year 2008. 

Moreover, data on lost sales indicate that, early in the period examined, several purchasers switched their purchases

from domestically-produced drill pipe to subject drill pipe at least in part because of “a lack of availability from U.S.

producers,” “U.S. producers could not meet demand,” “{{we}} could not get product from anyone else”, and “lead

times from U.S. producers were six to nine months, whereas the imported product from China was readily

available.” CR at V-26-34, PR at V-II-12. 

42
dramatically between those years.9

 Thus, to the extent that U.S. producers of the unfinished products lost

market share in 2009, much of that loss was to nonsubject imports rather than to subject imports.

Accordingly, based on the above analysis, while we find that the volume of subject imports is

significant, we do not find, as discussed below, an affirmative determination of material injury by reason

of subject imports is warranted. 

2. Analysis of Threat of Material Injury by Reason of Subject Imports

For purposes of threat, we consider whether, among other relevant economic factors, (1) any

existing unused production capacity or imminent, substantial increase in production capacity in the

exporting country, and (2) whether there will be a significant rate of increase of the volume or market

penetration of imports of the subject merchandise, indicating the likelihood of substantially increased

imports.10 The Commission received questionnaire responses from 10 Chinese producers/exporters of

which 4 reported production of unfinished drill pipe, 10 reported production of finished drill pipe, 2

reported production of unfinished drill collars, and 6 reported production of finished drill collars.11

According to these firms, these responses account for *** percent of total production of unfinished drill

pipe, *** percent of finished drill pipe production, *** percent of unfinished drill collar production, and

*** percent of finished drill collar production, in China.12 Moreover, data on exports of finished drill

pipe to the United States contained in these responses were equivalent to approximately 70.7 percent of

reported U.S. imports from China during this same period.13 Given that reported U.S. imports from China

are estimated to account for over 90 percent of U.S. imports of drill pipe and drill collars from China for

each period for which data were collected, we find that, at least with regard to finished drill pipe (which

constituted the vast bulk of exports from China of subject product to the United States during the period

examined) we have fairly comprehensive coverage of the foreign industry producing the subject

products.14

Based on these data, for both finished and unfinished products, Chinese capacity increased

overall during the period examined, with capacity utilization dropping to low levels by the end of the

period, so that reported excess capacity is extensive.15 For finished products, reported excess capacity in

 9 The share of subject imports of unfinished products in the U.S. market rose from *** percent in 2008 to ***

percent in 2009, or by *** percentage points. The share of nonsubject imports of unfinished products in the U.S.

market rose from *** percent in 2008 to *** percent in 2009, or by *** percentage points. CR/PR at Table C-1. 

 10 19 U.S.C. § 1677(7)(F)(ii) 

 11 CR/PR at Table VII-2. Six firms (***) reported production and/or exports of unfinished drill pipe and/or drill

collars. Ten firms (Baoshan, DP Master, Henan, Jiangsu, NOV Grant Prideco, Shanxi Fenglsi, Shanxi Huanjie,

Shengli, and Wuxi) reported production and/or exports of finished products. ***. All subject foreign producers of

finished drill collars also reported production of finished drill pipe, but the two responding producers of unfinished

drill collars and the four responding producers of unfinished drill pipe were distinct from each other. 

 12 CR at VII-6, PR at VII-4.

 13 CR at VII-9, n.34, PR at VII-7, n.34 as revised by memorandum INV-JJ-010 (Feb. 4, 2011).

 14 CR/PR at Tables IV-1, VII-3a-VII-3d. Total subject exports from China to the U.S. of finished drill pipe

accounted for *** percent of total subject exports to the U.S. in 2007, *** percent in 2008, *** percent in 2009, ***

in January-June 2009, and *** subject exports in January-June 2010.

 15 CR/PR at Tables VII-3b and VII-3d. Reported capacity in China to produce finished products was *** short

tons in 2007, *** short tons in 2008, *** short tons in 2009, *** short tons in January-June 2009, and *** short tons

in January-June 2010. Capacity utilization of facilities producing finished products was *** percent in 2007, ***

(continued...)

43
2009, at *** short tons, slightly exceeded apparent U.S. consumption in that year.16 On the other hand,

there is no evidence on the record that Chinese drill pipe producers intend to increase existing capacity.17

On balance, however, we find that Chinese drill pipe and drill collar producers have the ability to increase

shipments to the United States. 

The issue before us, however, is not simply the amount of excess capacity that currently exists in

China but rather whether, given the conditions of competition in the U.S. market, the Chinese industry is

likely to use that excess capacity to substantially increase shipments to the U.S. market. For the

following reasons, we conclude that such an outcome is unlikely.

First, responding firms did not report a surge of exports to the U.S. market during the period

examined. Between 2007 and 2008, exports to the United States of finished products increased only

modestly, and declined substantially in 2009; this trend mirrors that exhibited by U.S. imports of such

products.18 Similarly, U.S. imports of unfinished products, which were considerably lower in volume

than imports of finished products, did not surge between 2007 and 2009.19 To the extent that any increase

occurred, it did so against the backdrop of an overheated demand environment, which is not likely to

recur in the imminent future. As noted above, this demand environment was characterized by extended

lead times of U.S. producers in 2008 compared to importers of the subject products, which we find

accounted for any increase in imports that occurred. In contrast, as discussed below, the current state of

demand, while improved from its 2009 trough, is nowhere near as strong as it was in 2007 and early

2008. Because subject imports declined in volume in 2009 (and, in the case of finished products, in

market share as well) when demand was weak, there is no reason to expect a surge in subject import

volume and market share in the imminent future, inasmuch as demand and domestic producers’ lead times

have not yet returned to the levels they reached during the period when those trends were last

observed.20 21 Consequently, given the trends observed during the period examined, we do not find a

significant rate of increase of the volume or market penetration of imports of the subject merchandise

indicating the likelihood of substantially increased imports.

Second, although the Chinese industry can be characterized as export-oriented, the Chinese

industry is not very reliant on the U.S. market compared to other markets, and did not increase

significantly the share of its exports going to the U.S. market during the period examined. With regard to

finished products, which made up the substantial majority of imports into the U.S. market during the

period examined, the percentage of responding Chinese producers’ shipments exported to the United

States increased by only *** percentage points between 2007 and 2009, and was less than the share of

 15 (...continued)

percent in 2008, *** percent in 2009, *** percent in January-June 2009, and *** percent in January-June 2010. 

 16 CR/PR at Table C-2. Apparent U.S. consumption of finished products in 2009 was *** short tons.

 17 CR/PR at Tables VII-3a through Tables VII-3d.

 18 CR/PR at Table C-2; CR/PR at Tables VII-3b and VII-3d. Reported exports of finished products increased

from 23,939 short tons in 2007 to 25,459 short tons in 2008, before declining to 17,121 short tons in 2009. 

Similarly, subject imports of finished products increased slightly from *** short tons in 2007 to *** short tons in

2008, before declining sharply to *** short tons in 2009.

 19 CR/PR at Table C-1. Subject imports of unfinished products increased from *** short tons in 2007 to ***

short tons in 2008, before falling to *** short tons in 2009.

 20 As explained below, we find no evidence that importers used underselling to increase the volume of sales in

the U.S. market, a fact that further supports our finding as to likely volume. 

 21 Subject import volumes did not decline in 2009 as a result of the pendency of the present investigations,

considering that the petition was filed effective December 31, 2009. CR at I-1, PR at I-1. 

44
shipments going to non-U.S. markets throughout the period examined.22 Notably, between 2007 and

2008, a period during which demand in the U.S. market was generally strong, the share of Chinese

exports going to the U.S. market actually declined, in contrast to the share going to “all other markets,”

which increased sharply from *** percent to *** percent in 2008, and again even more markedly to ***

percent in 2009.23 Thus, we do not consider that the existing unused production capacity in China, or the

export orientation of Chinese producers, indicates a likelihood of substantially increased imports of the

subject merchandise into the United States, given the demonstrated ability of other export markets to

absorb any additional exports from China.

Other factors that the statute compels us to examine do not alter our conclusion. With regard to

inventories of the subject merchandise, there was no significant increase in inventories of subject product

held by U.S. importers or purchasers over the period examined. In fact, while inventories of finished

products from U.S. sources predictably increased from 2007 to 2009 as demand declined, inventories of

subject imports of finished products dropped substantially over that same period.24 Thus, in this market

there is no overhang of inventories from subject sources waiting to be sold into the U.S. market in the

imminent future. 

With regard to the potential for product shifting, in the preliminary phase of these investigations

we acknowledged that such a potential existed, inasmuch as certain production facilities in China that

make drill pipe also make oil country tubular (“OCTG”) casing and tubing, and can make unfinished drill

pipe on the same production lines as seamless OCTG. That potential still exists currently; however, the

record in the final phase of these investigations indicates that such a potential may be somewhat limited. 

Given the recently-imposed antidumping and countervailing duty orders on OCTG and seamless pipe,25

there is a potential for product-shifting regarding increased production of unfinished products. The

record, however, does not indicate any significant surge into the U.S. market of such products when the

OCTG orders went into effect in the U.S. market in early 2010.26 Moreover, as noted above in the

majority’s discussion of “domestic like product,” the finishing processes for finished drill pipe are

extensive, and thus it is unlikely that production could be easily shifted from either OCTG or seamless

pipe to production of finished drill pipe.27 In any event, it is unlikely that producers of subject

 22 CR/PR at Tables VII-3b and VII-3d. The share of exports of finished products to the United States in total

shipments by responding producers was *** percent in 2007, *** percent in 2008, *** percent in 2009, *** percent

in January-June 2009, and *** percent in January -June 2010. The corresponding share of exports to non-U.S.

markets in total shipments was *** percent in 2007, *** percent in 2008, *** percent in 2009, *** percent in

January-June 2009, and *** percent in January-June 2010.

 23 CR/PR at Tables VII-3b and VII-3d. The share of total shipments of finished products exported to “all other

markets” was *** percent in 2007, *** percent in 2008, *** percent in 2009, *** percent in January-June 2009, and

*** percent in January-June 2010. These markets include East Asia and the Middle East. Hearing transcript, p. 200

(Leibowitz) and p. 300 (Murphy). 

 24 CR/PR at Table II-4. Inventories of finished products from U.S. sources held by purchasers increased from

5,544,133 feet in 2007 to 6,956,373 feet in 2008, and increased again to 7,063,989 feet in 2009. Inventories of

finished products from China held by purchasers declined from 1,527,256 feet in 2007 to 1,186,943 feet in 2008, and

declined again to 690,935 feet in 2009.

 25 CR at II-12 n.13, PR at II-9 n. 13.

 26 CR/PR at Table C-1. Subject imports of unfinished products were *** short tons in January-June 2010,

compared with *** short tons in January-June 2009. Commerce published its countervailing duty order on OCTG

from China in January 2010 (75 Fed. Reg. 3203).

 27 Hearing transcript, p. 209 (Murphy). The two largest producers of finished drill pipe in China, *** and ***

(continued...)

45
merchandise in China would shift to the production of subject merchandise given the lack of motivation

to do so in the imminent future. 

Finally, there are some barriers to Chinese exports of drill pipe and drill collars in third-country

markets, but the record does not suggest that these barriers are so important as to cause a re-direction of

Chinese exports to the U.S. market. As we noted in the preliminary phase, in April 2009 the European

Union (EU) concluded an antidumping investigation on seamless pipe from China. The resulting order,

however, is limited to unfinished products and in any event, the EU was not an important export market

for the Chinese industry at any point during the period examined.28 Other third-country actions against

Chinese exports of the subject merchandise either appear to be limited to OCTG other than drill pipe (an

investigation by Argentina) or do not appear to have been finalized (an investigation by Russia).29 30

Accordingly, based on the above analysis, we cannot conclude that there has been a significant

rate of increase in the volume or market penetration of subject imports nor any existing unused capacity

or imminent substantial increase in production capacity indicating the likelihood of substantially

increased subject imports.

B. Price Effects of the Subject Imports

1. Analysis of Material Injury by Reason of Subject Imports

In our analysis of the price effects of subject imports, we consider, (1) whether there has been

significant price underselling by the imported merchandise as compared with the price of domestic like

products of the United States and (2) whether the effect of imports of such merchandise otherwise

depresses prices to a significant degree or prevents price increases, which otherwise would have

occurred.31 In evaluating the price effects of subject imports, we consider the interchangeability of the

domestic like product and subject merchandise as well as the importance of price in purchasing decisions. 

As indicated above in relation to the conditions of competition, the degree of interchangeability between

the domestic like product and subject imports is generally moderate to high, with the important exception

of premium product, for which substitutability is low.32 Premium drill pipe accounts for a growing share

 27 (...continued)

both reported that they ***. Similarly, ***, a producer of unfinished drill pipe and finished drill pipe and drill collar

reported that ***. CR/PR at Table VII-2. 

 28 CR/PR at Tables VII-3a through VII-3d; CR at VII-17, n.38, PR at VII-10, n.38. The share of exports to the

EU in total shipments of finished products by responding Chinese producers was *** percent in 2007, *** percent in

2008, *** percent in 2009, *** percent in January-June 2009, and *** percent in January-June 2010.

 29 CR at VII-17, PR at VII-10. 

 30 We also do not consider ***, to indicate that increased volumes of subject imports are imminent. As an initial

matter, Petitioners drew the Commission’s attention to this particular sale in order to rebut Respondents’ contention

that the domestic industry and importers of subject merchandise sold to distinct groups of customers. Petitioners’

posthearing brief at 1-2. As Respondents’ contention does not underpin our analysis in any way, we do not consider

Petitioners’ rebuttal germane to that analysis. In any event, the record indicates that ***. ***. Respondents’

posthearing brief at exhibit 23 (***), CR at V-31, PR at V-12. Given the specific circumstances surrounding this

sale, we do not find that it predicts any imminent surge in subject imports.

 31 19 U.S.C. § 771(7)(C)(ii). 

 32 CR at II-27, PR at II-19.

46
of domestic production, accounting for *** percent during 2009.33 Quality is the most important factor in

purchasing decisions, followed by availability and price.34

A. Data Used in Underselling Analysis

An important consideration in our analysis is the extent to which subject imports undersold the

domestic like product in the U.S. market during the period examined. Based on input from the parties, the

Commission identified a number of representative drill pipe and drill collar products on which it sought

pricing data in order to evaluate the degree of underselling. In keeping with its ordinary practice, the

Commission compared the prices at which the products were sold by domestic producers and by

importers in the first arm’s length transaction occurring in the United States. 

In the preliminary phase of these investigations, the quarterly price comparisons showed mostly

overselling. Petitioners argued that the Commission should disregard the results of the quarterly price

comparisons and instead evaluate underselling by comparing the average unit values (AUVs) of the

domestic like product and subject imports.35 Petitioners argue that the AUV data are consistent with

certain reports from purchasers as to which product was lower in price. They also contend that the

quarterly price comparisons understate the true extent of underselling, because some of the data were

collected at different levels of trade and because subject imports were more frequently sold to distributors

than was the domestic like product.36 We determine to rely on the quarterly price comparisons and not

AUV data in evaluating underselling in these investigations.

The merits of using AUV data in evaluating underselling has been a topic thoroughly explored by

the Commission and its reviewing courts. Use of AUV data becomes problematic in investigations in

which the subject merchandise and domestic product are sold in a variety of forms at varying prices. As

held by our reviewing courts, differences in AUVs may reflect differences in product mix rather than

differences in price.37 Not only can differences in product mix undermine comparisons between subject

imports and the domestic product, but also comparisons of the data from year to year, as product mix may

 33 Figure derived from CR/PR at Tables D-1 and D-2. As a share of apparent U.S. drill pipe consumption by

weight, premium pipe accounted for *** percent in 2007, *** percent in 2008, and *** percent in 2009. CR at II24, PR at II-17.

 34 CR/PR at Tables II-5 and II-6. 

 35 Petitioners’ prehearing brief at 40.

 36 Petitioner’s prehearing brief at 40–42 and posthearing brief at A-6. As noted, Petitioners argue that the

Commission should not rely on the quarterly pricing comparisons because only AUV data are consistent with reports

by a majority of purchasers responding to the Commission’s questionnaires that the subject merchandise represented

the lowest price for drill pipe and drill collar since January 1, 2007. Petitioners’ posthearing brief at A-6. For the

reasons provided in the text above, we decline to rely on AUVs in our underselling analysis. In any regard, we note

that the purchaser reports referenced by Petitioners are not specific to any particular quarterly annual period or to the

sales of comparable products. That lack of specificity undermines the usefulness of the reports in evaluating the

timing, frequency, or degree of underselling. In any event, when responding to a different query, a majority of

purchasers indicated the domestic product was generally lower or comparable in price with the subject merchandise. 

CR/PR at Table II-9. Despite Petitioners’ arguments to the contrary, we regard price comparisons for defined and

representative pricing products to be the best measure of underselling in this market. 

 37 See Allegheny Ludlum Corp. v. United States, 287 F.3d 1365, 1373-74 (Fed. Cir. 2002); Nucor Corp. v. United

States, 594 F. Supp. 2d 1320, (Ct. Int’l Trade 2008); and Oil Country Tubular goods from Austria, Brazil, China,

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

TA-428 (Preliminary) and 731-TA-992-994 and 996-1005 (Preliminary), USITC Pub. 3511 (May 2002) at 23 n. 137.

47
shift over time. In the current investigations, the subject product is sold in a multitude of forms, falling

into various categories including unfinished drill pipe, finished drill pipe, heavy-weight drill pipe,

premium drill pipe, and drill collars.38 Within each category, products are further differentiated by

grades, performance characteristics, and optional finishes that can account for substantial differences in

value.39 Given the great variety of drill pipe and drill collar products, and their variance in price, we

determine that AUVs do not constitute a reliable proxy for actual prices in these investigations. 

Accordingly, we decline Petitioners’ invitation to rely on AUVs in evaluating the extent of underselling

in these investigations. 

We also consider whether the quarterly price comparisons derived in these investigations may

understate the true extent of underselling in these markets, for the reasons given by Petitioners. We first

evaluate the assertion that the comparisons are distorted because data were gathered at differing levels of

trade. As noted, in evaluating underselling, it is the Commission’s longstanding practice to gather pricing

data at the level of the first arm’s length transaction occurring in the United States. The approach is

calculated to derive information relevant to the purchasing decisions of the purchasers in the U.S. market,

unaffected by corporate relationships or other extraneous factors that could affect price.

Petitioners do not appear to dispute the soundness of the Commission’s general approach, but

focus their claim on data relating to the importer and purchaser Command. A witness testifying at the

Commission’s hearing on behalf of Petitioners noted that Command purchases the domestic like product

from domestic producers and acquires (via importation) subject merchandise from foreign producers in

China. The witness noted that, for purposes of gathering data for the quarterly pricing comparisons, the

price data reported for the domestic like product were those sales by the domestic producers to Command. 

In contrast, the price data for the subject merchandise were those for sales by Command to other

distributors or end users.40 According to the witness, this arrangement reveals that these price data were

collected at different levels of trade, and noted further that Command will likely mark up the price before

sale.41 

We are not persuaded that Petitioners’ observation with respect to Command demonstrates that

the quarterly pricing comparisons understate the extent of underselling in the U.S. market. The purpose

of the price comparisons is to examine the prices at which the domestic like product and subject

merchandise are sold to arm’s length purchasers in the United States market. Sales of the domestic like

product to Command and sales by Command of subject merchandise represent bona fide, arm’s-length

sales to purchasers in the United States market. 

Even if these sales were somehow unrepresentative, as the witness of Petitioners asserts, the

effect on the quarterly pricing comparisons is very small. Command purchased only a small share of the

drill pipe and drill collar shipped by domestic producers during the period.42 In fact, purchases of

domestic product by Command occurred in only *** of the 62 quarterly comparisons made during the

period examined.43 We are not persuaded that the Command data are unrepresentative of a share of arm’s

 38 CR/PR at Tables V-2-V-7 (showing range of prices for representative products). 

 39 See CR/PR at Tables V-2-V-4 (varying price of finished drill pipe products) and CR at V-5, PR at V-4 (value

of add-ons). 

 40 Hearing transcript, p. 70-71 (Scott).

 41 Hearing transcript, p. 70-71 (Scott).

 42 Compare CR at V-9 n.33, PR at V-7 n.33 (value of Command’s purchases of the domestic like product) with

CR/PR at Table IV-4b (value of domestic producers’ total shipments of finished drill pipe)

 43 *** CR at V-23 and n.35, PR at V-10 and n.35.

48
length purchase prices in the United States market, but even if they were, they have little impact on the

results. 

Taking a different tack, Petitioners argue that the Commission should evaluate underselling by

comparing the price at which Command acquired subject merchandise as an importer with the price at

which domestic producers sold the domestic like product in the United States market. As noted above,

however, the Commission examines the prices at which domestic product and subject merchandise are

sold to purchasers in the United States, in order to evaluate price competition in the United States market. 

The price at which an importer such as Command may acquire subject merchandise is one level removed

from the inquiry that it is our statutory obligation to perform.44 We therefore cannot accept the

methodology proposed by Petitioners.

Even if we were persuaded that the use of Command’s import acquisition price was appropriate,

the price comparison that Petitioners advocate is undermined by an important difference in product

features. Drill pipe is sold with a range of so-called “add-ons,” a term referring to features including, but

not limited to, an interior plastic coating, hard banding (an exterior wear-resistant material), and “makeor-break” treatment (designed to facilitate drill pipe connections performed in the field).45 Each of these

add-ons raises the price of the product, potentially in excess of $*** per foot in the aggregate.46 Tables

V-2 through V-7 present the price at which Command acquired subject merchandise as an importer as

well as the price at which the domestic products were sold in the United States. Most of Command’s

imports however, lack add-ons, while the majority of domestic production is sold with add-ons.47 These

important differences undermine the value of the price comparisons advocated by Petitioners.

Petitioners further observe that the share of subject merchandise sold to distributors was higher

than the share of the domestic like product sold to distributors. Petitioners contend that because importers

reported ***, and because distributors perform services such as holding product in inventory, distributors

pay prices for drill pipe and drill collar that are substantially higher than those paid by end users.48 On

that basis, Petitioners argue that a comparison of quarterly prices for the subject merchandise and

domestic like product understates the degree of underselling that really occurs in the market. 

First, we note that Petitioners’ assumption that distributors pay higher prices than do end users

runs directly counter to the concern typically raised when comparing prices in sales to these purchaser

groupings. The concern ordinarily expressed is that distributors, because of their ability to make high-

 44 See Certain Polyester Staple Fiber from China, Inv. No. 731-TA-1104 (Final), USITC Pub. 3922 (June 2007)

at 19, n. 119. In a small minority of investigations, it may not be possible to obtain the price at which the subject

merchandise is sold to a purchaser in the U.S. market, such as where the importer is itself the end user of the subject

merchandise, or where the importer sells the subject merchandise at retail. In these special circumstances, the

Commission uses the prices paid by importers for the subject merchandise in price comparisons, but does so with

caution. See Ni-Resist Piston Inserts from Argentina, Inv. No. 701-TA-460 (Final), USITC Pub. 4104 (Oct. 2009),

at 14. 

 45 CR at V-5, PR at V-4; CR at I-19 n. 33, PR at I-13 n.33.

 46 See CR at V-5, PR at V-4.

 47 CR at V-9 n.34 and PR at V-7 n.34 (majority of Command’s imports without add-ons) and CR at V-6, PR at

V-4 (*** percent of domestic product sold with internal coating, *** percent sold with hard banding, and ***

percent sold with make-or-break treatment).

 48 Petitioners’ prehearing brief at 41 and 74.

49
volume purchases, are able to purchase at prices that are lower than those paid by end users.49 Here,

Petitioners argue that distributors pay higher prices than do end users.

Although Petitioners are not barred from arguing that the markets at issue here are unique, they

fail to supply a persuasive explanation as to why this unusual effect arises. Even if importers ***, as

Petitioners assert, that asserted fact does not constitute evidence that distributors necessarily pay higher

prices for drill pipe and drill collar than do end users. Nor does the fact that distributors may provide

inventory services necessarily demonstrate that they pay higher prices. The provision of those services

comes at some cost to distributors, meaning that distributors are under pressure to obtain drill pipe and

drill collar at the lowest price available. Why distributors would be willing to pay prices higher than

those paid by end users is not explained. If end users truly paid lower prices when buying direct from a

U.S. manufacturer, distributors would quickly go out of business as they would lose money on every sale

to an end user. In the absence of evidence or persuasive argument as to why distributors pay higher

prices, we decline to embrace the assumption advanced by Petitioners.

A procedural concern also arises in respect to Petitioners’ argument. When it appears that prices

may vary as a function of whether the purchaser is a distributor or end user, the Commission may in its

questionnaires direct the parties to report prices separately for sales to distributors and to end users,

generating two separate sets of quarterly pricing comparisons. While the Commission may take that step

at its own initiative if a need is indicated on the record, the parties have various opportunities during an

investigation to request that the Commission collect the data separately, including at any time during the

preliminary phase of the investigation or when commenting on the draft questionnaires in the final phase. 

Despite now arguing that prices to distributors are higher and distort the quarterly comparisons,

Petitioners did not request that the data be gathered separately, despite submitting lengthy comments on

the draft questionnaires. In other words, it was within Petitioners’ power to seek to fix the problem of

which it now complains, yet they failed to act prior to the time the Commission issued its questionnaires.

Nevertheless, after Petitioners raised the argument in their prehearing brief, Commission staff

segregated the pricing data to the extent possible, as reported in Appendix G of the final staff report. 

Tables G-1 through G-6 show, for each of the six pricing products, sales of subject Chinese imports that

were mainly to distributors and those mainly to end users. As shown in the tables, in a clear majority of

quarterly comparisons, sales of the subject merchandise to distributors were made at lower prices than

sales to end users.50 The data contradict Petitioners’ assertion that distributors pay higher prices and that

the pricing comparisons understate the extent of underselling in this market.

In light of the above, we are not persuaded that the quarterly pricing comparisons understate the

extent of underselling, as Petitioners contend. We determine to rely on the quarterly pricing data and

reject the invitation to rely on AUV data instead. Having determined which data to use, we now turn to

our analysis.

 49 In most investigations, the record does not demonstrate that distributors necessarily pay lower prices than do

end users. In particular circumstances, however, such as where a select few distributors purchase in very large

quantities and multiple end users purchase only in small quantities, the Commission segregates distributor and end

user prices when making quarterly price comparisons.

 50 Sales of subject merchandise made mainly to end users were priced higher than sales made mainly to

distributors in 5 of 7 comparisons for product 1, 8 of 12 comparisons for product 2, 3 of 6 comparisons for product 3,

7 of 10 comparisons for product 5, and 2 of 2 comparisons for product 6. CR/PR at Tables G-1-G-6.

50
B. Price Underselling

The Commission collected quarterly pricing data for six drill pipe and drill collar products.51

Usable pricing data were provided by six domestic producers and twelve importers of subject drill pipe

and drill collar from China.52 For finished drill pipe, the data accounted for *** percent of the value of

domestic producers’ U.S. shipments and *** percent of the value of the U.S. importers’ U.S. shipments

during the period examined.53 For unfinished drill pipe, the data accounted for *** percent of the value of

domestic producers’ U.S. shipments and *** percent of value of importers’ U.S. shipments.54 For

finished drill collar, the data accounted for *** percent of the value of domestic producers’ U.S.

shipments and *** percent of the value of importers’ U.S. shipments.55 The pricing data provide a

representative basis to evaluate the prevalence of underselling by subject imports.56 

The subject imports mostly oversold the domestic like product in the quarterly price comparisons. 

Subject imports oversold the domestic like product in 37 comparisons, by margins averaging 10.5 percent

and ranging from 0.5 percent to 45.9 percent.57 Subject imports undersold the domestic product in 25

quarterly pricing comparisons, by margins averaging 10.8 percent and ranging from 0.2 to 31.1 percent.58

We find that subject imports mostly oversold the domestic like product and conclude that there has not

been significant price underselling by the imported merchandise as compared with the price of the

domestic like product.

C. Price Depression and Price Suppression

 In evaluating whether subject imports depressed prices for the domestic like product, we examine

price trends during the period examined. Prices for all six domestic products generally increased from the

first quarter of 2007 through early- to mid- 2009, when they declined and then remained lower during

interim 2010.59 Assessing the reasons for the price declines in 2009, we note a sharp fall in demand in

2009.60 Additionally, the cost of scrap (used to make the steel billets and bars) used in drill pipe and drill

collar production fell by approximately 80 percent in late 2008, and remained at much lower levels in

2009 than during most of 2008.61 The fall in demand likely put downward pressure on prices, while

lower raw materials costs enabled producers to lower prices without sacrificing profitability, at least to

some extent. 

 51 CR at V-8, PR at V-6.

 52 CR at V-8, PR at V-6.

 53 CR at V-8, PR at V-6.

 54 CR at V-8, PR at V-6.

 55 CR at V-8, PR at V-6.

 56 Petitioners’ posthearing brief at A-6. “The pricing products used by the Commission in this case were

extremely representative of the drill pipe industry, covering *** percent of domestic industry shipments and ***

percent of importer shipments.” 

 57 CR/PR at Table V-9. If we exclude from the data set pricing comparisons for quarters in which ***. See CR

at V-23 and n.35, PR at V-10 and n.35 (identifying quarters, all in 2008, ***).

 58 CR/PR at Table V-9.

 59 CR/PR at Tables V-2-V-7 and Figures V-2-V-7. 

 60 CR/PR at Table C-3.

 61 CR/PR at Figure V-1. 

51
In considering whether subject merchandise caused significant price depression in 2009, we

observe that subject merchandise oversold the domestic like product in a majority of quarterly price

comparisons during that year.62 The record also shows that subject imports of finished drill pipe and drill

collar lost market share to the domestic product in 2009, although the smaller volume of unfinished

subject imports gained market share in that part of the market.63 Additionally, we note that subject

imports provided little or no price competition for the domestic industry’s growing share of premium drill

pipe. 

We conclude that the decline in prices in 2009 occurred as a result of the sharp fall in demand,

and that the decline was also enabled to at least some extent by the sharp fall in raw materials costs.64 The

record does not establish that subject imports caused price depression to a significant degree, as they

mostly oversold the domestic like product, they lost market share in the more important finished portion

of the market, and because they provided little or no competition for the growing share of domestic sales

of premium drill pipe.

Nor do we find evidence that subject imports prevented increases in the price of the domestic

product that otherwise would have occurred. As noted, prices for the domestic product generally

increased from the first quarter of 2007 and through 2008. There is no evidence that subject merchandise

prevented the domestic industry from achieving further price increases from 2007 to 2008, as the ratio of

the domestic industry’s cost of goods sold to net sales was already low and changed little.65 Nor do we

find evidence that subject imports prevented price increases that otherwise would have occurred in 2009. 

Demand for drill pipe and drill collar fell sharply, as apparent U.S. consumption for finished product fell

by *** percent from 2008 to 2009, and fell for unfinished product by *** percent.66 Given that a sharp

fall in demand usually places downward pressure on prices, the record does not support the notion that

domestic producers were poised to increase prices in 2009, but were prevented from doing so by subject

imports, which, in the case of finished products, actually lost market share. While higher raw materials

prices might sometimes help producers justify price increases in a declining demand environment,

assuming low demand elasticity, here raw materials costs were sharply lower in 2009 than in 2008. It is

also not apparent how subject merchandise could have prevented price increases for premium finished

drill pipe, given the lack of a competing product. While the domestic industry experienced a higher

COGS/net sales ratio in 2009 than in 2008 with regard to both finished and unfinished products, we find

no evidence that subject imports prevented the domestic industry from increasing prices to a significant

degree, for the reasons given above.

Having examined the record and the arguments of the parties, we find that subject imports did not

have significant price depressing or price suppressing effects during the period examined. 

 62 CR/PR at Table V-9.

 63 CR/PR at Tables C-1 and C-2.

 64 Despite the fall in prices during 2009, raw materials costs made up a smaller share of domestic producers’ cost

of goods sold in that year than in 2008. CR/PR at V-1.

 65 CR/PR at Tables C-1 and C-2.

 66 CR/PR at Tables C-1 and C-2.

52
2. Analysis of Threat of Material Injury by Reason of Subject Imports

For purposes of threat, we consider whether “imports of subject imports 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.”67 Because the prices of subject imports did not have significant

price depressing or suppressing effects during the period examined, we consider whether changes are

likely to occur that would lead us to expect adverse price effects in the imminent future. 

We consider the evidence in the context of likely demand in the imminent future, because of its

potential to affect prices. As indicated above, demand was strong and growing during 2007 and 2008

before entering a deep trough in 2009 and remaining low during the first half of 2010. Late in the period

examined, leading indicators of demand improved, including increases in U.S. real GDP growth, prices

for crude oil and natural gas, the number of active rigs drilling for oil and natural gas, and footage

drilled.68 The demand environment has improved substantially since its lowest point in 2009, and by

some measures is approaching levels seen in 2007.69 Evidence of demand recovery is also found in the

domestic producers’ drill pipe order books, which show booked volumes in the second and third quarters

of 2010 greater than during any of the five previous quarters and within the lower end of the range

experienced during 2007 to 2008.70 Just as falling demand caused prices for drill pipe and drill collar to

fall in 2009, we expect increasing demand to support steady or increasing prices in the imminent future.

We also examined whether subject imports are likely to undersell the domestic like product to a

significant extent in the imminent future. Although in a majority of comparisons subject merchandise

oversold the domestic like product during the period examined, it mostly undersold the like product

during interim 2010, in 6 of 8 comparisons.71 We do not consider the underselling observed during the

most recent six month period to constitute evidence that significant underselling is likely in the imminent

future. The demand conditions prevailing during interim 2010 (low-level demand following an abrupt

decline), are not likely to continue in the imminent future. As noted above, demand is likely to increase,

as indicated by a number of different measures. Because subject imports mostly oversold the domestic

product when demand was increasing during the 2007 to 2008 time frame, we expect overselling to

predominate in the imminent future, consistent with the pattern observed during the period examined. 

Consistent with this expectation, prices for the subject merchandise were substantially higher in

the second quarter of 2010 than in the first quarter of that year for most of the pricing products. The price

of subject merchandise product 1 ***. Over the same time frame, prices for subject merchandise product

3 ***, and for product 5 ***.72 The *** was seen in the price of product 2, which ***.73 Consistent with

these price increases, the subject merchandise undersold the domestic product in four of four price

comparisons in the first quarter of 2010, but in only two of four price comparisons in the second quarter

 67 19 U.S.C. § 1677(7)(F)(i)(IV). 

 68 CR at II-18 -II-24, VII-19; PR at II-11-II-16, VII-11.

 69 CR/PR at Figure II-2 (footage drilled), Figure II-6 (rig count), and Table VII-7 (rig count).

 70 CR/PR at Table III-5.

 71 CR/PR at Table V-9. In some investigations, increased underselling late in the period examined comes as

importers price the product aggressively in order to increase sales volume before the imposition of provisional

duties. Here, however, the volume of subject imports during interim 2010 was lower than in interim 2009 both

absolutely and in market share. Accordingly, we do not attribute the increase in underselling at the end of the period

to the pendency of the investigations. 

 72 CR/PR at Tables V-2, V-4, and V-6.

 73 CR/PR at Table V-3.

53
of 2010.74 Furthermore, in the two instances of underselling in the second quarter of 2010, the margins

were much smaller than in the prior quarter (falling from *** percent to *** percent in the case of product

2 and from *** percent to *** percent in the case of product 3).75 Due to increased demand, higher prices

for the subject merchandise, and the falling frequency and margins of underselling during the first half of

2010, we do not expect the subject merchandise to undersell the domestic product to a significant degree

in the imminent future. In short, since at no point in the period examined was there evidence of subject

producers using underselling to push product into the market, we see no reason for that to happen in the

imminent future. 

With regard to whether the subject merchandise is entering at prices likely to have significant

price depressing or suppressing effects, we expect a continuing recovery in demand in the imminent

future, albeit at levels lower than the market experienced during the best portions of 2007 and 2008. As

noted above, we do not expect substantially increased volumes of subject merchandise in the imminent

future nor do we expect that the subject merchandise will undersell the domestic like product to a

significant extent. Given the absence of adverse price effects during the period examined, and in the

absence of any changes in the market likely to bring about such effects in the imminent future, we do not

expect subject imports to enter 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 in the imminent future. 

C. Impact of the Subject Imports76

1. Analysis of Material Injury by Reason of Subject Imports

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.”77 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

are considered “within the context of the business cycle and conditions of competition that are distinctive

to the affected industry.”78 

The business cycle for drill pipe and drill collars is based on oil and gas prices and depends

heavily on oil and gas rig counts.79 Because drill pipe follows the booms and busts of the oil and gas

industry, its business cycle can be very volatile.80 This volatility was experienced during the period

examined as demand peaked and then rapidly declined beginning in late 2008. Overall, demand declined

 74 CR/PR at Tables V-2, V-3, V-4, V-6 and V-7.

 75 CR/PR at Tables V-3 and V-4. 

 76 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-12, PR at IV-7-8. 

 77 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.”). 

 78 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 Pub. 3155 at 25 n.148 (Feb. 1999).

 79 CR/PR at Figure II-7, CR at II-25, PR at II-17, and hearing transcript, p. 202 (Murphy). 

 80 CR/PR at Figure II-7, CR at II-25, PR at II-17, and hearing transcript , p. 202 (Murphy). 

54
by *** percent for unfinished drill pipe and drill collar, and by *** percent for finished drill pipe and drill

collar from 2007 to 2009.81 At the same time, measures of the domestic industry’s trade and financial

performance worsened during the period examined. Production of finished drill pipe and drill collar

declined by 48.1 percent from 2007 to 200982 while capacity utilization declined by 40.1 percentage

points.83 The quantity of net sales decreased by 43.8 percent,84 and U.S. shipments declined by 53.8

percent.85 The number of PRWs employed by the finished drill pipe and collar industry was reduced by

27.1 percent from 2007 to 2009.86 In 2007, the domestic industry’s operating income was $449.4 million

and was 34.4 percent as a share of total net sales. By 2009, the operating income was $201.8 million and

the operating income margin was 23.2 percent.87 Unlike the producers of unfinished drill pipe and drill

collars, the producers of the finished goods have not yet registered improvements over their 2009 results

for many trade and financial indicators. However, they reported an operating income of $75.2 million

and an operating income as a share of total net sales of 22.2 percent in the first half of 2010.88 

From 2007 to 2009, unfinished drill pipe and drill collar production declined by *** percent,89

capacity utilization declined by *** percentage points,90 net sales decreased by *** percent,91 and U.S.

shipments declined by *** percent.92 At the same time, the number of production and related workers

(“PRWs”) employed by the producers of unfinished drill pipe and collar was reduced by *** percent.93 In

 81 CR/PR at Tables C-1-C-4. 

 82 Domestic production declined from 266,343 short tons in 2007 to 248,454 short tons in 2008, and 138,155

short tons in 2009. Production was 78,347 short tons in interim 2009 and 61,668 short tons in interim 2010. CR/PR

at Table C-2.

 83 Capacity utilization declined from 77.5 percent in 2007 to 69.2 percent in 2008 and was 37.4 percent in 2009,

and 42.4 percent in interim 2009 compared with 33.4 percent in interim 2010. CR/PR at Table C-2. 

 84 Net sales decreased from 261,487 short tons in 2007 to 235,445 short tons in 2008 and to 146,871 short tons in

2009, and were 71,534 short tons in interim 2009 compared with 67,273 short tons in interim 2010. CR/PR at Table

C-2.

 85 U.S. shipments decreased from 197,609 short tons in 2007 to 148,327 short tons in 2008 and to 91,363 short

tons in 2009, and were 44,699 short tons in interim 2009 compared with 42,622 short tons in interim 2010. CR/PR at

Table C-2.

 86 Between 2007 and 2009, hours worked by PRWs fell by 28.4 percent, productivity declined by 27.5 percent,

and wages paid to PRWs declined by 28.0 percent. CR/PR at Table C-2. 

 87 CR/PR at Table C-2. 

 88 CR/PR at Table C-2. Given the nature of drill pipe and drill collar production, it is not surprising that the

upstream product would recover before the downstream product. 

 89 Domestic production declined from *** short tons in 2007 to *** short tons in 2008, and *** short tons in

2009. Domestic production was *** short tons in interim 2009 and *** short tons in interim 2010. CR/PR at Table

C-1.

 90 Capacity utilization declined from *** percent in 2007 to *** percent in 2008 and was *** percent in 2009. It

was *** percent in interim 2009 and *** percent in interim 2010. CR/PR at Table C-1. 

 91 Net sales decreased from *** short tons in 2007 to *** short tons in 2008 and to *** short tons in 2009 and

were *** short tons in interim 2009 and *** short tons in interim 2010. CR/PR at Table C-1. 

 92 U.S. shipments increased from *** short tons in 2007 to *** short tons in 2008 and were *** short tons in

2009. U.S. shipments were *** short tons in interim 2009 and *** short tons in interim 2010. CR/PR at Table C-1.

 93 Between 2007 and 2009, hours worked by PRWs in the unfinished drill pipe and drill collar business fell by

*** percent, productivity declined by *** percent, and wages paid to PRWs declined by *** percent. CR/PR at

(continued...)

55
2007, unfinished producers’ operating income was *** and *** percent as a share of total net sales. By

2009, the operating income was *** and *** percent as a share of total net sales. Each of these indicators

was better in January-June 2010 compared with January-June 2009. For example, production was ***

percent higher, operating income was *** percent higher, and the operating income margin was ***

percentage points higher.94

Notwithstanding these trends, we do not find that the domestic industry’s declining performance

during the period was due in any significant degree to the presence of subject imports. Given that 

(1) subject imports predominantly oversold the domestic like product even in 2009; (2) for the most part,

the industry was able to maintain or actually increase its prices in that period; and (3) subject imports

decreased in terms of both volume and market share, the record evidence fails to demonstrate that

declines in the domestic industry’s performance were by reason of the subject imports. In fact, the

performance of the unfinished drill collar industry declined even absent meaningful subject import

competition.95

The performance trends of the domestic industry do not correlate to the subject import volumes in

any meaningful way. The financial performance of the unfinished drill pipe and collar producers was

strongest in 2008, when subject imports reached their peak. The ratio of operating income to total net

sales, for the unfinished drill pipe and collar producers, initially improved slightly from *** percent in

2007 to *** percent in 2008 at the same time that the volume of subject imports increased by *** percent. 

The operating income ratio then declined to *** percent in 2009 as the volume of subject imports fell by

*** percent. 

The financial performance of the finished drill pipe and collar producers remained very strong in

2008 despite an increase in subject import volume and a decline in domestic consumption.96 The ratio of

operating income to total net sales was 34.4 percent in 2007 and declined slightly to 32.1 percent in 2008,

as subject imports increased by *** percent. The following year (2009), the ratio of operating income to

total net sales was 23.2 percent and the volume of subject imports was *** percent lower. 

We acknowledge that because of its dominant size, NOV Grant Prideco’s financial results have a

large impact on the combined financial results of the domestic industry.97 However, the statute directs us

to focus on the domestic industry “as a whole,” and not on individual firms in the domestic industry.98

We recognize that NOV Grant Prideco’s global operations afford it flexibility in its sourcing and

production decisions as evidenced by its ***99 and its ***.100 However, NOV Grant Prideco is not

unique in this regard, as several other domestic producers are also related to third country producers101

 93 (...continued)

Table C-1. 

 94 CR/PR at Table C-1. 

 95 CR/PR at Table VI-1c, CR at IV-12, n.16, PR at IV-8, n.16. 

 96 CR/PR at Table C-2. 

 97 NOV Grant Prideco is the leading U.S. producer of finished drill pipe and the second largest U.S. producer of

finished drill collars. In 2009, NOV Grant Prideco accounted for *** percent of U.S. finished drill pipe production

and *** percent of U.S. finished drill collar production. It ***. CR/PR at Table III-1. 

 98 19 U.S.C. § 1677(4)(A). Committee for Fair Coke Trade v. United States, – F. Supp. 2d.—, Slip Op. 04-68 at

42-43 (Ct. Int’l Trade June 10, 2004). 

 99 CR/PR at Tables III-7a-III-7b, and IV-1.

 100 CR at IV-7 n.8, PR at IV-6 n.8. 

 101 CR/PR at Table III-1. *** have related producers in nonsubject countries. 

56
and multiple domestic producers supplemented their own production with *** during the period

examined.102

A consideration of the financial performance of the industry that includes *** does not compel a

finding that the domestic industry is currently materially injured. The inclusion of *** changes the

combined finished drill pipe and drill collar producers’ operating income of $201.7 million to ***. This

change, however, results primarily from a one-time adjustment in 2009 designed to account for a *** and

was unrelated to subject imports.103 In any event, the finished drill pipe and drill collar industry *** in

interim 2010 and recorded an operating income of *** and an operating income to total net sales ratio of

*** percent.104 

The trade performance trends of the domestic industry also do not correlate to the subject import

volumes in any meaningful way. From 2007 to 2008, U.S. producers of unfinished drill pipe and drill

collars were able to increase their production capacity by *** percent, employment by *** percent, and

U.S. shipments by *** percent despite a *** percent increase in subject import volume. The following

year, as subject import volumes declined sharply, domestic production, employment, and U.S. shipments

all declined as well. Overall, subject import volumes of unfinished drill pipe and drill collar declined by

*** percent, U.S. production declined by *** percent, employment declined by *** percent, and U.S.

shipments declined by *** percent as apparent U.S. consumption declined by *** percent.105 A lack of

correlation with subject import volumes is also demonstrated by the finished drill pipe and drill collar

trends. From 2007 to 2008, U.S. producers of finished drill pipe and drill collars increased their

production capacity by 4.4 percent and employment by 7.2 percent, and production decreased slightly by

6.7 percent despite a *** percent increase in subject import volume. The following year, as subject

import volumes declined steeply, domestic production, employment, and U.S. shipments all declined as

well. Overall, subject import volumes of finished drill pipe and drill collar declined by *** percent, U.S.

production declined by 48.1 percent, employment declined by 27.1 percent, and U.S. shipments declined

by 53.8 percent. This occurred in the context of a dramatic *** percent decline in demand, as measured

by apparent U.S. consumption.106

Accordingly, although indicators of the industry’s condition worsened during the period

examined, the factors described above indicate that subject imports are not contributing materially to the

domestic industry’s condition. Therefore, we find that the record does not demonstrate the requisite

causal nexus between the subject imports and the condition of the domestic industry. For these reasons,

we find that subject imports have not had a significant adverse impact on the domestic industry. 

We have considered whether there are other factors that adversely affected the domestic industry. 

A more likely explanation for any volume losses by the industry was the severe decline in demand that

began in late 2008.107 As described above, demand for drill pipe and drill collar depends on oil and gas

 102 CR/PR at Tables III-7a-III-7d. During the period examined *** all either purchased or imported subject

product from China and/or third country sources. 

 103 This was described in ***.” This filing was made in November 2009 and reflected the company’s

expectations for the drill pipe market at that time. Significantly, this discussion makes no mention of subject imports

as a contributing factor to the adjustment. CR at VI-33 n.21, PR at VI-12 n.21. 

 104 CR/PR at Table VI-1d. 

 105 CR/PR at Table C-1. 

 106 CR/PR at Table C-2. 

 107 The reported pricing data show that during the first and in some instances, second, quarters of 2009, domestic

producers were able to increase their prices of products 1, 2, 3, 4, and 5. Domestic producers were able to raise the

price of product 6 in the *** and this product had the largest average margin of overselling by subject imports

(continued...)

57
drilling rig counts.108 The level of drilling has experienced sharp upward and downward adjustments

with some frequency over the past two decades, but has increased overall in the last ten years.109 Viewed

within the context of these boom and bust cycles, the downturn that began in late 2008 was from an

historic high in the rig count.110 Overall, demand declined by *** percent for unfinished drill pipe and

drill collar and by *** percent for finished drill pipe and drill collar. As demand declined, subject

imports retreated from the market and were sharply lower in 2009 and lower still in the first half of 2010

compared with the first half of 2009.111 The industry’s production, shipments, and employment levels all

declined significantly as demand for these drilling products collapsed.112 Despite these changes in the

market related to losses in volume, the industry remained profitable, even at very low levels of capacity

utilization. The domestic producers of finished drill pipe and drill collar even gained *** percentage

points of market share by quantity and *** percentage points of market share by value from 2008 to

2009.113 The domestic drill pipe and drill collar industry earned strong profits in 2007 and 2008 and

remained profitable in 2009 and the first half of 2010.114 The number of producers collectively reporting

operating profits exceeded those reporting operating losses in each period.115

We have also considered the role of nonsubject imports in the market. Nonsubject imports were

present in the market throughout the period examined and were a substantial source of supply,

particularly for unfinished products. Several domestic producers are related to nonsubject producers of

drill pipe and drill collars.116 The majority of nonsubject unfinished drill pipe imports were controlled by

 107 (...continued)

overall. CR/PR at Tables V-2-V-7, and V-9.

 108 In responses to the questionnaires issued in these investigations, the majority of U.S. producers, importers,

and purchasers reported that the business cycle for drill pipe and drill collars is based on the level of oil and gas

prices and depends heavily on oil and gas rig counts. CR at II-25, PR at II-17. 

 109 CR/PR at Figure II-7, CR at II-25, PR at II-17. “Drill pipe is a cyclical business that follows the booms and

busts in the oil and gas industry.” Hearing transcript, p. 202 (Murphy). 

 110 CR/PR at Figure II-7. 

 111 CR/PR at Tables C-1 and C-2.

 112 From 2007 to 2009, production of unfinished drill pipe and drill collar declined by *** percent, U.S.

shipments declined by *** percent, and the number of PRWs declined by *** percent. CR/PR at Table C-1. From

2007 to 2009, production of finished drill pipe and drill collar declined by 48.1 percent, U.S. shipments declined by

53.8 percent, and the number of PRWs declined by 27.1 percent. CR/PR at Table C-2. 

 113 CR/PR at Table C-2. 

 114 The unfinished drill pipe and drill collar producers’ gross profits totaled *** in 2007, *** in 2008, and *** in

2009. The operating income margin was *** percent initially, then rose to *** percent in 2008, and fell to ***

percent in 2009 but was *** percent in the first half of 2010. The finished drill pipe and drill collar producer’s gross

profits totaled $493.4 million in 2007, $481.9 million in 2008, and $258.9 million in 2009. The operating income

margin for this portion of the industry was 34.4 percent in 2007, 32.1 percent in 2008, 23.2 percent in 2009 and 22.2

percent in interim 2010. CR/PR at Tables C-1 and C-2. 

 115 CR/PR at Tables VI-1a-V1-1d. 

 116 Domestic producers *** are all related to nonsubject producers. CR/PR at Table III-1. 

58
domestic producers ***117 and ***.118 Nonsubject imports were responsive to changes in demand,

decreased in quantity in each full year, and were lower in interim 2010 compared with interim 2009.119

Nonsubject import prices were generally priced higher than similar merchandise from China.120

We find that the record does not show a correlation between subject imports and the domestic

industry’s declining performance indicia during the period examined. The deterioration in the domestic

industry’s performance indicators coincided with the global economic downturn and the fall in rig counts

and appears to be demand driven, occurring while subject imports were decreasing overall during the

period examined on an absolute basis. For the above reasons, we find that subject imports have not had a

significant adverse impact on the domestic industry. 

2. Analysis of Threat of Material Injury by Reason of Subject Imports

 As discussed above, because we find neither a likelihood of substantially increased volumes of

subject imports nor that subject imports are entering at prices that are likely to have a significant pricedepressing or price-suppressing effect, we find that there is no imminent threat of an adverse impact on

the domestic industry producing drill pipe and drill collars by reason of subject imports. 

As an initial matter, we do not find that the domestic industry producing drill pipe and 

drill collars is currently vulnerable. 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

weathering its normal business cycle, albeit one that has been exacerbated by the general economic

recession. Indeed, throughout the period examined, U.S. producers invested in greater production

capacity,121 experienced high levels of profitability, and currently remain in a strong position

notwithstanding the gradual economic recovery.122 We recognize that in part these results were achieved

through the shedding of workers after they were initially added in 2008.123 Other evidence supporting this

 117 Domestic producer *** nonsubject imports of unfinished drill pipe totaled *** short tons in 2007, *** short

tons in 2008, and *** short tons in 2009, and accounted for *** percent of such imports in 2009. CR/PR at Tables

III-7a and IV-1. 

 118 Domestic producer *** imports of unfinished drill pipe from nonsubject sources totaled *** short tons in

2007, *** short tons in 2008, and *** short tons in 2009, and accounted for*** percent of such imports in 2009.

CR/PR at Tables III-7a and IV-1. 

 119 Nonsubject unfinished drill pipe and drill collar imports totaled *** short tons in 2007, *** short tons in 2008,

and *** short tons in 2009 and held *** percentage points of market share, by quantity, during the full years 2007-

09. Nonsubject finished drill pipe and drill collar imports totaled *** short tons in 2007, *** short tons in 2008, and

*** short tons in 2009 and held *** percentage points of market share in the full years of 2007-09. CR/PR at Tables

C-1 and C-2. 

 120 CR/PR at Tables H-1-H-3. 

 121 During the period examined, the domestic industry expanded and invested in its productive assets. For

example, *** opened a finished drill pipe facility in 2008. Multiple other companies expanded their operations

including ***. CR/PR at Table III-2. 

 122 In the first half of 2010, producers of unfinished drill pipe had an operating income to sales ratio of ***

percent and producers of finished drill pipe and drill collar had an operating income to sales ratio of 22.2 percent or

*** percent if adjustments for *** are included. CR/PR at Tables C-1, C-2, and Revised C-2 (financial). 

 123 The industry added *** workers in 2008, a time of strong demand, but as demand for its products fell these

new hires and others were laid off. For U.S. Steel alone its “Voluntary Early Retirement Program” affected 500

(continued...)

59
conclusion indicates that: (1) demand is improving; (2) subject imports do not compete in the premium

segment of the market (an important and growing segment of the market that commands high prices); and

(3) U.S. producers are globally competitive in growing export markets. 

 Demand for drill pipe and drill collar is improving and is expected to continue to improve. The

demand drivers for this market-- oil and gas prices and the number of oil and gas rigs-- are all moving in a

positive direction. The number of total rigs operating in the United States has been rising since mid-2009

and is primarily attributable to an increase in the number of oil rigs.124 The North American rig count is

following the same trend and has been improving since mid-2009. Horizontal rigs in particular are

experiencing strong growth.125 Spears and Associates reported that the 2010 U.S. rig count was 1,537 and

the number of wells drilled was 52,146. The publication forecasts that the number of U.S. rigs will be

1,805 in 2011 and the number of wells drilled will be 64,368.126 In addition to the number of rigs that are

currently drilling, the footage drilled by those rigs determines the amount of drill pipe and drill collars

demanded. The footage drilled peaked in late 2008 and declined through early 2009. After remaining

relatively flat it began a steady climb in 2010.127 

These market improvements are reflected in the order books of domestic producers. U.S.

producers’ order books peaked in the second and third quarters of 2008 before falling to their lowest point

in the fourth quarter of 2009. Since reaching that low, they have rebounded to 2007 levels. For example,

as of September 30, 2010, order book levels were several thousand short tons above order book levels as

of September 30, 2007 and December 31, 2007.128

In addition to improving demand, the domestic industry will also benefit from sales of premium

pipe. The domestic producers face minimal competition from subject imports for sales of premium drill

pipe. The Petitioners note that premium drill pipe, in many cases under patent, can only be manufactured

by several producers in the world, none of which are located in China.129 The information collected in

these investigations indicates that very limited amounts of drill pipe identified as “premium” were

imported from China. These quantities ranged from a high of just *** short tons in 2008 to a low of ***

in interim 2010.130 A hearing witness explained that while Chinese manufacturers can provide some

premium products, acceptance is relatively limited on a worldwide basis and the major producer of

premium products in China is NOV Grant Prideco.131

 123 (...continued)

employees and saved $70 million companywide. CR/PR at Tables III-2, C-1 and C-2. 

 124 CR/PR at Figures II-3 and II-4. 

 125 CR/PR at Figure II-5. 

 126 Petitioner’s posthearing brief, exh. 1, p. 4. 

 127 CR/PR at Figure II-2. Another measure of demand is the ratio of purchasers’ reported number of rigs actively

drilled to the number of rigs owned or serviced. The ratio declined by 25 percentage points from December 2007 to

2009 and then recovered somewhat by June 2010. The ratio was 50.3 in December 2009 and 58.7 in June 2010. CR

at II-22, PR at II-13. 

 128 CR/PR at Table III-5. Combined order books were lowest, at 7,935 short tons on December 31, 2009 and

since then have increased irregularly to 25,371 short tons as of March 31, 2010, 42,451 short tons as of June 30,

2010, and 37,999 short tons as of September 30, 2010. 

 129 CR at I-32, PR at I-23. 

 130 CR/PR at Table D-1. 

 131 Hearing transcript, pp. 116-117 (de Rotalier), p. 195 (Leibowitz), p. 224 (Mostoway), and pp. 239-240

(Murphy). 

60
Sales of premium drill pipe accounted for a growing share of total domestic sales during the

period examined. As a share of domestic production, premium pipe accounted for *** percent in 2009. 

Premium drill pipe as a share of finished goods consumption increased from less than *** percent in 2007

to more than *** percent in 2009, before falling back below *** percent in the first half of 2010.132

The growing use of premium drill pipe is being driven by increased drilling in high-risk

applications, extreme reach drilling projects, high pressure or temperature wells, critical sweet or sour

environments, and deep water drilling environments.133 The parties agree that pipe used in more difficult

environments tends to wear out more quickly than that used under normal conditions.134 Information on

this record suggests that demand for these products will continue to be strong. First, unconventional

drilling, such as horizontal drilling for natural gas in shale plays, uses more premium pipe than

conventional, vertical drilling. There has been a steady increase in the number of horizontal rigs

operating in North America since early 2009.135 In addition, premium products are widely used in the

demanding environment of offshore drilling.136 After the explosion of the Deepwater Horizon oil drilling

rig off the coast of Louisiana, the number of offshore rigs plummeted from 53 to 12 by July 2010 but by

the end of 2010 that number had increased to 24.137 Now that the moratorium on offshore drilling has

been lifted and replaced by strict safety standards,138 that number will likely continue to rise, and with it

the demand for premium drill pipe. Offshore rigs account for a small portion of total U.S. rigs139 but are

more prevalent worldwide.140

Premium drill pipe sells for significantly more than drill pipe. The average unit values of

premium drill pipe exceeded those of finished drill pipe (other than premium drill pipe) in every year and

by large amounts, ranging from $*** per short ton in 2009 to $*** per short ton in January-June 2010.141

Imports of premium drill pipe were so limited that pricing data were not collected for a premium

product142 but in their comments on the draft questionnaires, Petitioners agreed that premium drill pipe

sells for significantly more than API-grade drill pipe.143

Finally, the domestic industry is globally competitive and will benefit from increased

worldwide demand for its products. Domestic producers of finished drill pipe and drill collars exported a

sizeable portion of their production during the period examined. Among finished drill pipe producers,

export shipments totaled more than a quarter of all shipments in every full year and during the interim

 132 Calculated from CR/PR at Tables C-2, D-1, and D-2. Domestic production of premium drill pipe totaled ***

short tons in 2007, *** short tons in 2008, and *** short tons in 2009. Production was *** short tons in interim

2009 and *** short tons in interim 2010. CR/PR at Table D-1. 

 133 CR at I-33-I-34, II-24-25, PR at I-23-24, II-17. 

 134 CR at II-24, PR at II-17.

 135 CR/PR at Figure II-5. 

 136 Hearing transcript, p. 33 (Fields), p. 61 (de Rotalier). 

 137 CR at II-24, PR at II-17. 

 138 CR at III-8 fn.10, PR at III-6 fn.10. 

 139 CR at II-24, PR at II-15, CR/PR at Figure II-6. 

 140 Hearing transcript p. 33 (Fields), and p. 61 (de Rotalier). 

 141 CR/PR at Table I-7, CR at I-37, PR at I-25. 

 142 CR at V-7 fn 28, PR at V-5 n.28. 

 143 CR at I-32, PR at I-23.

61
periods.144 Finished drill collar producers were also large exporters with exports as a share of shipments

ranging from 19.0 to 49.0 percent during the three calendar years.145 Furthermore, the average unit values

of export shipments were generally higher than those of U.S. shipments. Although this likely reflects

differences in product mix, the higher average unit values for exports, coupled with their large volume,

demonstrate that domestic producers compete successfully in global drill pipe and drill collar markets. 

With worldwide demand for these products forecast to increase in 2011,146 the domestic industry can be

expected to continue to export its products at favorable prices in the future.

Given our conclusion that subject imports likely will not substantially increase and likely will not

have significant adverse price effects in the imminent future, we find that subject imports will not likely

have a significant adverse impact on the performance of the domestic industry. The recovery of demand,

limited competition in the premium segment of the market, and growth in export markets, suggest

strongly that the domestic industry is poised for increased production, sales, and profits. Therefore, we

find that further dumped or subsidized imports are not imminent and that material injury by reason of

subject imports will not occur absent issuance of an antidumping duty order or countervailing duty order

against subject imports. Accordingly, we conclude that the domestic drill pipe and drill collar industry is

not threatened with material injury by reason of subject imports from China.

CONCLUSION

For the reasons stated above, we find that the domestic industry producing drill pipe and drill

collars is neither materially injured nor threatened with material injury by reason of subject imports from

China. 

 144 CR/PR at Table III-4b. Finished drill pipe export shipments as a share of total shipments were 25.6 percent in

2007, 37.8 percent in 2008, 35.7 percent in 2009, 35.0 percent in January-June 2009, and 37.1 percent in JanuaryJune 2010. 

 145 CR/PR at Table III-4d. Finished drill collar export shipments as a share of quantity were 19.0 percent in

2007, 37.7 percent in 2008, 49.0 percent in 2009, 53.4 percent in January-June 2009, and 51.7 percent in JanuaryJune 2010. 

 146 Spears and Associates reported that the 2010 global rig count was 4,916 and the number of wells drilled was

104,846. The publication forecast the number of worldwide rigs would be 5,467 in 2011 and the number of wells

drilled would be 121,540. Petitioner’s posthearing brief, exh. 1, p. 4. 

62
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 investigations is provided below.2

Effective date Action

December 31, 2009 Petition filed with Commerce and the Commission; institution of Commission’s

investigations (75 FR 877, January 6, 2010)

January 27, 2010 Commerce’s notice of initiation of countervailing duty investigation (75 FR

4345)

January 28, 2010 Commerce’s notice of initiation of antidumping duty investigation (75 FR 4531)

March 8, 2010 Commission’s preliminary determination (75 FR 10501)

June 11, 2010 Commerce’s preliminary countervailing duty determination (75 FR 33245)

August 18, 2010

Commerce’s preliminary antidumping duty determination (75 FR 51004);

correction of Commerce’s preliminary antidumping duty determination (75 FR

51014); scheduling of final phase of Commission investigations (75 FR 54912,

September 9, 2010)

January 5, 2011 Commission’s hearing1

January 11, 2011 Commerce’s final antidumping duty determination (76 FR 1966); Commerce's

final countervailing duty determination (76 FR 1971)

February 7, 2011 Commission’s vote

February 24, 2011 Commission’s determination transmitted to Commerce

 1 A list of witnesses appearing at the hearing is presented in app. B.

 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 issued during the final phase of these investigations and cited in the tabulation are

presented in app. A.

I-1
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

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.

I-2
Organization of the Report

Part I of this report presents information on the subject merchandise, subsidy 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 are drill string components produced in a range of diameters and wall

thicknesses, but typically in standard lengths of just over 30 feet. Drilling rigs (particularly those

intended to extract oil and gas) generally use a drill string to transmit power from a drilling motor located

above the surface to a rotating drill bit below the surface. In addition, the hollow interior cavities of drill

pipe and drill collars conduct a lubricant called “drilling mud” down to the drill bit to flush drill cuttings

around the drill string and up to the surface. Once rigs complete the drilling stage of their operations,

which can range from several hundred feet to many thousands of feet, drill pipe and drill collars are

removed (or “tripped”) and stored in stands of up to 90 feet.

The leading U.S. producer of finished drill pipe is National Oilwell Varco Grant Prideco (“NOV

Grant Prideco”), followed by (in alphabetical order) RDT, 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 reported U.S. producers of unfinished drill

collars are Sunbelt Texas Steel (“Sunbelt”) and Timken. 

The leading producers of finished drill pipe in China include *** while the leading producers of

finished drill collars in China are ***. The leading producers of unfinished drill pipe in China include

*** while the leading producers of unfinished drill collars in China are ***. 

The leading U.S. importers of finished 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 importers of finished drill collars from China are *** and

Command.3

 The leading U.S. importer of unfinished drill pipe from China is ***.4 Leading importers of

finished drill pipe from nonsubject countries are ***, while the 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. The leading importers of finished drill collars

from nonsubject countries are ***.

Leading U.S. purchasers of drill pipe and/or drill collars include the following firms: ***, a

drilling contractor; ***, a distributor; ***, a rental equipment company; ***, a contractor; ***, a

processor; and ***, a contractor. All of these firms reported purchasing drill pipe and drill collars valued

at more than $***. Among the large purchasers, ***. 

Apparent U.S. consumption of finished drill pipe totaled approximately *** short tons with a

value of $*** in 2009. Apparent U.S. consumption of finished drill collars totaled approximately ***

short tons with a value of $*** in 2009. Currently, 14 firms are confirmed to produce drill pipe and drill

 3 Because *** did not provide a response in the final phase, Staff used the company’s preliminary phase response

to the Commission’s questionnaire, ***.

 4

 There are believed to be limited imports of unfinished drill collars into the United States.

I-3
collars in the United States.5

 U.S. producers’ U.S. shipments of finished drill pipe totaled 78,153 short

tons with a value of $488.7 million in 2009, and accounted for *** percent of apparent U.S. consumption

by quantity and *** percent by value. U.S. producers’ U.S. shipments of finished drill collars totaled

13,210 short tons with a value of $39.7 million in 2009, and accounted for *** percent of apparent U.S.

consumption by quantity and *** percent by value. U.S. imports of finished drill pipe from China totaled

*** short tons with a value of $*** in 2009 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 $*** in 2009 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 $*** in 2009 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 $*** in 2009 and accounted for *** percent of apparent U.S.

consumption by quantity and *** by value.6

SUMMARY DATA AND DATA SOURCES

A summary of data collected in the investigations appears in appendix C, tables C-1 through C-5,

and appendix D, tables D-1 and D-2. Except as noted, U.S. industry data are based on questionnaire

responses of 13 firms that accounted for the vast majority of U.S. production of drill pipe and drill collars

during period for which data were collected. U.S. imports of the subject merchandise are based on the

reporting by 33 firms that are believed to account for over 90 percent of U.S. imports of drill pipe and

drill collars from China for each period for which data were collected.

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 sought to obtain 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.

 5 *** is one of the 14 known producers of drill pipe; however, the firm was not able to provide the Commission

with sufficient useable data even after follow up by Commission staff. 

 6

 Unfinished drill pipe consumption in 2009 was *** short tons with a value $*** and primarily consisted of

Austrian origin product. Unfinished drill collar consumption as reported in 2009 was *** short tons with a value of

$*** and consisted of largely U.S.-origin product because there are believed to be limited imports of unfinished drill

collars.

I-4
Table I-1

Drill pipe: Previous and related investigations and reviews, 1995-2010

Investigations 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.–On April 9, 2009, U.S. producers filed antidumping and countervailing duty petitions covering imports of

certain oil country tubular goods from China. The petition and subsequent scope of Commerce's investigations

specifically included casing, tubing, and coupling stock, and specifically excluded drill pipe. Accordingly, during the

final phase of the Commission's investigations, Staff presented U.S. imports as compiled from official Commerce

statistics for HTS subheadings 7304.29, 7305.20, 7306.20, and 7306.29 – but not subheadings 7304.22 or

7304.23 (the subheadings that cover drill pipe, other than that fitted with tool joints). Similarly, Staff presented

separate data for mill production of drill pipe in the United States and in China as one of several alternatives to the

production of casing, tubing, and coupling stock (others included standard, line, and pressure pipe; pressure

tubing; and mechanical tubing). Data reported by TMK and U.S. Steel for 2008 mill production of drill pipe as an

alternative product was consistent with data reported by these producers in the current investigations. Timken

produces drill pipe but not casing, tubing, or coupling stock. Accordingly, mill production of drill pipe was not

included in the datasets for casing, tubing, and coupling stock presented in Certain Oil Country Tubular Goods

from China, Investigation Nos. 701-TA-463 and 731-TA-1159 (Final).

Source: Cited USITC publications.

I-5
NATURE AND EXTENT OF SUBSIDIES AND SALES AT LTFV

Subsidies

On January 11, 2011, Commerce published a notice in the Federal Register of its final

determination of countervailable subsidies for producers and exporters of drill pipe and drill collars from

China.7

 Table I-2 presents Commerce’s findings of subsidization of drill pipe and drill collars in China.

Table I-2

Drill pipe: Commerce’s final subsidy determination with respect to imports from China

Entity

Countervailable subsidy margin

(percent)

DP Master Manufacturing Co., Ltd., Jiangyin Sanliang Petroleum Machinery

Co., Ltd., Jiangyin Liangda Drill Pipe Co., Ltd., Jiangyin Sanliang Steel Pipe

Trading Co., Ltd., and Jiangyin Chuangxin Oil Pipe Fittings Co., Ltd.

(collectively, DP Master Group) 18.18

All others 18.18

Source: 76 FR 1971, January 11, 2011.

Sales at LTFV

On January 11, 2011, Commerce published a notice in the Federal Register of its final

determination of sales at LTFV with respect to imports from China.8

 Table I-3 presents Commerce’s

dumping margins with respect to imports of drill pipe and drill collars from China.

Table I-3

Drill pipe: Commerce’s final weighted-average LTFV margins with respect to imports from China

Exporter Producer

Dumping margin

(percent)

DP-Master Group DP–Master Group 69.32

Baoshan Iron & Steel Co., Ltd. Baoshan Iron & Steel Co., Ltd. de minimis

Shanxi Yida Special Steel Imp. & Exp.

Co., Ltd. Shanxi Yida Special Steel Group Co., Ltd. de minimis

Shanxi Fenglei Drilling Tools Co., Ltd. Shanxi Fenglei Drilling Tools Co., Ltd. 69.32

Jiangyin Long-Bright Drill Pipe

Manufacturing Co., Ltd.

Jiangyin Long-Bright Drill Pipe

Manufacturing Co., Ltd. 69.32

All others 429.95

Source: 76 FR 1966, January 11, 2011.

 7 Drill Pipe From the People’s Republic of China: Final Affirmative Countervailing Duty Determination, Final

Affirmative Critical Circumstances Determination, 76 FR 1971, January 11, 2010.

 8 Drill Pipe from the People’s Republic of China: Final Determination of Sales at Less Than Fair Value and

Critical Circumstances, 76 FR 1966, January 11, 2011.

I-6
THE SUBJECT MERCHANDISE

Commerce’s Scope

Commerce has defined the scope of these investigations as follows:

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. Included are finished drill pipe and drill collars 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. Also included are unfinished drill collars

(including all drill collar green tubes) and unfinished drill pipe (including drill pipe green

tubes, which are tubes meeting the following description: seamless tubes with an outer

diameter of less than or equal to 6 5/8 inches (168.28 millimeters), containing between

0.16 and 0.75 percent molybdenum, and containing between 0.75 and 1.45 percent

chromium). 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.9

Tariff Treatment

Drill pipe and drill collars are classifiable in the HTS under subheadings 7304.22, 7304.23, and

8431.43. Drill pipe, other than that fitted with tool joints, is covered by the following HTS statistical

reporting numbers: 7304.22.0030, 7304.22.0045, 7304.22.0060, 7304.23.3000, 7304.23.6030,

7304.23.6045, and 7304.23.6060.10 Drill pipe with tool joints attached is treated by Customs as

machinery parts and is covered by HTS statistical reporting number 8431.43.8040, while drill collars are

covered by HTS statistical reporting number 8431.43.8060 (a broad category that includes a substantial

volume of nonsubject merchandise). General rates of duty for all these statistical reporting numbers are

free.

THE DOMESTIC LIKE PRODUCT

Overview

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 type of steel used in production11 as well as by end use. The

American Iron and Steel Institute (AISI) defines six such end-use categories: standard pipe, line pipe,

structural pipe and tubing, mechanical tubing, pressure tubing, and oil country tubular goods (OCTG).12

 9 Drill Pipe from the People’s Republic of China: Final Determination of Sales at Less Than Fair Value and

Critical Circumstances, 76 FR 1966, January 11, 2011.

 10 Prior to February 2, 2007, drill pipe, other than that fitted with tool joints, was covered under HTS statistical

reporting numbers 7304.21.3000, 7304.21.6030, 7304.21.6045, and 7304.21.6060.

 11 Steel types include carbon steel as well as heat-resisting, stainless, and other alloy steels.

 12 Standard, line, and pressure pipe are generally intended to convey liquids and are typically tested and rated for

the 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. Mechanical tubing is

(continued...)

I-7
Steel pipes and tubes generally are produced according to standards and specifications published

by a number of organizations, including the American Petroleum Institute (API),13 the American Society

for Testing and Materials (ASTM), and the American Society of Mechanical Engineers (ASME). 

Comparable organizations in the United Kingdom, Japan, Russia, and other countries also have developed

standard specifications for steel pipes and tubes.14

The products that are the focus of this proceeding consist of drill pipe and drill collars, two of the

many tools used on drilling rigs (particularly those intended for oil and gas production). In general terms,

drilling rigs consist of a support structure such as a derrick (for onshore drilling) or a platform (for

offshore drilling); power and mechanical systems; rotating equipment; and lining and circulation

equipment (see figure I-1). A central element of the rotating equipment, in turn, is the drill string, which

transmits power from the drilling motor above the surface to the drill bit below, and which conducts

drilling mud to the drill bit to flush drill cuttings through the space between the drill string and the casing

lining the hole to the surface (see figure I-2). The upper portion of the drill string consists in large part of

drill pipe. The lower portion of the drill string, or bottom hole assembly, typically includes heavy-weight

drill pipe (serving as a transition between the conventional drill pipe and the drill collars); crossovers or

subs (typically short accessories used to join different components or to join components with different

diameters or thread types); drill collars (required to place additional weight on the drill bit); and the drill

bit itself.15

 12 (...continued)

typically a custom-designed product employed in the automotive industry and by equipment manufacturers. OCTG

are steel pipes and tubes used in the drilling of oil and gas wells (drill pipe) and in the conveying of oil and gas from

within the well to ground level (casing and tubing).

 13 API is a trade organization serving the petroleum industry. API is an American National Standards Institute

(“ANSI”) accredited standards developing organization, operating with approved standards development procedures

and undergoing regular audits of its processes. In addition, API produces recommended practices, specifications,

codes and technical publications, reports, and studies that cover each segment of the petroleum industry. API states

that its 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.

 14 Particular specifications to which pipe products are produced are commonly marked on each pipe and are

referred to as a “stencil.”

 15 See, e.g., conference transcript, p. 45 (Morris). Drill rigs in deeper or more challenging environments, or those

drilling horizontally instead of, or in addition to, vertically, may employ additional components in their bottom hole

assembly, such as a mud motors and their housings (known as stators) and advanced measurement systems (e.g.,

measurement-while-drilling or logging-while-drilling (“MWD” or “LWD”) tools) that are frequently encased in

intensively machined sensor housings of non-magnetic material (also referred to as drill collars). See, e.g., Staff

interview and plant tour at TBS (October 29, 2010); Staff interview and plant tour at TSC (October 28, 2010); and 

correspondence from *** to Staff regarding the Commission’s questionnaire, November 18, 2010.

I-8
Figure I-1

Drill pipe and drill collars: Simplified diagrammatic representation of a well that is being used to

bring oil and/or natural gas to the surface

Source: Introduction to Oil and Gas Production, Fifth Edition, American Petroleum Institute, June 1996, p. 11.

I-9
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 when drilling for oil and/or natural gas

Source: Timken, retrieved from www.timken.com, February 7, 2007.

I-10
Description and Applications

Drill Pipe

A single length (or joint) of drill pipe comprises a hollow tube, generally 30-31 feet long, with a

wall thickness of less than 0.5 inch, and a tool joint connection on each end.16 Because drill pipe is

subject to torsional stresses and fatigue during drilling operations, it must be seamless and heat-treated to

meet or exceed API specifications.17

The subject product includes 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 pipe mills. Producers of finished drill pipe heat treat and forge (upset) the green tube so that

they can weld separately manufactured tool joints (steel components with a rotary shoulder connection) to

either end. The tool joint itself is a heavy coupling element with 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 subject to stress caused by shear and

vibration, and consequently fatigue.18

Heavy-weight drill pipe is characterized by thicker walls and longer tool joints 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. Heavy-weight drill pipe is designed to provide a gradual transition from

the lighter, thinner-walled conventional 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. Heavy-weight drill pipe also

allows drilling at higher speeds, reducing torque and differential pressure sticking.19 Heavy-weight drill

pipe is well-suited for directional drilling because it bends easily, simplifies directional control, and

minimizes connection fatigue problems common to high-angle or horizontal drilling.20

Premium drill pipe is specifically designed for drilling conditions which require properties

surpassing those specified by the API standards. As such, premium drill pipe typically contains alloy

additions that enhance its toughness, a necessary feature for drilling in a corrosive, sulphurous (or “sour”)

environment or under other harsh conditions. Premium drill pipe has the same physical dimensions

(including length and diameters) as standard drill pipe but may also have different thread designs from

 16 The outside diameter of a green tube ranges from 2.375 to 6.625 inches. ANSI/API Specification for Drill

Pipe, First Edition, August 2009, table A-3, p. 54.

 17 The API specifies four grades of standard drill pipe of different tensile strengths. These tensile strengths

specify the pulling force per unit area at which the material will fail and are typically measured in pounds per square

inch (psi). The four API grades include: grade E (minimum tensile strength at 100,000 psi), grade X (105,000 psi),

grade G (115,000 psi), and grade S (145,000 psi). ANSI/API Specification for Drill Pipe, First Edition, August

2009, table A-3, p.54. 

 18 The scope of these investigations does not include tool joints that are not attached to drill pipe.

 19 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. Hurton, “Rotary Drilling: Drill String and Drill Collars,”

University of Texas at Austin and International Association of International Contractors, third edition, 1995, p. 66. 

 20 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.

I-11
API standards for certain operational conditions.21 As such, “premium” drill pipe is manufactured to

proprietary, sometimes patented, specifications as will be discussed later.22 This range of drill pipe,

however, should not be confused with premium used drill pipe, a term which generally refers to used drill

pipe with substantial wear remaining on its body walls.23

Drill Collars

Drill collars are heavy, thick-walled, machined products that are designed to guide, stabilize,

provide stiffness, and add weight to the drill bit to drill a more vertical hole, but are not necessary for

horizontal drilling.24 Most drill collars are round with lengths of about 30 feet.25 The inside diameter

(I.D.) of a drill collar ranges from 2 inches to 3 inches, and the outside diameter (O.D.) ranges 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.26

Manufacturing Processes

Drill Pipe

The manufacturing process for the body of the drill pipe consists of two phases. The first phase,

forming, is performed by pipe mills, while the second phase, finishing, generally is performed by

processors (although there is some overlap in terms of heat treatment).

 21 Staff interview and plant tour at TSC (October 28, 2010); Staff telephone interview with ***, November 19,

2010.

 22 As requested by the petitioners, the Commission’s questionnaires defined premium drill pipe as “Generally

considered to be drill pipe whose tube body, tool joint, and/or tool joint connections surpass API specifications. 

Specifically Premium Drill Pipe:

(1) Specifies the drill pipe body or tool joint material as:

a. Conforming to API 5DP (or ISO 11961) at Product Specification Level PSL-3, or

b. Conforming to common premium specifications such as NS-1 (Shell Sqair) or IRP, or

c. Having minimum yield strength which is appreciably above S135, with PSIs or 150 or above,

- OR -

(2) Includes drill pipe threaded connections which:

a. Do not conform to the threaded connections listed in either API Specifications 7-2, ISO 10424-2, or API 

Recommended Practice 7G, and

b. Have minimum mechanical ratings exceeding those of Standard Drill Pipe connections by more than 

15%, with the tool joint of the same nominal outside diameter and inside diameter.”

 23 See, e.g., “Drill Pipe,” promotional material available from RDT. Several questionnaire respondents offered

similar observations.

 24 The drill bit is the cutting or pulverizing head which bores through underground formations. 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, p. 5.

 25 See table 14-Drill Collars, Specification for Rotary Drill Stem Elements, ANSI/API 7-1, 2006, p. 40. 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, pp. 4-5. 

 26 VAM Drilling Catalogue, p. 64, found at http://www.vamdrilling.com/userfiles/file/catalog.pdf, retrieved

January 10, 2010.

I-12
In the forming phase, the initial raw material is a solid steel billet. Green tube generally is

manufactured by either of two high temperature processes to form a central cavity in the billet.27 In the

rotary piercing process, a heated billet is gripped by angled rolls that cause the billet to rotate and advance

over a piercer point, forming a hole through the billet’s length. In the extrusion process, the billet is hotpunch pierced and then extruded axially through a die and over a mandrel, forming a hollow shell. The

hollow shell produced by either process is then rolled with either a fixed plug or a continuous mandrel

inside the shell to reduce the wall thickness and increase the length. The shell is then rolled in a sizing

mill or a stretch reduction mill where it is formed into a true round and sized to the specified diameter.28

Subsequent to the forming phase, the green tube can be transferred to a processor where it will go

through the finishing phase, in which the pipe is heated, upset,29 heat-treated, inspected, and straightened. 

All drill pipe is heat-treated through its full length after upsetting. In general, the nature of the heat

treatment depends on the grade of the pipe and includes a combination of normalizing, tempering, and

quenching. Heat treatments for drill pipe are agreed to between the buyer and maker or specified by the

API.30 

Following the above processes, the drill pipe tube is finished by welding a tool joint to each end

of the drill pipe tube using rotational friction.31 The pin is attached to one end of the length of drill pipe

tube and the box is attached to the other end. No filler is used. In friction welding, the heat for the weld

is created by pressuring one piece of metal against another piece that is rotated at high speed.32

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 drill pipe is machined

smooth and inspected using a range of tests that vary according to the preference of the customer. 

Following inspection, internal plastic coating may be applied by the processor, if requested by the

customer (although this process may alternatively be performed by an outside party at the preference of

the processor or of the customer). 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 tool joint blank is then heat-treated, threaded, hardbanded,33 coated with phosphate for

protection against corrosion, and inspected as depicted in figure I-4.

A similar process is typically used to produce “premium” drill pipe. However, the green tube for

premium drill pipe is typically manufactured to a greater minimum wall thickness than that of the

standard drill pipe, even if both are specified to the same nominal wall thickness. In the “upset” process,

premium drill pipe is subject to more stringent control of the transition in internal diameters. 

Furthermore, because of the differences in chemical compositions and/or mechanical properties between

 27 The billet is either round as rolled, or square. If a square billet is used, it is forced through a single circular roll

pass, prior to the formation of the central cavity.

 28 For a detailed description of the tube-forming operations employed by two of the three U.S. mills that

manufacture unfinished drill pipe in the United States, see Staff interviews and plant tours at Timken (August 10,

2010) and U.S. Steel / Lorain (August 11, 2010).

 29 In the upsetting process, the pipe ends 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. 

 30 See “Heat Treatment,” API Specification 5DP, 2009, p. 27.

 31 Tool joints may also be screwed onto the pipe.

 32 NOV Grant Prideco produces tool joints at a different facility than its drill pipe because tool joints require

different equipment and processes. Staff interview and plant tour at NOV Grant Prideco (January 13, 2010).

 33 Hardbanding is the application of a special wear-resistant material to tool joints to prevent abrasive wear to the

area when the pipe is being rotated downhole.

I-13
API and premium drill pipe, the heat treatment processes (including the tempering procedure) for the

premium drill pipe typically takes place at a higher temperature and for a longer time than for a standard

API drill pipe even if the minimum yield strength is the same as specified by API. During the production

process, premium drill pipe may be also subject to more extensive testing and documentation than API

standard drill pipe.34

The production of heavy-weight drill pipe typically begins with a seamless green tube as

previously described. Heavy-weight drill pipe is made to ANSI/API Specification 7-135 and is produced

in a generally similar fashion as conventional drill pipe.36 However, additional machining is required to

produce heavy-weight drill pipe’s characteristic integral wear pad in the middle of its body and its

optional spiral patterns.37

Drill Collars 

Drill collars begin with a solid round steel bar that is bored or trepanned to form a continuous

seamless product. The boring or trepanning process can be performed by a drilling specialist (such as

Timken’s TBS facility in Houston, TX) or by a processor (such as NOV Grant Prideco).38 

At Timken’s TBS facility, production begins by precision straightening the bar stock. Next, the

bar is placed in a rotating drill, typically with drilling tools on either end. The double ended drilling

machines rotate the bar while the left and right drilling tools remain stationary. The action of the drilling

tools ejects the cuttings. Total processing time is about ***. Alternatively, counter-rotational drilling

machines rotate the bar and the drilling tools in opposite directions. The counter-rotational process

addresses the potential for mismatching (mis-alignment of the left and right holes) and is used primarily

for ***. Processing time is nearly *** times that of the conventional drilling machines.39

At NOV Grant Prideco,40 the bar goes through a heat treatment process for *** hours at ***

degrees Fahrenheit that is followed by a water quench process to freeze the pipe’s microscopic structure

to *** degrees Fahrenheit. The bar is then tempered in another furnace at *** degrees Fahrenheit to

achieve the desired mechanical property before being straightened and bored or trepanned by carbide

thread cutters. Spiral grooves may also be formed and hardbanding applied 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. Phosphate coating and inspections are usually the final

processes. See figure I-5 for a depiction of the manufacturing process for drill collars.

 34 ***.

 35 Addendum 1 to ANSI/API Specification 7-1, 2009, p. 1.

 36 Timken manufactures both conventional and heavy-weight drill pipe green tubes on its piercing mills at the

Gambrinus Plant in Canton, OH. Staff interview and plant tour at Timken (August 10, 2010).

 37 Staff interviews and plant tours at TSC and RDT (October 28, 2010). NOV Grant Prideco ***. Staff interview

and plant tour at NOV Grant Prideco (January 13, 2010).

 38 In a drilling process, the drilled metal is removed as chips. However, for large or deep hole drilling, such as for

drill collars, either drilling or trepanning can be used. In a drilling or boring operation, the drilled hole is enlarged

by the rotation of one or two cutting tools. In trepanning, a hollow tool cuts around a centered circle, leaving a

central core material with very little chip. Trepanning is typically used for holes that are larger than 6 inches in

diameter and when the core material is more valuable than the chip metal.

 39 Staff interview and plant tour at TBS (October 29, 2010).

 40 Staff interview and plant tour at NOV Grant Prideco (January 13, 2010).

I-14
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-15
Figure I-4

Drill pipe: Manufacturing process for tool joint

Source: Grant Prideco, from http://www.grantprideco.com/drilling/manufacturing_drillpipe_manproc.asp, retrieved 

January 15, 2010.

I-16
Figure I-5

Drill collar: Manufacturing process for drill collar

Source: VAM Catalogue, found at http://www.VAMdrilling.com, retrieved January 15, 2010.

I-17
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.

For the purposes of its determinations in the preliminary phase of these investigations, the

Commission found, “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.”41 With respect to drill pipe and drill collars, the Commission found the evidence on the

record in the preliminary phase of these investigations to show “some overlapping physical characteristics

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

manufacturers, manufacturing processes, and labor (but differences in prices).”42

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, which have

not made any reference to drill collars.43 Both parties stated that drill collars are part of the domestic like

product.44 Petitioners contend that the Commission should find one domestic like product coextensive

with Commerce’s scope.45 Respondents do not contest the inclusion of drill collars.46 

Petitioners contend that unfinished drill pipe and finished drill pipe are part of a continuum and

should be part of a single domestic like product.47 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.48 Like petitioners, respondents argue that the

Commission should find one domestic like product consisting of a continuum of drill pipe and drill

collars.49 

 41 Drill Pipe and Drill Collars from China, USITC Publication 4127, March 2010, p. 13.

 42 Drill Pipe and Drill Collars from China, USITC Publication 4127, March 2010, pp. 12-13.

 43 “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.

 44 Hearing transcript, p. 25 (Chen) and p. 174 (Schagrin).

 45 Petitioners’ postconference brief, p. 2 and petitioners’ prehearing brief, p. 3.

 46 Respondents argue that the Commission should find one like product consisting of drill pipe and drill collars. 

Hearing transcript, p. 25 (Chen).

 47 Petitioners’ prehearing brief, p. 3.

 48 Petitioners’ postconference brief, p. 7.

 49 Respondents’ posthearing brief, p. 3, fn. 1. Prior to Commerce’s final determinations which specifically

included unfinished drill pipe, respondents argued that the Commission should find unfinished drill pipe a separate

domestic like product. Respondents contended that green tube is a commodity product that can be used to make a

(continued...)

I-18
Petitioners contend that premium drill pipe is a separate like product from API-grade drill pipe.50

Respondents argue that premium drill pipe is part of a continuum and is not a separate like product.51

Drill Pipe and Drill Collars

Physical Characteristics and Uses

Finished drill pipe, heavy-weight drill pipe, and drill collars, as discussed earlier in this chapter,

are drill string components designed to transmit power from a drilling motor to a rotating drill bit, as well

as to conduct drilling mud to the drill bit to flush drill cuttings up to the surface. 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

heavy-weight drill pipe serves as an intermediate drill string member. Although similar in terms of length

(generally 30-31 feet), each of these drill string components differs in terms of wall thickness, with drill

collars having the thickest walls and conventional drill pipe having the thinnest. In addition, as described

earlier, drill pipe is joined using tool joints that are welded to each end, while drill collars are made from a

single steel tube and are coupled together.

Responding U.S. producers that addressed the Commission’s question regarding this issue

identified similarities and differences. Similarities include common coverage by API specifications;

adjacent positions on the drill string; common or similar uses (broadly defined) in the drilling for oil and

gas; similar lengths; and, in some cases, similar threads. Differences focused on weight, outside diameter,

wall thickness, and specific application / function (noting that these differences were less pronounced

when comparing heavy-weight drill pipe with drill collars). U.S. purchasers focused on the differences in

specific applications (and corresponding differences in weight and wall thickness), but also noted that both

drill pipe and drill collars are used on the drill string (albeit in different positions) for the common purpose

of drilling for oil and gas.

Manufacturing Facilities and Employees

Petitioners stress the overlap in the manufacturing processes for drill pipe and drill collars52 and

contend that the drill string members are generally made in the same facilities by the same employees.53

U.S. mills differ as to whether the “mother tubes” are produced with common equipment – Timken has

produced pierced tubes for drill pipe and drill collars on the same equipment, while its Houston-based

boring equipment is used for drill collars and other drill string members, but not drill pipe.54 Neither TMK

 49 (...continued)

variety of OCTG items including drill pipe as well as casing or tubing. Respondents argued that imports of green

tubes destined for OCTG had been classified and reported as green tube for drill pipe, potentially resulting in the

over-reporting of imports of drill pipe green tubes. Respondents’ prehearing brief, p. 41 and conference transcript,

p. 134 (Chen).

 50 Petitioners’ prehearing brief, p. 29.

 51 Respondents’ prehearing brief, p. 45.

 52 Petitioners’ postconference brief, p. 9; Staff interview and plant tour at NOV Grant Prideco (January 13, 2010).

 53 Petitioners’ postconference brief, p. 9; Conference transcript, p. 43 (Fields and Morris). 

 54 Timken Boring Specialties, or TBS, is a subsidiary of the Timken Co., based in Canton, OH. In the first

quarter of 2008, Timken completed the acquisition of the assets of Boring Specialties, Inc. (formerly an independent

producer of cold-bored drill collar blanks and ***). Timken’s tube operations in Canton at one time supplied ***;

(continued...)

I-19
nor U.S. Steel produce drill collars. With respect to the largest processors, NOV Grant Prideco, VAM, and

RDT produce drill pipe and drill collars; TSC produces conventional drill pipe but not drill collars; and

Smith produces drill collars and heavy-weight drill pipe, but not conventional drill pipe.

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 materials55 and common processes (such as heat treating, machining,

threading, hardbanding, and inspection). Most processors also noted the requirement for specialized

welding equipment to join the drill pipe with the tool joints. U.S. purchasers generally focused on

differences in raw materials (green tube versus bar), on end finishing (machining versus upsetting), and the

welding of tool joints that is specific to drill pipe.

Interchangeability

Petitioners maintain that individual drill collars and finished drill pipe are not interchangeable with

other individual drill collars or finished drill pipe, nor are individual sizes of heavy-weight drill pipe and

the standard finished drill pipe.56 Petitioners stress that they can be treated as part of the same like product,

however, as they are used in a complementary fashion for drilling.57

In their questionnaire responses, responding producers generally agreed that finished drill collars

and drill pipe are not interchangeable, with the exception of heavy-weight drill pipe and drill collars in

some drilling applications. U.S. purchasers generally made the same observations, while noting that drill

pipe and drill collars “work together” or “are used in conjunction with each other.”

Customer and Producer Perceptions 

In their questionnaire responses, responding producers noted that the uses and the products might

differ, but that there were overlaps in terms of marketing (such as the use of the same personnel to market

both finished drill pipe and drill collars) and in customer base (including customers that bid on rig

packages requiring both drill pipe and drill collars in an approximately 9:1 ratio). U.S. purchasers, while

continuing to note the difference in the specific functions of drill pipe and drill collars, generally agreed

that marketing practices were similar and that drill pipe and drill collars were often sold together (although

certain suppliers might carry only drill pipe or only drill collars).

Channels of Distribution

 Table I-4 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

 54 (...continued)

however, counter-rotational drilling available at TBS ***. Staff interview and plant tour at TBS (October 29, 2010).

 55 *** estimated that *** employs a welded tool joint and *** utilizes an integral joint. The latter may be

produced from drill collar bar stock. Staff interview and plant tour at TSC (October 28, 2010). See also “Heavy

Weight Tuff Tube” and “Drill Collars”, promotional material issued by RDT (heavy-weight drill pipe was

manufactured from grade 4145 steel - drill collar material - in the 1960s, but as existing stocks diminished, the

industry began using grade 1340 steel for heavy-weight drill pipe; drill collars are still manufactured from grade

4145-modified steel). 

 56 Petitioners’ postconference brief, p. 8.

 57 Petitioners’ postconference brief, p. 9.

I-20
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-4, domestic producers sell drill pipe and drill collars largely to end users. In

their questionnaire responses, responding producers overwhelmingly reported that the channel structure for

drill pipe and drill collars are “the same,” “one and the same,” or “identical.” U.S. purchasers generally

agreed with the characterization of common channel structures, although they tended to emphasize the role

of distributors to a greater degree than did U.S. producers.

Table I-4

Drill pipe and drill collars: Channels of distribution for U.S. producers’ U.S. shipments of drill pipe

and drill collars, 2007-09, January-June 2009, and January-June 2010

Item

Calendar year January-June 

2007 2008 2009 2009 2010

Share of U.S. producers’ reported U.S. shipments (percent)

Unfinished drill pipe:

Distributors 0.0 0.0 0.0 0.0 0.0

Processors 100.0 100.0 100.0 100.0 100.0

End users 0.0 0.0 0.0 0.0 0.0

 Total 100.0 100.0 100.0 100.0 100.0

Finished drill pipe:

Distributors 18.2 21.8 21.7 20.0 19.9

Processors 0.0 0.0 0.0 0.0 0.0

End users 81.8 78.2 78.3 80.0 80.1

 Total 100.0 100.0 100.0 100.0 100.0

Unfinished drill collars:

1

Distributors *** *** *** *** ***

Processors *** *** *** *** ***

End users *** *** *** *** ***

 Total *** *** *** *** ***

Finished drill collars

Distributors 12.4 5.6 6.8 7.1 6.9

Processors 0.5 0.6 0.8 0.0 0.7

End users 87.1 93.8 92.4 92.9 92.3

 Total 100.0 100.0 100.0 100.0 100.0

1

 ***.

Source: Compiled from data submitted in response to Commission questionnaires.

I-21
Price

Table I-5 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 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-5

Drill pipe and drill collars: Average unit values of U.S. producers’ U.S. shipments of drill pipe and

drill collars, 2007-09, January-June 2009, and January-June 2010

Item

Calendar year January-June 

2007 2008 2009 2009 2010

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 5,193 5,570 6,253 6,297 4,969

U.S. producers’ U.S. shipments of

unfinished drill collars2 *** *** *** *** ***

U.S. producers’ U.S. shipments of

finished drill collars 3,259 4,022 3,008 3,939 2,754

 1 Net value, f.o.b. U.S. point of shipment.

 2

 ***.

Source: Compiled from data submitted in response to Commission questionnaires.

As shown in table I-5, the average unit values for finished drill pipe exceeded those for finished

drill collars in every quarter. In their questionnaire responses, responding producers sometimes focused

on price per piece (by which measure the much thicker-walled drill collars are actually more costly). On a

per-ton basis, however, U.S. producers noted that drill pipe was more expensive than drill collars,

identifying such factors as the direct tie-in with drill collars to the cost of raw materials, the more

commodity-like nature of drill collars, and the use of drill collar prices to acquire orders for standardweight drill pipe. However, several of these factors were also noted with respect to heavy-weight drill

pipe. U.S. purchasers observed that drill pipe is typically priced per foot, while drill collars by piece. Like

producers, U.S. purchasers typically viewed drill collars as more expensive, however, this was attributable

to the substantially greater weight on a per-foot or a per-piece basis.

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Premium Drill Pipe

Petitioners contend that premium pipe constitutes a separate like product from drill pipe.58

Petitioners estimate that premium drill pipe accounts for roughly 15 percent of the total U.S. market for

drill products.59 Petitioners contend that while premium drill pipe and drill pipe overlap, particularly in

physical characteristics, key differences exist; including premium connections allowing increased torque,

as well as faster and more reliable connections. Petitioners also maintain that API drill pipe cannot

provide adequate performance under certain demanding types of drilling, such as ultra-extended reach

wells of 10,000 to 15,000 meters, and is thus not interchangeable with premium drill pipe. Petitioners

further argue that the location of many of these types of drilling that require premium drill pipe means that

U.S.-produced premium drill pipe is typically exported rather than sold domestically. Petitioners note that

premium drill pipe, in many cases under patent, can only be manufactured by several producers in the

world, none of which are located in China. Lastly, petitioners contend that premium drill pipe sells for

significantly more than drill pipe.60

Respondents argue that premium pipe is part of a continuum of drill pipe and that it is not a

separate like product. Respondents contend that premium pipe accounts for more than 15 percent of the

total U.S. market for drill products, with estimates ranging from 25 to 40 percent.61 Respondents assert

that there are only insignificant differences between API standard drill pipe and premium drill pipe,

principally proprietary thread design on tool joints and mechanical properties, and that there is no clear

dividing line between premium and API standard drill pipe.62

Physical Characteristics and Uses

Petitioners contend that premium drill pipe is a finished drill pipe with a special chemical

composition or threadline which is specifically designed for a unique drilling environment, in which APIgrade pipe would not suffice.63 Petitioners also maintain that premium drill pipe may be used because of

government regulations or because the operator wants to minimize risks.64 Respondents argue that the

physical characteristics of premium drill pipe and other drill pipe are practically indistinguishable, with

only subtle differences in yield strength, steel chemistry, and tolerances. Respondents point out that API

standards provide for a minimum yield strength, and contend that there is no significant gap between those

for API standard drill pipe and premium drill pipe. In addition, the actual yield strengths overlap from

grade to grade, and different yield strengths can be obtained from green tubes with identical chemistries. 

Respondents also contend that tolerances as provided by testing does not provide for a clear dividing line. 

Respondents concede that premium pipe differs from API standard drill pipe in terms of proprietary or

patented thread design on the tool joints, but state that the presence of these threads does not prohibit the

use of premium drill pipe from being used on the same drill string as API standard drill pipe. Respondents

 58 Petitioners’ prehearing brief, p. 29.

 59 Hearing transcript, p. 33 (Fields).

 60 Petitioners’ comments regarding draft questionnaires, pp. 11-12.

 61 Hearing transcript, p. 244 (Mostoway) and p. 245 (Garvey); Respondents’ posthearing brief, exh. 24, p. 11.

 62 Respondents’ prehearing brief, p. 45, and hearing transcript, p. 196 (Leibowitz).

 63 Petitioners’ prehearing brief, p. 23.

 64 ***’s questionnaire response, part V, p. 50.

I-23
maintain that premium drill pipe and API standard drill pipe have identical uses, to drill for oil and gas,

although there are specific uses where drillers typically use premium drill pipe.65

In their questionnaire responses, responding U.S. producers typically indicated that there was a

commonality between premium and non-premium drill pipe in terms of appearance, shape, size, and broad

uses. However, U.S. producers also indicated that premium drill pipe can outperform an API-specified

drill pipe. Accordingly, high-risk drilling utilizes premium drill pipe for extreme reach drilling projects,

high pressure or temperature wells, critical sweet or sour environments, and deep water drilling

environments. U.S. purchasers generally identified similar applications for premium drill pipe.

Manufacturing Facilities and Employees

Petitioners and respondents maintain that premium drill pipe and other drill pipe are largely made

in the same way, depending on the requirements for the premium product.66 In their questionnaire

responses, responding U.S. producers generally agreed that premium drill pipe and non-premium drill pipe

use the same overall manufacturing processes, although specific additional steps may be required for

premium pipe. U.S. purchaser responses were sparse, but generally similar in indicating a commonality in

production processes.

Interchangeability

Petitioners maintain that premium drill pipe are not interchangeable with other drill pipe.67 

Petitioners maintain that there are differences in the chemistries, heat treatment process, mechanical

properties, constructions, designs and process validation to assure that a premium pipe will meet the

specific requirements as designed.68 One petitioner contends that, because of its higher quality, a premium

drill pipe typically can substitute for API-specified drill pipe but not the other way around.69 Respondents

argue that there is full interchangeablity from premium drill pipe to API standard drill pipe, as premium

drill pipe can be used in every application in which API standard drill pipe is used. Respondents further

contend that API standard drill pipe can be used in the same applications as premium drill pipe, but drillers

chose not to do so because of durability and potential liability issues.70 

In their questionnaire responses, responding U.S. producers generally agreed that premium drill

pipe and non-premium drill pipe are not interchangeable. U.S. purchasers tended to hold similar views

regarding the limitations to interchangeability between premium and non-premium drill pipe, although

several noted that one-way interchangeability was possible.

 65 Respondents’ prehearing brief, pp. 45-50.

 66 ***’s questionnaire response, part V, p. 51, Petitioners’ prehearing brief, p. 27, and Respondents’ prehearing

brief, p. 50. 

 67 Petitioners’ prehearing brief, p. 25.

 68 ***’s questionnaire response, part V, p. 51.

 69 ***’s questionnaire response, part V, p. 49. 

 70 Respondents’ prehearing brief, pp. 50-51.

I-24
Customer and Producer Perceptions 

Both petitioners and respondents contend that premium drill pipe is perceived to be of a higher

quality, but respondents argue that this does not provide a clear dividing line.71 The responding U.S.

producers generally agree that premium drill pipe is perceived as a more technically advanced product or

an upgrade to the API grade non-premium drill pipe. U.S. purchasers focused on higher performance and

quality, with some noting that premium drill pipe would only be used when required by drilling conditions.

Channels of Distribution

 Table I-6 presents the respective channels of distribution for U.S. producers’ U.S. shipments of

finished drill pipe (other than premium drill pipe) and premium drill pipe. As shown previously in table

I-4, domestic producers sell unfinished drill pipe *** to processors, and unfinished drill collars mostly to

processors with the remaining divided among distributors and end users.72 In contrast, finished drill pipe

other than premium, as shown in table I-6, is sold mostly to end users with almost all of the remaining sold

to distributors. Similarly, although to a less extent, premium drill pipe is sold to end users with the

remaining share to distributors.

Table I-6 

Drill pipe: Channels of distribution for U.S. producers’ U.S. shipments of finished drill pipe (other 

than premium drill pipe) and premium drill pipe, 2007-09, January-June 2009, and January-June 

2010

* * * * * * *

Price

Table I-7 presents average unit values for U.S. producers’ U.S. shipments of finished drill pipe

(other than premium drill pipe) and premium drill pipe in the United States from various sources. 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-7

Drill pipe: Average unit values of U.S. producers’ U.S. shipments of drill pipe (other than premium

drill pipe) and premium drill pipe, 2007-09, January-June 2009, and January-June 2010

* * * * * * *

As shown in table I-5 and table I-7, the average unit values for premium drill pipe exceeded those

for finished drill pipe (other than premium drill pipe) and both finished and unfinished drill collars in every

quarter. The differential between premium drill pipe and unfinished drill pipe was even greater than the

differential between finished drill pipe (other than premium drill pipe) and unfinished drill pipe.

 71 Petitioners’ prehearing brief, p. 26 and Respondents’ prehearing brief, p. 51.

 72 *** reported shipments of unfinished drill collars to processors, while *** reported shipments equally divided

between distributors and end users.

I-25
INTERMEDIATE PRODUCTS

As discussed above, unfinished (or “green” if not heat-treated) drill pipe73 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 semi-finished product analysis.74 In its preliminary

views, the Commission noted that, “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 semi-finished product analysis is more appropriate than application of the

Commission’s six factor analysis.”75

Uses

“Green tube” is a term that can apply to unfinished, non-heat-treated tube bodies for casing and

tubing or for drill pipe.76 The scope of these investigations, however, focuses on the latter form of green

tube.77 From the perspective of at least two leading processors, the green tube used in their operations is

dedicated to the production of 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.”78 Similarly, Grant Prideco (prior to its

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

 73 Commerce defined the scope of these investigations to include unfinished drill pipe (including drill pipe green

tubes, which are tubes meeting the following description: seamless tubes with an outer diameter of less than or

equal to 6 5/8 inches (168.28 millimeters), containing between 0.16 and 0.75 percent molybdenum, and containing

between 0.75 and 1.45 percent chromium). Drill Pipe from the People’s Republic of China: Final Determination of

Sales at Less Than Fair Value and Critical Circumstances, 76 FR 1966, January 11, 2011. This definition captures

*** of the unfinished drill pipe reported by TMK, *** reported by U.S. Steel, and *** reported by Timken. 

Specifically, ***. See e-mail correspondence from *** dated January 14, 2011, and e-mail correspondence from

*** dated January 14 and 18, 2011.

 74 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.

 75 Drill Pipe and Drill Collars from China, USITC Publication 4127, March 2010, p. 17.

 76 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 (Final), p. 5 (green tubes identified as one example of unfinished drill pipe and/or drill collars).

 77 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).

 78 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.

I-26
(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.”79 

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: TMK and U.S.

Steel, both of which also produce casing and tubing, and Timken, which does not.80 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 as green tube or as

upset and heat-treated to API 5D grades.”81 According to Timken, ***.82 U.S. Steel’s online product

catalogue identifies drill pipe as a distinct entry,83 although 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.84

Responding U.S. producers that addressed the Commission’s question regarding whether the

upstream article is dedicated to the production of the downstream article categorically indicated that both

green tube and unfinished drill collars are dedicated to the production of finished drill pipe and drill collars

and identified no other commercial application during the period for which data were collected.85 U.S.

purchasers provided similar observations. 

Markets 

As shown previously in table I-4, unfinished drill pipe in its green stage is sold exclusively to the

processors that provide heat treatment, upsetting, and tool joining. The finished drill pipe, in turn, is sold

by the processors largely to end users.86

Responding U.S. producers that addressed the Commission’s question regarding whether there are

perceived to be separate markets for the upstream and downstream articles generally indicated that markets

- defined more broadly than distribution channels - were the same. Producers that focused on the customer

 79 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.

 80 Certain Oil Country Tubular Goods from China, Investigation No. 701-TA-463 (Final), USITC Publication

4124, January 2010, table III-1.

 81 Found at http://www.tmk-group.com/ipsco_seamless.php, presented in Respondents’ Postconference Brief,

exhibit 9.

 82 Staff interview and plant tour at Timken (August 10, 2010).

 83 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.

 84 See generally Respondents’ Postconference Brief, exhibit 9. In a more recent interview, Staff asked U.S. Steel

personnel if they were able to readily identify the company’s unfinished drill pipe. U.S. Steel personnel indicated

that ***. Staff interview and plant tour at U.S. Steel / Lorain (August 11, 2010).

 85 *** noted, however, that it is possible to use unfinished drill pipe to produce casing or tubing.

 86 In this regard, the marketing of both unfinished and finished drill pipe differs from that of casing and tubing

(whether unfinished or finished) and coupling stock, which are sold almost exclusively to distributors. 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).

I-27
base for unfinished and finished drill pipe, however, reiterated that the former is sold to processors and the

latter is sold (directly or indirectly) to end users such as drilling contractors. Purchasers largely share this

view, generally reporting that they purchase only finished drill pipe or drill collars, although some end

users “may specify the type and source of unfinished product,” according to ***.

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.

Responding U.S. producers that addressed the Commission’s question regarding whether there are

differences in the physical characteristics and functions of the upstream and downstream articles

emphasized both similarities and differences. Similarities included the steel chemistry and certain physical

characteristics such as length. Differences for drill pipe included heat treating, end finishing, and the

presence of the tool joint; drill collar differences, however, were less pronounced, and generally involved

certain exterior machining and the addition of threaded connectors. U.S. purchasers focused on the lack of

connectors on unfinished drill pipe in its green stage and on unfinished drill collars, and generally

observed that, in the absence of such connectors, downhole use was precluded.

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.87 As shown in table I-5, the

average unit values of U.S. mill shipments of unfinished drill pipe in its green stage were approximately

*** the average unit values of U.S. processor shipments of finished drill pipe. As noted at the staff

conference, the tool joint represents a not insubstantial portion of the production cost of finished drill

pipe.88

Responding U.S. producers that addressed the Commission’s question regarding whether there are

differences in the costs or value of the vertically differentiated articles used such terms as “substantial,”

“significant,” and “a lot.” Producers that attempted to quantify the relative value indicated that finished

drill pipe more than doubles in value relative to unfinished drill pipe in its green stage, with lower

estimates for heavy-weight drill pipe by ***. In contrast, both *** indicated that unfinished drill collars

constitute the large majority of the value of finished drill collars (*** percent, according to ***).89 U.S.

purchasers were generally unable to address this issue; those that did generally concurred in the assessment

that a not insubstantial amount of value is added through the processing stages, although attempts to

quantify this value were widely divergent.

 87 Heavy-weight 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).

 88 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).

 89 ***.

I-28
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.90 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.91

Responding U.S. producers that addressed the Commission’s question regarding the significance

and extent of the processes used to transform the upstream into the downstream articles generally

described an extensive process for transforming unfinished drill pipe in its green stage into finished drill

pipe. As summarized by ***, these processes include upsetting/forging; end prep; heat treatment; pipe

straightening; inspection; and tool joint welding (followed by additional operations involving the nowattached tool joint and the weld zone). In contrast, the processing of drill collar blanks, following drilling

or trepanning, primarily involves machining and threading, processes characterized as “straightforward”

by ***. U.S. purchasers capable of responding to this question focused on drill pipe and discussed the

multiple production stages that cumulatively resulted in a substantially transformed product, summarized

succinctly by *** as follows: “Finished goods incorporate most of the value-added manufacturing

process, whereas unfinished goods are nearly at the raw material cost stage.”

 90 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).

 91 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-29
 
PART II: CONDITIONS OF COMPETITION IN THE U.S. MARKET

U.S. MARKET CHARACTERISTICS

Overview

Drill pipe and drill collars are key tools used in drilling operations (particularly for the extraction

of oil or natural gas). They are sold in unfinished and finished forms, and are also sold new as well as

used or refurbished. Conventional finished drill pipe is available in four API grades and a variety of

premium (often proprietary) specifications, while heavy-weight drill pipe is available in both spiral and

non-spiral patterns. Drill collars are available in a range of standard weights and diameters.

Regional Availability

Firms were asked to list the geographic regions of the United States in which they sell drill pipe.

Seven of 11 U.S. producers reported that they served a nationwide market, while the other 4 producers all

reported selling to the Central Southwest, as well as one or more other regions. For drill collars, four of

seven U.S. producers reported selling nationwide, and three sold only in certain regions. Unlike U.S. 

producers, only two of 23 importers reported selling nationwide. Seventeen importers of drill pipe from

China reported the regions to which they sold; all sold to the Central Southwest, seven sold to the

Mountain region, five sold to the Pacific Coast, four sold to the Midwest, three sold to the Northeast and

Southeast, and two sold to other regions.1

 Most of these (12) also imported drill collar. Importers of drill

pipe and drill collars from other countries reported a similar pattern, with all selling to the Central

Southwest, and a subset selling to each of the other regions. 

Lead Times

All but one U.S. producer reported selling all or the majority of its drill pipe or drill collars

produced-to-order. About half of importers reported selling the majority of their drill pipe and drill

collars from U.S. inventory, and about half reported selling mostly produced-to-order.2

 Table II-1

presents the average and range of lead times for finished drill pipe from both producers and importers, as

well as reporting the names of the firms reporting the shortest and longest delivery times. Table II-2

presents lead times for unfinished drill pipe and finished and unfinished drill collars. Average reported

lead times for produced-to-order products generally decreased markedly from 2007 to 2009, and

generally increased moderately from 2009 to the first half of 2010. Lead times tend to be longer for

finished drill pipe than drill collar and for finished product than for unfinished product. There were large

firm-to-firm differences in lead times for produced-to-order products. 

 1 ***.

 2

 Only one importer reported any 2009 sales from overseas inventory, and it reported that such sales were only

*** percent of total import sales of drill pipe or drill collars.

II-1
Table II-1

Drill pipe and drill collars: U.S. producers’ and importers’ lead times for U.S. shipments of finished

drill pipe and drill collars, 2007-09, and January-June 2010

Average and range of lead times (days)

Product/source 2007 2008 2009

Jan.-June

2010

Finished drill pipe

 Producers

Produced-to-order

(average) 225 147 80 91

Produced-to-order

(range) *** *** *** ***

From U.S. inventory

(average) 12 30 19 31

From U.S. inventory

(range) *** *** *** ***

 Importers

Produced-to-order

(average) 130 129 84 96

Produced-to-order

(range) *** *** *** ***

From U.S. inventory

(average) 7 7 8 8

From U.S. inventory

(range) *** *** *** ***

Finished drill collars

 Producers

Produced-to-order

(average) 147 115 73 53

Produced-to-order

(range) *** *** *** *** 

From U.S. inventory

(average) 12 9 10 11

From U.S. inventory

(range) *** *** *** ***

 Importers

Produced-to-order

(average) *** *** *** ***

Produced-to-order

(range) *** *** *** ***

From U.S. inventory

(average) *** *** *** ***

From U.S. inventory

(range) *** *** *** ***

Note.--Importers’ times from inventories are those from U.S. inventories, not overseas inventories; few

importers reported lead times from overseas inventories. 

Source: Compiled from data submitted in response to Commission questionnaires.

II-2
Table II-2

Drill pipe and drill collars: U.S. producers’ and importers’ lead times for U.S. shipments of

unfinished drill pipe and drill collars, 2007-09, and January-June 2010

Average and range of lead times (days)

Product/source

U.S. producers Importers

2007 2008 2009

Jan.-

June

2010 2007 2008 2009

Jan.-

June

2010

Drill pipe (unfinished)1

Produced-to-order

(average) 73 80 61 69 *** *** *** ***

Produced-to-order

(range) *** *** *** *** *** *** *** ***

Drill collars (unfinished)

Produced-to-order

(average) 75 83 53 70 – -- -- --

Produced-to-order

(range) *** *** *** *** – -- -- --

 1 No U.S. producers reported shipments of unfinished drill pipe from inventories. Only two importers reported

shipments of unfinished drill pipe from inventories. ***. 

Note.--Importers’ times from inventories are those from U.S. inventories, not overseas inventories; few importers

reported lead times from overseas inventories. 

Source: Compiled from data submitted in response to Commission questionnaires.

Petitioners reported that all purchasers are sold product on a first-come-first-serve basis to both

large and small customers.3

 Respondents reported that while larger purchasers tend to pre-order based on

their future needs, smaller purchasers typically do not order far in advance of their needs either because

they cannot predict their needs or are less able/willing to provide an advance deposit required for orders

with non-cancellation clauses.4

 Instead, smaller purchasers typically purchase closer to their actual

drilling time frame. Consistent with this framework, respondents contend that during peak demand

periods smaller purchasers can face particularly high prices and difficulty obtaining product.5

Channels of Distribution

Table II-3 summarizes data on channels of distribution. All U.S. producers’ U.S. shipments of

unfinished drill pipe were to processors. Unfinished drill collars are produced domestically by ***.6

 In

2007 and 2008 *** of U.S. producers’ U.S. shipments of unfinished drill collars were to processors,

however, in 2009, *** of shipments of unfinished drill collars were to distributors and end users, and in

January-June 2010 *** of such shipments were to distributors and end users. The majority of U.S.

producers’ U.S. shipments of finished drill pipe and drill collars were to end users, including drilling

contractors. 

 3 Hearing transcript, p. 35 (Fields).

 4

 Hearing transcript, pp. 286-287 (Garvey).

 5

 Hearing transcript, pp. 236-237 (Lesco). 

 6

 ***.

II-3
Table II-3

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, 2007-09, and January-June 2010

Item

Period

2007 2008 2009 Jan.-June 2010

 Share of reported shipments (percent)

U.S. producers’ U.S. shipments of unfinished drill pipe to:

 Processors 100.0 100.0 100.0 100.0

Importers’ U.S. shipments of unfinished drill pipe from China to:

 Distributors *** *** *** ***

 Processors *** *** *** ***

Importers’ U.S. shipments of unfinished drill pipe from all other countries to:

 Processors 100.0 100.0 100.0 100.0

U.S. producers’ U.S. shipments of unfinished drill collars to:1

 Distributors *** *** *** ***

 Processors *** *** *** ***

 End users *** *** *** ***

U.S. producers’ U.S. shipments of finished drill pipe to:

 Distributors 18.2 21.8 21.7 19.9

 End users 81.8 78.2 78.3 80.1

Importers’ U.S. shipments of finished drill pipe from China to:

 Distributors *** *** *** ***

 Processors *** *** *** ***

 End users *** *** *** ***

Importers’ U.S. shipments of finished drill pipe from all other countries to:

 Distributors *** *** *** ***

 Processors *** *** *** ***

 End users *** *** *** ***

U.S. producers’ U.S. shipments of finished drill collars to:

 Distributors 12.4 5.6 6.8 19.9

 Processors 0.5 0.6 0.8 0.0

 End users 87.1 93.8 92.4 80.1

Importers’ U.S. shipments of finished drill collars from China to:

 Distributors 46.3 37.7 52.2 ***

 Processors 8.9 12.8 1.9 ***

 End users 44.8 49.5 45.7 ***

Importers’ U.S. shipments of finished drill collars from all other countries to:

 Distributors *** *** *** ***

 Processors *** *** *** ***

 End users *** *** *** *** 

 1 Reported imports of unfinished drill collars were limited and sporadic. 

Note.--Channels for which no sales were reported are not included.

Source: Compiled from data submitted in response to Commission questionnaires.

II-4
U.S. importers of Chinese product did not have any commercial shipments of any unfinished

product in 2009 or in the first six months of 2010; they did ship unfinished drill pipe to distributors and

processors in 2007 and 2008. U.S. importers of Chinese finished drill pipe shipped a majority of such

imports to distributors during 2007-08, but a majority to end users in 2009 and the first six months of

2010. U.S. importers of Chinese finished drill collars shipped over *** percent to both distributors and

end users in both 2007 and 2009, almost half to end users in 2008, and over *** percent to end users in

the first half of 2010, selling the remainder to distributors.

Producers and importers were asked to report their top-five purchasers of drill pipe and of drill

collar. Producers and importers listed 76 purchasers of drill pipe; *** of which (***) were listed by both

a U.S. producer and an importer. *** additional top-five customers for drill pipe reported by U.S.

producers (***) are importers of drill pipe from China. Producers and importers listed 46 top-five

customers for drill collars since 2007; *** of which, (***), were listed by both a U.S. producer and an

importer. *** additional top-five customer for drill collars reported by U.S. producers (***) is an

importer of drill collars from China.

The Commission issued questionnaires to 115 firms believed to purchase drill pipe and/or drill

collars. Thirty-five purchasers (18 drilling contractors, 8 distributors, 3 equipment rental companies,

2 oil/gas companies, 2 pipe processors/manufacturers, ***, and 1 drill pipe producer) returned completed

questionnaires. The eight distributors reported selling to a variety of types of customers, including other

distributors, equipment rental companies, contractors, and oil/gas companies. Twenty-nine firms reported

purchase data for drill pipe and drill collars for January 2007-June 2010; their purchases totaled $1.9

billion. Specifically, 14 firms purchased U.S.-produced drill pipe and/or drill collars and imports from

China;7

 10 firms purchased U.S.-produced products but not imports from China; 4 purchased imports

from China but not U.S.-produced products; and 1 purchased only nonsubject product.8

 Of the 29 firms

that reported the types of product they purchased, 2 purchased unfinished drill pipe; 2 purchased

unfinished drill collars; 26 purchased new finished drill pipe; 22 purchased new finished drill collars; 1

purchased used drill pipe; and 1 purchased used/refurbished drill collars. Purchasers were requested to

answer separately for premium and non-premium drill pipe if their responses to any question differed for

premium and non-premium drill pipe, but none did so.9

Eighteen purchasers reported the number of rigs they owned or operated. Of these, 16 were

contractors, 1 a distributor (***), and 1 an equipment rental company (***). Based on the number of rigs

they reported owning or operating in 2010, the largest firms were ***; none of the remaining purchasers

reported operating more than 100 rigs. Based on purchase value, the largest purchasers were ***. None

of the remaining purchasers reported purchasing more that $***. Of these largest purchasers, four

purchased Chinese product ***, while ***. The firms purchasing the largest amount of Chinese imports

(by value) were ***. No other purchaser reported purchasing more than $*** worth of Chinese product. 

 7 This includes two purchasers *** that imported product directly from China. ***.

 8

 Four firms reported purchasing imports from nonsubject countries in addition to their purchases of domestic

and/or imported Chinese products. Also, one firm stated that it did not know the origin of the products it purchased.

 9

 The questionnaire defined premium drill pipe as “Generally considered to be drill pipe whose tube body, tool

joint, and/or tool joint connections surpass API specifications.” See Part I of the staff report for the petitioners’

definition of premium pipe.

II-5
SUPPLY AND DEMAND CONSIDERATIONS

Supply10

U.S. Producers

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, inventory levels, and the ability to shift production

to the manufacture of other products. The evidence indicates that U.S. producers of unfinished drill pipe

and unfinished drill collars currently have the ability to respond to changes in prices with large changes in

quantity, due primarily to the existence of large amounts of unused capacity, as well as some production

alternatives. The evidence also indicates that U.S. producers of finished drill pipe and finished drill

collars currently have the ability to respond to changes in prices with large changes in quantity, due to

primarily to the existence of unused capacity, as well as alternative markets, and inventories, which are

***. 

Industry capacity

U.S. producers’ annual capacity utilization rates for unfinished drill pipe increased from

48.3 percent in 2007 to 54.6 percent in 2008 before falling to 4.8 percent in 2009, and were 22.0 percent

in the first half of 2010. U.S. producers of unfinished drill collars reported capacity utilization rates for

unfinished drill collars that decreased from *** percent in 2007 to *** percent in 2009, and were

*** percent in the first half of 2010. U.S. producers’ capacity utilization rates for finished drill pipe

decreased from 79.8 percent in 2007 to 38.8 percent in 2009, and were 39.5 percent in the first half of

2010. U.S. producers’ capacity utilization rates for finished drill collars decreased from 69.2 percent in

2007 to 32.3 percent in 2009, and were 11.3 percent in the first half of 2010. These data indicate that

U.S. producers currently have substantial ability to increase shipments.

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 2007 to *** percent in 2009, and were *** percent in the first

half of 2010. U.S. producers’ exports of unfinished drill collars, as a share of their total shipments of

unfinished drill collars, *** during 2007-09, and were *** in the first half of 2010. U.S. producers’

exports of finished drill pipe, as a share of their total shipments of finished drill pipe, increased from 25.6

percent in 2007 to 35.7 percent in 2009, and were 37.1 percent in the first half of 2010. U.S. producers’

exports of finished drill collars, as a share of their total shipments of finished drill collars, increased from

19.0 percent in 2007 to 49.0 percent in 2009, and were 51.7 percent in the first half of 2010. These data

indicate that U.S. producers of unfinished products are limited in their capability to divert shipments to or

from alternative markets in response to price changes, whereas U.S. producers of finished drill pipe and

drill collars have a greater capability to do so.

 10 Short-run effects discussed in the supply and demand sections refer to changes that could occur within

12 months, unless otherwise indicated.

II-6
Inventory levels

U.S. producers’ ratio of end-of-period inventories of unfinished drill pipe to total shipments of

unfinished drill pipe increased from *** percent in 2007 to *** percent in 2009, and were *** percent in

January-June 2010. U.S. producers’ ratio of end-of-period inventories of unfinished drill collars to total

shipments of unfinished drill collars decreased from *** percent in 2007 to *** percent in 2009, and were

*** percent in January-June 2010. U.S. producers’ ratio of end-of-period inventories of finished drill

pipe to total shipments of finished drill pipe increased from 5.8 percent in 2007 to 19.6 percent in 2009,

and were 15.6 percent in January-June 2010. U.S. producers’ ratio of end-of-period inventories of

finished drill collars to total shipments of finished drill collars increased from 29.3 percent in 2007 to 62.8

percent in 2009, and were 119.8 percent in January-June 2010. These data indicate that U.S. producers

may have the ability to use inventories as a means of increasing shipments.

Production alternatives

*** U.S. producers of unfinished drill pipe, *** producers of unfinished drill collars, ***

producers of finished drill pipe, and *** producers of finished drill collars reported that they use the same

manufacturing equipment and the same workers used to make drill pipe and/or drill collars in the

production of other products. Specifically, three U.S. producers reported producing seamless

standard/line/pressure pipe, two reported producing casing/tubing/coupling stock, and two reported

producing mechanical tubing. Other products cited included whipstocks, kellys, and drilling jars. The

ability of some U.S. producers to shift production from drill pipe and drill collars to or from other

products increases their supply responsiveness.

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 and drill collars in China have the

capability to respond to changes in demand with large changes in the quantity of shipments to the U.S.

market. The main contributing factors to this degree of responsiveness of supply are the ***. 

Respondents report that Chinese producers have very limited ability to produce premium drill

pipe.11 To the extent that demand is for premium product that is not available from China, Chinese supply

will be unresponsive to changes in U.S. prices. 

Industry capacity

Chinese producers of unfinished and finished drill pipe and drill collars reported increasing

capacity and declining capacity utilization from 2007-09. The reported capacity utilization rate for

unfinished drill pipe producers in China decreased from *** percent in 2007 to *** percent 2009; it is

projected to be *** percent in 2010 and *** percent in 2011. The reported capacity utilization rate for

unfinished drill collar producers in China decreased from *** percent in 2007 to *** percent in 2009; it is

projected to be *** percent in 2010 and in 2011. The reported capacity utilization rate for finished drill

pipe producers in China decreased from 98.2 percent in 2007 to 43.4 percent 2009; it is projected to be

47.1 percent in 2010 and 52.9 percent in 2011. The capacity utilization rate for reporting finished drill

collar producers in China decreased from *** percent in 2007 to *** percent in 2009; it is projected to be

*** percent in 2010 and *** percent in 2011. 

 11 Hearing transcript, pp. 220, 227, and 239-240 (Garvey, Malashevich, and Murphy).

II-7
Alternative markets

Available data indicate that producers of finished 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 finished drill pipe in China that went to the

United States increased irregularly from 17.0 percent in 2007 to 18.1 percent in 2009; it is projected to be

14.8 percent in 2010 and 13.2 percent in 2011. The share of such shipments to export markets other than

the United States increased from 25.3 in 2007 to 37.8 percent in 2009; it is projected to be 36.7 percent in

2010 and 35.7 percent in 2011. The share of such shipments to the Chinese home market decreased from

57.7 percent in 2007 to 44.1 percent in 2009; it is projected to be 48.5 percent in 2010 and 51.1 percent in

2011.

The share of shipments by producers of finished drill collars in China that went to the United

States decreased irregularly from *** percent in 2007 to *** percent in 2009; it is projected to be

*** percent in 2010 and *** percent in 2011. The share of such shipments to export markets other than

the United States increased from *** percent in 2007 to *** percent in 2009; it is projected to be

*** percent in 2010 and *** percent in 2011. The share of such shipments to the Chinese home market

decreased from *** percent in 2007 to *** percent in 2009; it is projected to be *** percent in 2010 and

*** percent in 2011.

Shipments of unfinished drill pipe by producers in China were primarily internal

consumption/transfers, as well as some shipments to the Chinese home market; there were no reported

export shipments except for a small amount in 2007.12 There were only limited and sporadic U.S. imports

of unfinished drill collars from China.

Inventory levels

Inventories of responding producers of finished drill pipe in China, as a share of total shipments

of finished drill pipe, increased from 10.7 percent in 2007 to 27.1 percent in 2009; they are projected to

be 18.7 percent in 2010 and 10.8 percent in 2011. Inventories of responding producers of finished drill

collars in China, as a share of total shipments of finished drill collars, decreased from *** percent in 2007

to *** percent in 2009; they are projected to be *** percent in 2010 and *** percent 2011. 

Inventories of responding producers of unfinished drill pipe in China, as a share of total

shipments of unfinished drill pipe, increased from *** percent in 2007 to *** percent in 2009; they are

projected to be *** percent in 2010 and *** percent in 2011. Inventories of responding producers of

unfinished drill collars in China, as a share of total shipments of unfinished drill collars, increased from

*** percent in 2008 to *** percent in 2009; they are projected to be *** percent in 2010 and *** percent

2011. 

 12 Because these data include ***, export shares are understated.

II-8
Production alternatives

Producers of unfinished drill pipe typically can also produce OCTG and/or seamless standard,

line and pressure pipe on the same equipment used to produce unfinished drill pipe. These products are

currently subject to antidumping/countervailing duty orders in the United States.13

Nonsubject Imports

Nonsubject country imports of unfinished drill pipe, as a share of the total quantity of apparent

U.S. consumption of unfinished drill pipe, increased from *** percent in 2007 to *** percent in 2009 and

were *** percent in the first half of 2010. Nonsubject imports of finished drill pipe, as a share of the total

quantity of apparent U.S. consumption of finished drill pipe, decreased from *** percent in 2007 to ***

percent in 2009 and were *** percent in the first half of 2010. There were limited and sporadic imports

of unfinished drill collars during January 2007-June 2010. Imports from nonsubject sources of finished

drill collars, as a share of the quantity of apparent U.S. consumption of finished drill collars, decreased

from *** percent in 2007 to *** percent in 2009 and accounted for *** percent in the first half of 2010.

Supply Constraints/Disruptions

Twenty-seven of 35 responding purchasers reported that no suppliers refused, declined, or had

been unable to supply drill pipe or drill collars since 2007. Seven of the remaining eight purchasers

including such large purchasers as *** reported that domestic suppliers were unable to supply product. 

Five of the seven responding purchasers reported that the referenced transactions did not differ in any

factors other than delivery, one reported that the Chinese price was much lower, and one reported that the

specifications differed.

C ***. 

C ***. 

C ***. 

C ***.14 

C ***. 

C ***. 

C ***.15

Purchasers were asked how long before receipt of their deliveries they typically inform their

suppliers of their needs with responses ranging from 1 day to 1 year. The average length for the eight

largest purchasers was 144 days with only one of these, ***, reporting times less than 120 days. The

remaining 24 purchaser responses averaged 90 days with 10 reporting times of less than 60 days. 

Purchasers were asked to report the shortest time between their order and delivery. Responses ranged

 13 Certain Oil Country Tubular Goods From the People's Republic of China: Amended Final Affirmative

Countervailing Duty Determination and Countervailing Duty Order, 75 FR 3203 (January 20, 2010); Certain Oil

Country Tubular Goods From the People's Republic of China: Amended Final Determination of Sales at Less Than

Fair Value and Antidumping Duty Order, 75 FR 28551 (May 21, 2010); Certain Seamless Carbon and Alloy Steel

Standard, Line, and Pressure Pipe From the People's Republic of China: Amended Final Affirmative Countervailing

Duty Determination and Countervailing Duty Order, 75 FR 69050 (November 10, 2010); Certain Seamless Carbon

and Alloy Steel Standard, Line, and Pressure Pipe From the People's Republic of China: Amended Final

Determination of Sales at Less Than Fair Value and Antidumping Duty Order, 75 FR 69052 (November 10, 2010).

 14 ***.

 15 Answers to additional questions have been used where appropriate to clarify the purchasers’ responses.

II-9
from 0 to 120 days, with the eight largest purchasers reporting an average of 46 days.16 The remaining

23 purchasers reporting an average of 33 days.17 These responses suggest that smaller purchasers, even

when quoted the same lead time as their larger competitors, can face additional supply management

challenges during periods of long and lengthening delivery times.18

One U.S. producer of drill pipe, ***, reported that it faced periodic supply constraints in 2008,

during which it limited volume to its customers. Downhole, an importer and distributor of drill pipe and

drill collars, reported that in 2007 and 2008 its customers experienced backlogs from U.S. producers

ranging from 12 to 18 months.19 *** 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 that

although ***.20

Later in the period, however, the nature of the delivery issues changed, and at least one producer,

VAM, had difficulty getting payment for its production. Command ordered drill pipe from VAM from

April 2008 through September 2008. However, when the products were produced Command was

reluctant to take possession of and pay for this material. VAM, after a number of attempts to get payment

in 2009, initiated legal proceedings in 2010 to compel payment.21

Used Products/Exchanges22

Only one U.S. producer of finished drill pipe and drill collars (***) and three U.S. importers

(***) sell used or refurbished drill pipe and drill collars.23 24 U.S. producer RDT reported that used

products are sold to small shallow land drilling companies that account for approximately 15 percent of

the U.S. market.25 U.S. producer VAM reported that drilling contractors can transfer used products from

idled rigs to active rigs rather than buying new product.26 U.S. producer RDT also stated that some of the

 16 ***.

 17 Purchasers with responses such as “now” or “stock” have been assumed to receive product in one day.

 18 Petitioners report that they do not discriminate against smaller purchasers in lead times from order to delivery. 

Hearing transcript, p. 34 (Fields). The respondents report that smaller purchasers are quoted longer lead times than

larger purchasers. Hearing transcript, p. 225 (Mostoway).

 19 Hearing transcript, p. 235 (Lesco).

 20 Weatherford’s postconference brief, p. 3.

 21 Petitioners’ prehearing brief, Exhibit 11.

 22 In its views in the preliminary phase of these investigations, the Commission stated “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.” Drill Pipe and Drill Collars from China, Invs. Nos. 701-TA-474 and

731-TA-1176 (Preliminary), USITC Publication 4127, March 2010, p. 27, footnote 200.

 23 U.S. producers, TSC and VAM, reported that they only sell new products. Conference transcript, p. 66 (Parks,

Brand). Importers Command and Downhole reported that they have, at times, imported used products from Europe,

Mexico, the Middle East, and South America. Conference transcript, pp. 188-189 (Lesco, Garvey).

 24 Importer ***.

 25 Conference transcript, pp. 65-66 (Morris). This producer also noted that offshore drilling companies do not use

used products. Ibid. Importer Command reported that there are limited applications for used drill pipe and drill

collars. Conference transcript, p. 176 (Garvey).

 26 Conference transcript, p. 67 (Fields).

II-10
large manufacturers of drill pipe and drill collars face difficulty in selling used products because they are

not necessarily API certified.27

Command reported that when a customer wants to swap material, Command appraises the value

of the material, then will swap the customers inventories dollar for dollar for material Command sells.28

Importer Downhole 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.”29 It reported that it imported in the first quarter of 2006 because domestic producers were

quoting 18 month deliveries and it had no more good quality used pipe to sell.30

Although only 2 purchasers reported purchasing used product, 15 of 32 responding purchasers

reported selling used drill pipe other than as part of an exchange. Firms reported that the value of used

drill pipe depends on its age and amount of wear, as well as availability of new drill pipe, and that items

that are not repairable may be sold as scrap. Several firms reported that they sell used drill pipe at

auction.

Only two of 28 responding purchasers reported attempting to trade new and/or used drill pipe as

part of an exchange. One of these firms reported that the attempt was unsuccessful. The other, ***,

reported that in *** it traded excess inventory of *** for ***; and that *** 

Purchasers’ Inventories

Table II-4 provides purchasers’ end-of-year inventories for 2007-09 and at the end of June 2010. 

No purchasers reported end-of-period inventories of product from China for unfinished drill pipe or drill

collars. Most end-of-period inventories of finished drill pipe was domestically produced, whereas the

leading source for finished drill collars varied by period. 

Demand

The very limited 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. Demand for drill pipe and drill collars is largely determined

by the health of the overall economy and drilling activity which, in turn, is driven by oil and natural gas

prices. U.S. real GDP growth at seasonally adjusted annual rates is shown in figure II-1.

 27 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).

 28 Hearing transcript, pp. 221-221 (Garvey).

 29 Conference transcript, p. 170 (Lesco). 

 30 Hearing transcript, pp. 275-276 (Lesco).

II-11
Table II-4

Drill pipe and drill collars: U.S. purchasers’ end-of-period inventories of drill pipe and drill collars,

by sources, 2007-09, and January-June 2010

Source

Period

2007 2008 2009 Jan.-June 2010

 Quantity (in feet)

 Unfinished drill pipe (new)

 United States 5,098,853 21,481,448 3,133,585 7,111,633

 Other *** *** *** ***

 Unfinished drill collars (new)

 United States 4,057,260 12,778,887 1,288,524 1,685,829

 Finished drill pipe (new)

 United States 5,414,743 6,509,678 6,712,686 6,697,433

 China 947,965 553,486 467,423 311,133

 Finished drill collars (new)

 United States 129,390 446,695 351,303 419,019

 China 579,291 633,457 223,512 38,577

 Used drill pipe1

 All sources 6,684,546 6,364,311 7,477,396 7,809,322

 Used drill collars1

 All sources 409,992 391,533 454,345 469,317

 1 Inventories of used drill pipe and drill collars include any product that is available for use, including that

currently being used for drilling. Such product typically would have been purchased new by the reporting

purchaser. 

Note.--This table does not present sources for which no product was reported. 

Source: Compiled from data submitted in response to Commission questionnaires.

Figure II-1

Real GDP growth, percentage change from previous period, by quarters, January 2007-September

2010

Source: Bureau of Economic Analysis.

II-12
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 figure II-2 (footage

drilled), drilling activity generally increased between January 2007 and October 2008, after which it

declined sharply until May 2009, then returned to close to 2007 levels by 2010.

Figure II-2

Drilling activity: Footage drilled, January 2007-November 2010

Source: EIA, “U.S. Footage Drilled for Crude Oil, Natural Gas, and Dry Exploratory and Developmental Wells.”

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

2-3 years for normal use or 1-2 years when used in more harsher environments. Petitioners reported that

drilling operators can predict replacement needs well in advance of when they are needed.

The number of active rigs is a broad indicator of demand for oil and natural gas.31 Figure II-3

presents monthly average crude oil prices, oil and total rig counts, and figure II-4 presents monthly

average natural gas prices, natural gas and total rig counts.32 In general, data in these figures reflect

variable though steady growth until approximately mid-2008, after which they experienced substantial

declines until early- to mid-2009, depending on the demand indicator. Most of these indicators have

shown varying levels of recovery in 2010.

 31 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.

 32 The U.S. Energy Information Administration (USEIA) expects the price of West Texas Intermediate crude oil

to average $93.00 in 2011. USEIA expects the U.S. average wellhead price for national gas to fall from an average

of $4.39 per million BTU in 2010 to $4.02 in 2011. USEIA, Short Term Energy Outlook, January 11, 2011. 

http://www.eia.doe.gov/emeu/steo/pub/cf_tables/steotables.cfm, retrieved January 18, 2011.

II-13
Figure II-3

Crude oil prices, U.S. oil rig count, and total rig count, monthly averages, January 2007-

November/December 2010

Source: Energy Information Administration.

Figure II-4

Natural gas prices, U.S. gas rig count, and total rig count, monthly averages, January 2007-

November/December 2010

Source: Energy Information Administration.

II-14
The following tabulation shows the ratio of purchasers’ reported number of rigs actively drilling

to the number of rigs owned or serviced at the end of December 2007-09 and June 2010. The ratio

declined by 25 percentage points from December 2007-09 and then recovered somewhat by June 2010.

December 2007 December 2008 December 2009 June 2010

75.6 71.3 50.3 58.7

When asked how the overall U.S. demand for drill pipe and drill collars has changed since

January 2007, most responding U.S. producers (12 of 13), importers (21 of 24), and purchasers (30 of 33)

reported that demand has decreased or fluctuated. One purchaser noted an increase in demand from 2007

to 2008, no change between 2008 and 2009, and a decrease between 2009 and 2010. Most responding

U.S. producers (9 of 10) and importers (14 of 17) also reported that demand outside the United States has

decreased or fluctuated. Fifteen of 21 purchasers indicated that demand outside the United States

fluctuated or did not change, 5 indicated that it increased, and 2 indicated that it decreased.

Apparent U.S. consumption of unfinished drill pipe decreased by *** percent from 2007 to 2009,

and was *** percent lower in January-June 2010 than in January-June 2009. Apparent U.S. consumption

of finished drill pipe decreased by *** percent from 2007 to 2009, and was *** percent lower in JanuaryJune 2010 than in January-June 2009. Apparent U.S. consumption of unfinished drill collars decreased

by *** percent from 2007 to 2009, and was *** percent lower in January-June 2010 than in January-June

2009. Apparent U.S. consumption of finished drill collars decreased by *** percent from 2007 to 2009,

and was *** percent lower in January-June 2010 than in January-June 2009. 

Most of the increase in drilling that occurring in 2010 was horizontal drilling in shale. This

horizontal drilling is mainly for gas, however, some of these shale regions provide oil as well as gas.33

Figure II-5 shows the increase in horizontal drilling relative to vertical drilling, and figure II-6 shows

inland and offshore drilling.

In spite of low natural gas prices in the United States, “the number of rigs drilling for gas has

remained ‘broadly stable’ thanks to continued activity on shale plays.”34 Increased drilling for natural gas

in U.S. shale formations has been reported to increase demand for steel tubular products.35

In vertical drilling, the drill collars act as a weight to increase the effectiveness of the drill bit at

the bottom of the drill string. In horizontal drilling, however, a weight at the end of the drill string does

not increase the effectiveness of the drill bit, thus few drill collars are used in horizontal drilling, reducing

demand for drill collars relative to drill pipe. 

Offshore drilling typically is a small share of U.S. drilling, ranging from a high of 5 percent of all

drilling rigs in January 2007 to only 3 percent in August 2009. Subsequently, offshore drilling began to

recover, but following the explosion of Transocean’s Deepwater Horizon oil drilling rig off the coast of

Louisiana, the number of offshore rigs plummeted from 53 to 12 by July 2010. By the end of 2010, the

number of offshore rigs had increased to 24, but accounted for only 1 percent of active U.S. rigs. 

 33 Respondents’ posthearing brief, exhibit 15.

 34 Vallourec cites shale plays for strong growth in 3d quarter, AMM.com, November 10, 2010, retrieved

December 2, 2010.

 35 Shale plays’ role in steel tubular demand growth seen on rise, AMM.com, November 5, 2010, retrieved

December 2, 2010.

II-15
Figure II-5

North-American rig count, by type, quarterly averages, January 2007-December 2010

Note.– Data are shown for North America.

Source: Baker Hughes.

Figure II-6

U.S. rig count, by type, quarterly averages, January 2007-December 2010

Source: Baker Hughes.

II-16
Premium Drill Pipe

Premium drill pipe as a share of U.S. apparent drill pipe consumption increased from *** percent,

by weight, in 2007 to *** percent in 2008, and *** percent 2009, and was *** percent of consumption in

January-June 2010. Both parties agree that pipe used in more difficult environments tends to wear out

more quickly than that used under normal conditions.36 Accordingly, the increased use of premium drill

pipe suggests increased drilling in environments with faster replacement rates. 

Respondents report that demand for premium pipe is increasing because of its use in high

technology, horizontal, and ultra-deep drilling, for both oil and gas applications, with about half of the

drilling in shale requiring premium pipe.37 Respondents also report that Chinese producers do not make

premium product that is used in deeper wells and for more difficult horizontal wells.38 Respondents

expect that premium product will account for nearly all “near-term” demand growth in the U.S. market.39

Petitioners, however, report a number of changes that reduce demand for drill pipe and drill

collars. They report that as the price of oil increases relative to gas prices, rigs have been shifted from

drilling gas wells to drilling oil wells. They contend that oil wells are more likely to be conventional

wells than gas wells. As a result, rigs used in oil wells both require less drill pipe than the same number

of rigs used in gas wells, while the drill pipe used in oil wells lasts longer.40 Petitioners report that

increased efficiency and improved technology have increased the speed at which drilling rigs can “hit a

pay zone” reducing the number of rigs needed again reducing the amount of drill pipe and drill collar

needed.41

Business Cycle

The majority of U.S. producers, importers, and purchasers reported that the business cycle for

drill pipe and drill collars is based on oil and gas prices and depends heavily on oil and gas rig counts. As

shown in figure II-7, oil and gas drilling in the United States has experienced sharp upward and

downward adjustments with some frequency over the past two decades, but has increased overall in the

last 10 years.

 36 Hearing transcript, pp. 128, 219 (Barnes and Garvey).

 37 Hearing transcript, pp. 246-247 (Garvey).

 38 Hearing transcript, pp. 217-222 (Garvey).

 39 Hearing transcript, p. 227 (Malashevich).

 40 Hearing transcript, pp. 127-128 (Barnes).

 41 Hearing transcript, p. 125 (Parks).

II-17
Figure II-7 

Operating oil and gas rigs in the United States, 1990-2010

Source: Baker-Hughes.

Nearly all (31 of 33) responding purchasers indicated that the price of oil and gas affects demand

for drill pipe and drill collars. Only two firms specified the lag time between changes in oil and gas

prices and demand for drill pipe and drill collars; one purchaser reported it was six months.42 Thirteen of

32 purchasers indicated that the business cycle for drill pipe or drill collars differs from that of the overall

economy. These firms indicated that oil and gas prices, as well as the number of rigs, affect demand. 

One firm also mentioned the regulatory environment and access to oil and gas leases. 

Substitute Products

Twelve of 13 responding U.S. producers, 28 of 29 responding importers, and 33 of 34 responding

purchasers reported no substitutes for drill pipe or drill collar.43 One producer (***) reported that

premium upset oil country tubing, aluminum based drill pipe, and casing could be used as substitutes for

drill pipe. According to ***, “Drilling with casing is a fairly new tool, and we are seeing some

substitutions occurring, particularly when the total cost of drilling wells is lower.” One importer also

reported that casing was a substitute for drill pipe. The sole purchaser reporting a substitute indicated that

coil tubing would affect the price of drill pipe and drill collar in the future. 

Cost Share

Firms were asked to estimate drill pipe or drill collar’s share of the cost of downstream products. 

Firms reported that such costs generally ranged from 0.4 to 14 percent for drill pipe and from 0.05 to

 42 A second company ***, reported that drill pipe used for drill risers may have a lag time of up to *** years. A

drilling riser “is a large diameter pipe or series of concentric pipes which connects the drilling string on a seafloor oil

well to a surface drilling platform.” http://www.helium.com/items/1836922-what-is-an-oil-riser, retrieved 1/11/11.

 43 In addition, one U.S. producer reported that drill pipe was a substitute for drill collars.

II-18
5 percent for drill collars.44 However, petitioners report that the drill stem, which includes drill pipe and

drill collar as well as other equipment, is the most expensive part after the drilling rig, explaining why

purchasers are concerned about the price of drill pipe and drill collars.45

SUBSTITUTABILITY ISSUES

The degree of substitution between domestic and imported drill pipe or drill collar depends on

such factors as relative prices, range of product available, quality (e.g., grade standards, reliability of

supply, defect rates, etc.), and conditions of sale (e.g., price discounts/rebates, lead times between order

and delivery dates, payment terms, product services, etc.). Based on available information, staff believes

that there is a moderate to high degree of substitutability between U.S. and Chinese non-premium

product. However, for that share of the market that requires premium product, Chinese product would

have low substitutability for U.S. product because U.S. imports of drill pipe from China are concentrated

in API, rather than proprietary grades.46

Factors Affecting Purchasing Decisions

Table II-5 summarizes purchasers’ responses concerning the top three factors in their purchase 

decisions. Quality, followed by availability and price, were the most frequently reported first factors,

price was the most frequently reported second factor, and availability was the most frequently reported

third factor.

Table II-5

Drill pipe and drill collars: Ranking of factors used in purchasing decisions as reported by U.S.

purchasers

Factor

Number of firms reporting

Number one factor Number two factor Number three factor

Quality 16 7 7

Price 6 15 9

Availability 7 5 10

Delivery/lead times 1 4 5

Contract/manufacturer1 301

Technical support 0 0 2

Other2 230

 1 Includes proven track record and traditional supplier.

 2

 Other factors include proprietary connectors and ability to manufacture to our specifications for the first factor,

and product range, credit, and willingness to establish pricing agreements for the second factor.

Source: Compiled from data submitted in response to Commission questionnaires.

 44 ***. ***.

 45 Hearing transcript, p. 43 (Brand).

 46 “Offshore rigs require premium or patented products which Chinese mills have yet to demonstrate an ability to

supply.” Hearing transcript, p. 61 (Dorn). “The largest proportion of the consumption of drilling product in China is

API, by far. China has also some growing wells which are getting complicated, where they also need some premium

products, or I would say some non-API products. And some of these manufacturers, Chinese manufacturers, can

provide some premium products. But the acceptance is still relatively limited on a worldwide basis.” Hearing

transcript, p. 116 (De Rotalier). “We certainly agree with Petitioners that premium drill pipe doesn't compete with

Chinese product, which is largely based on standard API grades.” Hearing transcript, p. 195 (Leibowitz).

II-19
Purchasers were asked to rate the importance of 17 factors in their purchasing decisions (table

II-6). Factors reported by at least half of the 30 responding purchasers to be very important were

availability, price, and quality meeting API standard (27 purchasers); product consistency and reliability

of supply (26); delivery time and technical support (25); quality exceeds API standard (18); proprietary

grades (16); and discounts offered and product range (15). Most purchasers (20) reported that the option

to swap was not important, and 15 reported that packaging was not important.

Table II-6

Drill pipe and drill collars: Importance of purchasing factors, as reported by U.S. purchasers

Factor

Number of firms reporting

Very important Somewhat important Not important

Availability 27 3 0

Delivery terms 13 14 2

Delivery time 25 5 0

Discounts offered 15 10 3

Extension of credit 6 11 13

Minimum quantity requirements 12 10 7

Option to swap used product 3 4 20

Packaging 5 10 15

Price 27 2 1

Product consistency 26 4 0

Product range 15 12 2

Proprietary grades 16 9 4

Quality meets API standard 27 2 1

Quality exceeds API standard 18 7 4

Reliability of supply 26 3 0

Technical support/service 25 4 1

U.S. transportation costs 5 16 9

Note.– In addition, one firm, ***, identified “warranty of product” as “very important,” and another firm, ***, identified

“proven track record” as “very important.”

Source: Compiled from data submitted in response to Commission questionnaires.

Thirty-four of 35 responding purchasers reported that they required all product they purchased to

meet API standards47 and 16 purchasers also require other certification or qualification. Seventeen of

35 purchasers require that product they purchase surpass API standards, although 3 of the 16 require this

higher standard on only a portion of their purchases (ranging from 10 to 60 percent). Although some

 47 The one purchaser that did not require product to meet API standards, ***, reported that product had to meet its

standards.

II-20
purchasers reported that it took up to 365 days to qualify a new supplier, most firms (16 of 26) reported

that it took 30 or fewer days.48 Eight of 33 responding purchasers indicated that a supplier failed to 

certify or qualify their drill pipe or drill collars. Of these, four reported problems with U.S. firms

including TSC, NOV Grant Prideco, Smith, and Timken, and one reported problems with Chinese

product.49

When asked what factors purchasers consider in determining quality of drill pipe or drill collars, 

the most common response was meeting API standards (reported by 15 purchasers). Other factors

mentioned include quality and mechanical properties of the steel; precision and control in the

manufacturing process including accurate drawing; process of welding on tool joints; adequate heat

treatment facilities; modern equipment and good quality control system; mill and test certification; 

marking system; and traceability. Firms also cited low inspection rejection rate, meeting all required

performance criteria, product consistency, history of performance, delivery history, meeting customer

needs, ready for service on delivery, U.S. or North American production, and longevity of the drill pipe.

As shown in the tabulation below, about two-thirds (22 of 33) of purchasers always or usually

make purchasing decisions for drill pipe or drill collars based on the producer and about half (16 of 34)

always or usually make purchasing decisions based on the country of origin. 

Purchaser/customer decision Always Usually Sometimes Never

Purchaser makes purchase decisions based on producer 15 7 7 4

Purchaser’s customers make purchase decisions based producer 4 6 7 6

Purchaser makes purchase decisions based on country of origin 8 8 9 9

Purchaser’s customers make purchase decisions based on

country of origin 4 2 9 8

Twenty-five of 34 responding purchasers indicated that they or their customers will specifically

order drill pipe and drill collar from one country in particular over other possible sources of supply. 

Seventeen purchasers listed the United States as the preferred country, five listed China, and one each

listed Austria, Germany, and India. When asked if certain grades, forms, or types of drill pipe and drill

collars were available from a single source, 9 of 35 purchasers reported “yes;” specifically, several

purchasers mentioned certain proprietary grades, including some produced by NOV Grant Prideco. 

About half of responding purchasers reported that buying U.S.-produced product is an important factor in

their purchases of drill pipe and/or drill collars. While only one of these purchasers reported that U.S.-

produced product is required by law or regulation, six reported that some or all of their customers require

U.S.-produced product, and ten reported that U.S.-produced product is required for other reasons such as

company specifications and brand preferences.

When asked how often they purchase the lowest priced drill pipe and drill collar, 4 of 35

purchasers responded “always,” 11 responded “usually,” 15 responded “sometimes,” and 5 responded

“never.” Reasons cited by purchasers for buying from one source although a comparable product was

available at a lower price from another source included availability, delivery, quality, long-term contracts,

lead times, and reliability of supply.

 48 One purchaser reported it took “years” to qualify a supplier.

 49 In addition, three purchasers did not identify the firms or source country of producers that failed to qualify.

II-21
Comparisons of Domestic Product and Imports

In order 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. Eight of 12 U.S. producers

reported that U.S. drill pipe and that from China are always interchangeable (5 of 8 for drill collars), as

shown in table II-7. 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. Sixteen of

20 purchasers reported U.S. drill pipe and drill collars and those from China are always interchangeable. 

Table II-7

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 U.S. purchasers

AFSNAFSNAFSN

Drill pipe

 U.S. vs. China 8 2 1 1 5 9 3 0 16 2 1 1

 U.S. vs. other 8 2 1 1 5 8 1 0 7 3 1 1

 China vs. other 7 1 0 0 5 6 1 1 4 2 0 1

Drill collars

 U.S. vs. China 5 1 1 1 7 6 4 0 15 1 2 1

 U.S. vs. other 5 1 1 1 6 5 2 0 5 2 2 1

 China vs. other 4 1 0 0 5 5 1 0 3 2 0 1

Note.–“A” = Always, “F” = Frequently, “S” = Sometimes, and “N” = Never.

Source: Compiled from data submitted in response to Commission questionnaires.

As indicated in table II-8, three-quarters of responding U.S. producers reported that differences

other than price between U.S.-produced drill pipe and subject imports are sometimes or never a

significant factor in their sales, while one-quarter reported that they are always or frequently a significant

factor. A majority of responding importers reported that differences other than price between

U.S.-produced drill pipe and subject imports are sometimes or never a 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. Unlike most producers and or importers,

approximately one-half of purchasers reported that factors other than price were always a significant

factor for drill pipe and drill collars.

II-22
Table II-8

Drill pipe and drill collars: Differences other than price between products from different sources1

Country comparison

U.S. producers U.S. importers U.S. purchasers

AFSNAFSNAFSN

Drill pipe

 U.S. vs. China 1 2 4 5 3 4 7 3 11 4 3 3

 U.S. vs. other 124515335311

 China vs. other 003513424011

Drill collars

 U.S. vs. China 1 0 5 2 3 3 6 3 10 3 4 3

 U.S. vs. other 105214434221

 China vs. other 003203423011

 1

 Producers, importers, and purchasers 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/purchases

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.

Two U.S. producers reported that the quality of imports from China was previously perceived to

be inferior but that it now meets 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.

Only 2 of 32 responding purchasers reported changing suppliers after agreeing to purchase from

another supplier. Nine of the 29 responding purchasers reported that the time between informing

suppliers of needs and delivery differed for U.S. and imported product; however, these firms reported that

U.S. delivery times may be longer or shorter than delivery times for imports. 

Purchasers were asked to compare U.S.-produced drill pipe and drill collars and those produced

in China and nonsubject countries with respect to 17 different attributes (table II-9). Of the 18 firms that

compared U.S. and Chinese drill pipe, a majority reported that the products were comparable for all

factors except for delivery time, price, and technical support/service. Of the 12 firms that compared U.S.

and Chinese drill collars, a majority reported that the products were comparable for all factors except for

availability, delivery terms, delivery time, discounts offered, price, and technical support/service. Only

three firms compared U.S.-produced drill pipe to drill pipe from countries other than China; two of these

firms generally rated the products as comparable and one generally rated the nonsubject country product

as superior. Two firms compared U.S.-produced drill collars to that from France and India, and generally

rated the products as comparable.

II-23
Table II-9

Drill pipe and drill collars: Comparisons between U.S.-produced and Chinese products, as

reported by U.S. purchasers

Factor

Number of firms reporting

Drill pipe

U.S. vs. China

Drill collars

U.S. vs. China

SC I SC I

Availability 6 11 1 5 6 1

Delivery terms 6 12 0 5 5 2

Delivery time 6 8 3 5 4 3

Discounts offered 3 10 5 4 5 3

Extension of credit 3 11 0 2 7 0

Price 3 7 8 3 5 4

Minimum quantity requirements 2 15 0 3 8 0

Packaging 3 13 1 3 8 0

Product consistency 7 10 1 5 7 0

Quality meets API standards 7 11 0 5 7 0

Quality exceeds API standards 6 12 0 4 7 0

Proprietary grades 5 12 0 3 7 0

Product range 4 13 1 3 9 0

Reliability of supply 7 10 1 4 8 0

Technical support/service 891552

Option to swap 1 12 2 1 8 1

U.S. transportation costs 5 12 0 3 8 0

 1 A rating of superior means that the price is generally lower. For example, if a firm reports “U.S. superior,” this

means that it rates the U.S. price generally lower than the other country’s price.

Note.–S = Superior, C = Comparable, I = Inferior.

Source: Compiled from data submitted in response to Commission questionnaires.

Twenty-one of 34 responding purchasers reported that U.S.-produced drill pipe and drill collars 

always meet minimum quality specifications, and 11 reported that they usually did (table II-10). Eleven

of 27 responding purchasers reported that the Chinese drill pipe and drill collars always met minimum

quality specifications, and 10 reported that they usually did. Purchasers reported that products from the

following nonsubject countries always or usually met minimum quality specifications: Argentina,

Austria, France, Germany, India, Indonesia, Italy, Japan, Korea, Mexico, Singapore, and Ukraine.

II-24
Table II-10

Drill pipe and drill collar: Ability to meet minimum quality specifications, by source

Country

Number of firms reporting1

Always Usually Sometimes Rarely or Never

 United States 21 11 1 1

 China 11 10 2 4

 1 Purchasers were asked how often domestically produced or imported drill pipe and drill collar meets minimum

quality specifications for their own or their customers’ uses.

Source: Compiled from responses to Commission questionnaires.

ELASTICITY ESTIMATES

This section discusses elasticity estimates. Parties were encouraged to comment on these

estimates in their prehearing or posthearing brief. No parties commented on these elasticity estimates.50

U.S. Supply Elasticity51

The domestic supply elasticity for drill pipe and drill collars measures the sensitivity of the

quantity supplied by U.S. producers to changes in the U.S. market price of drill pipe and drill collars. The

elasticity of domestic supply depends on several factors including the level of excess capacity, the ease

with which producers can alter capacity, producers’ ability to shift to production of other products, the

existence of inventories, and the availability of alternate markets for U.S.-produced drill pipe and drill

collars. Analysis of these factors earlier indicates that the U.S. industry is likely to be able to greatly

increase or decrease shipments to the U.S. market; an estimate in the range of 5 to 10 is suggested. 

U.S. Demand Elasticity

The U.S. demand elasticity for drill pipe and drill collars measures the sensitivity of the overall

quantity demanded to a change in the U.S. market price of drill pipe and drill collars. This estimate

depends on factors discussed earlier such as the existence, availability, and commercial viability of

substitute products, as well as the component share of the drill pipe and drill collars in the production of

any downstream products. Based on the available information, the aggregate demand for drill pipe and

drill collars is likely to be inelastic; a range of -0.25 to -0.5 is suggested. 

 50 Petitioners submitted an economic study using the COMPAS model to estimate the effect on the U.S. drill pipe

and drill collar industry “if Chinese product had not entered the U.S. market.” The results did not depend on

elasticity estimates. Based on their assumptions, the petitioners’ study found that in 2009 domestic share would

have been 12.3 percent higher, than their actual level. Petitioners’ posthearing brief Exhibit 8.

 51 A supply function is not defined in the case of a non-competitive market.

II-25
Substitution Elasticity52

The elasticity of substitution depends upon the extent of product differentiation between the

domestic and imported products. Product differentiation, in turn, depends upon such factors as quality

(e.g., chemistry, appearance, etc.) and conditions of sale (e.g., availability, sales terms, availability of

product with add-ons, etc.). Based on available information, the elasticity of substitution between U.S.-

produced non-premium drill pipe and all drill collars and imported products is likely to be in the range of

3 to 5 while substitution for premium drill pipe would be much lower.

 52 The substitution elasticity measures the responsiveness of the relative U.S. consumption levels of the subject

imports and the domestic like products to changes in their relative prices. This reflects how easily purchasers switch

from the U.S. product to the subject products (or vice versa) when prices change.

II-26
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 margin 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 13 firms that accounted for the

vast majority of U.S. production of drill pipe and drill collars during 2009.

U.S. PRODUCERS

The Commission issued questionnaires to 38 companies identified as possible producers of drill

pipe and/or drill collars. Fourteen producers responded to the Commission questionnaires, thirteen of

which were able to provide useable data.1 2

 Table III-1 presents a list of confirmed domestic producers of

drill pipe and/or 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 2009.3

 As shown

in the table below, firms reported producing either finished or unfinished product, but not both, and many,

but not all, firms reported producing both drill pipe and drill collars.

As indicated in table III-1, four U.S. producers are related to foreign producers of drill pipe or

drill collars, one of which is related to foreign producers in China. In addition, as discussed in greater

detail below, two U.S. producers, ***, directly import the subject merchandise.

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 2009 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

Table continued on next page.

 1 Five firms (***) reported that they had not produced drill pipe or drill collars since 2007. 

 2

 ***.

 3

 V&M Star reported that it is in the process of constructing a new $650 million seamless pipe mill in

Youngstown, OH. The new mill is expected to produce 350,000 tons of seamless pipe in the size range of 2 to 7

inches, beginning in the fourth quarter of 2011. Ten percent of the production is projected to be green tubes

intended for domestic manufacturing of drill pipe at V&M Drilling in Houston, TX. Certain Seamless Carbon and

Alloy Steel Standard, Line, and Pressure Pipe from China, Inv. Nos. 701-TA-469 and 731-TA-1168 (Final), Hearing

transcript, pp. 57-58 (James Herald, Managing Director, V&M North America). V&M reported ***. Letter from

***, November 5, 2010.

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 2009 reported U.S. production

Firm

Position on

petition

U.S. production

location(s) Related and/or affiliated firms

Share of

production

(percent) 

Finished drill pipe

Charles

Machine *** Perry, OK None ***

Drill Pipe

International *** New Hope, MN *** ***

NOV Grant

Prideco ***

Amelia, LA

Navasota, TX (

2

) ***

RDT Support Beasley, TX *** ***

Smith *** Houston, TX (

3

) ***

Superior *** Houston, TX None ***

Tejas *** Houston, TX None ***

TSC Support Houston, TX *** ***

VAM Support Houston, TX ***4 ***

Total 100.0

Unfinished drill collars

Sunbelt *** Houston, TX None ***

Timken *** Houston, TX None ***

Total 100.0

Finished drill collars

Drill Pipe

International5 *** New Hope, MN *** ***

NOV Grant

Prideco ***

Amelia, LA

Navasota, TX (

2

) ***

RDT Support Beasley, TX *** ***

Reamco6 *** Broussard, LA None ***

Smith *** Houston, TX (

3

) ***

VAM Support Houston, TX ***4 ***

Total 100.0

 1 ***.

 2

 ***.

 3

 ***.

 4 ***.

 5 ***. 

 6 ***.

Source: Compiled from data submitted in response to Commission questionnaires.

III-2
Table III-2 presents important drill pipe and drill collar industry events since 2007.

Table III-2

Drill pipe and drill collars: Important industry events, 2007-10

Year Company Description

2007 Grant Prideco ***.1

2007 Timken ***.1

2007 Sunbelt ***.1

2007 Grant Prideco ***.1

2008 Superior ***.1

2008

Drill Pipe

International ***.1

2008 Sunbelt ***.1

2008

Evraz and TMK

(Russia)

Purchase: Evraz and TMK purchase IPSCO-Tubulars for $4 billion

from Svenskt Stal AB.2

2008 Timken

Purchase: Acquisition of Boring Specialties Inc., Houston, TX, in

March 2008 for about $70 million.3

2008

Vallourec and

Grant Prideco

Purchase: Vallourec purchases three tubular business from Grant

Prideco for $800 million including: Atlas Bradford (OCTG connection

technology), TCA (heat treatment), and Tube Alloy (production and

service of down-hole accessories).4

2008

NOV Grant

Prideco

Purchase: NOV purchases Houston-based Grant Prideco for $7.4

billion.5

2008 TMK

Expansion: TMK-IPSCO increases its production range for unfinished

drill pipe at its Ambridge, PA, mill.6

2008

NOV Grant

Prideco ***.1

2008

NOV and

Schlumberger

Joint venture: NOV and Schlumberger form joint venture in the

manufacturing and technology development of wired drill string

telemetry systems.7

2008 VAM

Production disrupted: Hurricane Ike disrupts operations of VAM’s

Houston manufacturing facility for several days in September.8

2009 Timken ***.1

2009 RDT Expansion: Addition of a second weld line; remains idle.9

2009 Charles Machine ***.1

2009 Sunbelt ***.1

2009 Smith Production curtailment: Due to low sales.1

2009 TSC ***.1

2009 U.S. Steel ***.1

2009 TSC ***.1

2009 Timken ***.1

2009 U.S. Steel

U.S. Steel Voluntary Early Retirement Program affects 500 employees

and saves $70 million companywide.10

Table continued on the next page.

III-3
Table III-2--Continued

Drill pipe and drill collars: Important industry events, 2007-10

Year Company Description

2009 VAM

Lay off: reductions in February, June, and November hours reduced

to 32 per week, 3 weeks of unpaid furlough (office).11

2009 VAM

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.12

2010 U.S. Steel ***.13

2010 RDT ***.14

2010 TMK ***.1

2010 Smith Acquisition: Smith merges with Schlumberger.15

2010 TSC

End of marketing agreement: On December 7, 2010, Schlumberger

ends Smith’s marketing agreement with TSC.16

1

 Response to U.S. producer’s questionnaire.

2

 IPSCO, news release, March 14, 2008.

3

 TIMKEN, news release, February 22, 2009 and “Timken Acquires Boring Specialties,” The eBearing News,

July 28, 2008, http://www.ebearing.com/news2008/072801.htm. . 4

 Vallourec news release, May 16, 2008,

http://www.vallourec.com/en/group/news/NewsDetail.aspx?NewsID=10&List=News%20List, and "Vallourec to

Acquire Three Tubular Businesses from Grant Prideco, October 31, 2007,

http://steelguru.com/search/index.html#29006. 5

 Grant Prideco, news release, April 21, 2008.

6

 Conference transcript, p. 27 (Ramsey).

7

 NOV, press release, November 19, 2008.

8

 VAM Drilling USA, News, http://www.vamdrilling.com/news-details.asp?id=24 9

 Conference transcript, p. 23 ( Morris), and hearing transcript p. 42 (Morris).

10 See U.S. Steel, press releases, found at http://uss.mediaroom.com/index.php?s=43&item=556, retrieved

January 8, 2010. 11 Conference transcript, pp. 17-18 (Fields).

12 VAM Drilling, news, found at 

http://www.vamdrilling.com/userfiles/file/Vallourec%20Press%20Release%20DPAL.pdf/, retrieved January 8, 2010. 13 ***.

14 ***.

15 Schlumberger, press release, August 27, 2010

16 Hearing transcript, p. 38 (Brand).

Sources: Staff interviews and plant tours, corporate press releases, various articles, questionnaire responses, and

conference transcript.

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.4

 ***’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

 4 Although it was unable to provide useable data on unfinished drill pipe, *** reported that *** percent of its drill

pipe production (*** tons in 2009) is sold as unfinished, and solely to ***.

III-4
unfinished drill pipe with an outside diameter of 51⁄2 inches.5

 This increase in capacity was offset by a

reduction in allocated capacity by *** during 2007-09 due to ***. During the period for which data were

collected, however, *** reported *** higher capacity utilization than did ***.6

Table III-3a

Unfinished drill pipe: U.S. capacity, production, and capacity utilization, 2007-09, January-June

2009, and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Capacity (short tons)

1 164,568 156,821 137,965 70,130 73,329

Production (short tons) 79,494 85,681 6,595 3,968 16,143

Capacity utilization (percent) 48.3 54.6 4.8 5.7 22.0

 1 ***. 

 

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 2007 and 2008 largely due to ***’s

addition of a weld line and ***’s ramp-up of production of finished drill pipe. *** producers of finished

drill pipe except *** reported lower production in 2009 than in 2008, with *** experiencing production

declines of *** percent. While U.S. capacity utilization was lower in January-June 2010 compared with

January-June 2009, U.S. producers *** reported increased capacity utilization and production. ***

consistently reported *** capacity utilization of all responding producers of finished drill pipe.7

 Indeed,

in 2007, when *** were all producing at full capacity,8

 *** reported having *** short tons of available

capacity. All of the other U.S. processors combined reported only *** short tons of available capacity in

that year.

 5 Conference transcript, p. 27 (Ramsey).

 6

 *** capacity utilization ranged from a high of *** percent in 2008 to a low of *** percent in January-June

2009, while *** reported capacity utilization ranging from a high of *** percent in 2007 to a low of *** percent in

2009. *** reported capacity utilization ranging from a high of *** percent in 2008 to a low of *** percent in 2009.

 7

 *** reported production capacity ranging from a high of *** percent in 2008 to a low of *** percent in JanuaryJune 2010. *** stated that it used only *** percent of its production capacity (part of which was also used to

produce drill collars). Email from ***, November 22, 2011.

 8

 ***'s bottleneck is its welding capacity. Although it took steps to address this bottleneck (as discussed in Part

IV of this report), even the company’s heat-treating operations *** in 2007, before declining to *** percent in 2008

and to *** percent in 2009.

III-5
Table III-3b

Finished drill pipe: U.S. capacity, production, and capacity utilization, 2007-09, January-June 2009,

and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Capacity (short tons)

1 268,520 279,489 289,751 144,882 144,850

Production (short tons) 214,412 203,231 112,395 66,064 57,163

Capacity utilization (percent) 79.8 72.7 38.8 45.6 39.5

 1 ***.

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.9

 *** reported increasing production capacity in 2008 by adding capital

equipment. In addition, Timken reported the acquisition of Boring Specialties, Inc. in March 2008. 

Production levels, however, declined *** beginning in 2008.10

Table III-3c

Unfinished drill collars: U.S. capacity, production, and capacity utilization, 2007-09, January-June

2009, and January-June 2010

* * * * * * *

U.S. producers’ capacity, production, and capacity utilization data for finished drill collars are

presented in table III-3d. In 2007 *** reported capacity utilization above *** percent, while *** reported

*** percent and *** percent, respectively. *** U.S. producers reported reduced capacity utilization

between 2007 and 2009, and in January-June 2010 compared with January-June 2009.11 The two largest

U.S. producers of finished drill collars, ***, reported production declines of approximately *** percent

between 2007 and 2009 (declined of approximately *** short tons and *** short tons, respectively).

 9 *** reported that it is ***. ***. In addition, it reported that ***. *** reported that about *** percent its

production of unfinished drill collars was under tolling arrangements. For further details see Part VI of this report.

 10 Boring Specialties, Inc. historically ***. The merger with Timken offered an opportunity to bring material

closer to the customer by effectively integrating bar production in Ohio with additional hole forming and related

services in Texas. While the enterprise initially faced scepticism, particularly from ***, during the first three

quarters of 2008 it ***. After the third quarter of 2008, however, ***. TBS officials identified a number of

contributing factors for this observed trend: ***. Staff interview and plant tour at TBS, October 9, 2010.

 11 *** reported the lowest capacity utilization in each year, starting at *** percent in 2007 and declining to ***

percent in 2009, although it reported the highest capacity utilization in January-June 2010, with *** percent. In

contrast, *** reported the highest capacity utilization in 2007 (*** percent), but the lowest in January-June 2010

(*** percent).

III-6
Table III-3d

Finished drill collars: U.S. capacity, production, and capacity utilization, 2007-09, January-June

2009, and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Capacity (short tons)

1

 75,065 79,384 79,638 39,819 39,819

Production (short tons) 51,931 45,223 25,760 12,283 4,505

Capacity utilization (percent) 69.2 57.0 32.3 30.8 11.3

 1 ***. 

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 declined by *** percent between 2007 and 2009, but were *** percent higher in January-June

2010 than in January-June 2009. While the decrease between 2007 and 2009 coincided with a decreased

quantity of U.S. and export shipments of finished drill pipe of *** percent, the higher U.S. shipments of

unfinished drill pipe in January-June 2010 compared with January-June 2009 is in contrast with stable

overall shipments of finished drill pipe.

Table III-4a

Unfinished drill pipe: U.S. producers’ shipments, by types, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Quantity (short tons)

U.S. shipments *** *** *** *** ***

Export shipments *** *** *** *** ***

Total shipments 78,561 90,178 8,834 6,160 13,826

Value (1,000 dollars)

U.S. shipments *** *** *** *** ***

Export shipments *** *** *** *** ***

Total shipments 117,250 178,647 14,323 10,007 23,223

Unit value (per short ton)

U.S. shipments *** *** *** *** ***

Export shipments *** *** *** *** ***

Total shipments $1,492 $1,981 $1,621 $1,625 $1,680

Table continued on next page.

III-7
Table III-4a–Continued

Unfinished drill pipe: U.S. producers’ shipments, by types, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Share of quantity (percent)

U.S. shipments *** *** *** *** ***

Export shipments *** *** *** *** ***

Total shipments 100.0 100.0 100.0 100.0 100.0

 1 Undefined.

Source: Compiled from data submitted in response to Commission questionnaires.

Data on U.S. producers’ shipments of finished drill pipe are presented in table III-4b.12 Between

2007 and 2009 the quantity of U.S. shipments declined by 51.4 percent (43.0 percent, by value), while

exports declined by 21.1 percent (6.9 percent, by value). U.S. shipments were stable in January-June

2010 compared to January-June 2009, in contrast to a modest recovery in export shipments.13 After an

increase between 2007 and 2008 (largely due to increases by ***), export shipments consistently

accounted for slightly more than one-third of U.S. producers’ total shipments.14

 12 *** reported transfers to a related company, which accounted for less than *** percent of its total shipments

during 2007-09. *** reported internal consumption (less than *** percent of total shipments of finished drill pipe)

for use in ***. *** did not respond to Staff’s request to confirm it shipments, so its shipments (representing less

than 0.01 percent of total U.S. producer’s shipments) were allocated to U.S. commercial shipments.

 13 U.S. shipments of finished drill pipe exhibited a less pronounced decline than U.S. shipments of finished drill

collars. Although multiple factors could contribute to this difference, one factor mentioned by several sources has

been the need for 4" drill pipe (a size for which there are reportedly not substantial inventories on the ground) in the

still-vibrant U.S. shale plays. Moreover, these shale plays, which usually involve horizontal drilling, do not

generally use drill collars. Staff telephone interview with ***, September 10, 2010; Staff interview and plant tour at

***; Staff interview and plant tour at ***; Hearing transcript, p. 219 (Garvey).

 14 *** reported exports greater than 25 percent of total shipments in every period for which data were collected

(except ***). Of those firms *** reported the greatest share of exports to total shipments, ranging from *** percent

in 2007 to *** percent in January-June 2010. *** accounted for the majority of reported higher export shipments in

January-June 2010 compared to January-June 2009, while *** reported a slight decline.

III-8
Table III-4b

Finished drill pipe: U.S. producers’ shipments, by types, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Quantity (short tons)

U.S. shipments 159,622 124,746 78,153 39,333 39,435

Export shipments 54,981 75,733 43,367 21,153 23,262

Total shipments 214,603 200,479 121,520 60,486 62,696

Value (1,000 dollars)

U.S. shipments 828,856 694,830 488,681 247,686 195,968

Export shipments 331,407 484,753 308,624 151,240 133,706

Total shipments 1,160,263 1,179,583 797,305 398,926 329,675

Unit value (per short ton)

U.S. shipments $5,193 $5,570 $6,253 $6,297 $4,969

Export shipments 6,028 6,401 7,116 7,150 5,748

Total shipments 5,407 5,884 6,561 6,595 5,258

Share of quantity (percent)

U.S. shipments 74.4 62.2 64.3 65.0 62.9

Export shipments 25.6 37.8 35.7 35.0 37.1

Total shipments 100.0 100.0 100.0 100.0 100.0

Note.–Because of rounding, figures may not add to the totals shown.

Note.–***. 

Source: Compiled from data submitted in response to Commission questionnaires.

Data on U.S. producers’ shipments of unfinished drill collars are presented in table III-4c. The

primary U.S. producer of unfinished drill collars (by capacity), Timken, reported *** decline in its

shipments during 2007 and 2009, and lower shipments in January-June 2010 compared with January-June

2009.15 Timken reported in its questionnaire that its unfinished drill collar (and unfinished drill pipe)

order books are currently ***.

 15 ***.

III-9
Table III-4c

Unfinished drill collars: U.S. producers’ shipments, by types, 2007-09, January-June 2009, and

January-June 2010

* * * * * * *

Data on U.S. producers’ shipments of finished drill collars are presented in table III-4d. U.S.

shipments declined in every year during 2007-09 and were lower in January-June 2010 compared with

January-June 2010, while export shipments increased during 2007-09 and, despite a decline in 2010,

accounted for more than one-half of total shipments. 

Table III-4d

Finished drill collars: U.S. producers’ shipments, by types, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Quantity (short tons)

U.S. shipments 37,987 23,581 13,210 5,366 3,187

Export shipments 8,922 14,284 12,667 6,143 3,417

Total shipments 46,909 37,865 25,877 11,509 6,604

Value (1,000 dollars)

U.S. shipments 123,205 94,835 39,733 21,136 8,778

Export shipments 30,528 55,622 38,388 21,484 10,123

Total shipments 153,733 150,457 78,121 42,620 18,901

Unit value (per short ton)

U.S. shipments 3,243 4,022 3,008 3,939 2,754

Export shipments 3,422 3,894 3,031 3,497 2,963

Total shipments 3,277 3,974 3,019 3,703 2,862

Share of quantity (percent)

U.S. shipments 81.0 62.3 51.0 46.6 48.3

Export shipments 19.0 37.7 49.0 53.4 51.7

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.

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 fourth quarter of 

III-10
2009.16 *** reported *** increases for unfinished drill pipe in June 30, 2010, compared with the previous

quarter.17 ***, which represents *** of the reported finished drill pipe orders, reported a *** percent

increase between March 31 and June 30, 2010, followed by a *** percent decline in September 30.18 ***,

which reported *** finished drill pipe orders, reported a *** percent increase between March 31 and June

30, 2010, and then *** September 30.

Table III-5

Drill pipe and drill collars: U.S. producers’ order books, by types, March 2007-September 2010

Item

Unfinished

drill pipe

Finished drill

pipe

Unfinished

drill collars

Finished drill

collars Total

Quantity (short tons)

2007

March 31 *** *** *** *** 62,959

June 30 *** *** *** *** 49,408

September 30 *** *** *** *** 31,230

December 31 *** *** *** *** 35,787

2008

March 31 *** *** *** *** 41,888

June 30 *** *** *** *** 89,971

September 30 *** *** *** *** 76,538

December 31 *** *** *** *** 30,740

2009

March 31 *** *** *** *** 12,929

June 30 *** *** *** *** 11,675

September 30 *** *** *** *** 13,380

December 31 *** *** *** *** 7,935

2010

March 31 *** *** *** *** 25,371

June 30 *** *** *** *** 42,451

September 30 *** *** *** *** 37,999

1

 Not reported.

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. PRODUCERS’ INVENTORIES

Table III-6a presents end-of-period inventories for unfinished drill pipe. Inventories decreased

from 2007 to 2009, primarily due to lower holdings by ***. *** reported higher end-of-period

inventories in January-June 2010 compared to January-June 2009. *** reported no end-of-period

inventories during the period examined.

 16 *** were unable to provide order book information.

 17 ***.

 18 ***.

III-11
Table III-6a

Unfinished drill pipe: U.S. producers’ end-of-period inventories, 2007-09, January-June 2009, and

January-June 2010

* * * * * * *

Table III-6b presents end-of-period inventories for finished drill pipe.19 U.S. inventories nearly 

doubled between 2007 and 2009, as all U.S. producers other than *** reported growing stocks of finished

drill pipe.20 U.S. inventories rose from approximately 3 weeks to more than 10 weeks of supply on hand

between 2007 and 2009. Inventory holdings began to fall in 2010, but remained at high levels relative to

production and shipments.21

Table III-6b

Finished drill pipe: U.S. producers’ end-of-period inventories, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Inventories (short tons)

1 12,458 21,051 23,802 31,911 19,501

Ratio to production (percent) 5.8 10.4 21.2 24.2 17.1

Ratio to U.S. shipments (percent) 7.8 16.9 30.5 40.6 24.7

Ratio to total shipments (percent) 5.8 10.5 19.6 26.4 15.6

1

 The inventories presented may be overstated as the inventories reported by *** may include product ***. *** reported

that it had incorrectly reported inventories of work-in-progress and product owned by customers but held by ***. These

inventories for *** are no longer included in the data. Petitioners' posthearing brief, p. A-14.

Note.–Partial-year ratios are based on annualized production and shipments.

Source: Compiled from data submitted in response to Commission questionnaires.

Table III-6c presents end-of-period inventories for unfinished drill collars. Timken’s end-ofperiod inventories decreased *** in *** and again in ***, and were lower in ***.22 Timken explained

that ***. 

 19 *** stated that it generally produces drill pipe for inventory. In addition, *** reported that the drill pipe ***

was generally produced to order and transferred to the customer in the same month. *** noted that it purchased some

inventory in 2008 for spot sales without firm orders which was held due to lack of orders for these products. Email

from ***, January 10, 2011. *** stated that its inventories reflect drill pipe occasionally produced for inventories as

well as customer orders which were complete but for which title had not been transferred. Email from ***, January

10, 2011. *** reported that inventories consisted of partial order production, and primarily, orders for which

customers did not pay. 

 20 U.S. inventories increased between 2007 and 2008 largely due to ***.

 21 Petitioners attributed this decline to the effects of the preliminary duties. Respondents argue that it is due to

increased demand. Hearing transcript, p. 35 (Fields) and p. 24 (Chen).

 22 ***, reported that ***.

III-12
Table III-6c

Unfinished drill collars: U.S. producers’ end-of-period inventories, 2007-09, January-June 2009,

and January-June 2010

* * * * * * *

Table III-6d presents end-of-period inventories for finished drill collars. Inventories increased

after 2007 and remained elevated for the remainder of the period for which data were collected.23 24 All

finished drill collar producers’ inventories increased throughout the period examined, with *** reporting

more end-of-period inventories than the other producers combined.25 Annualized data from the first half

of 2010 indicate that U.S. producers were holding more than one full year’s shipments in inventory.

Table III-6d

Finished drill collars: U.S. producers’ end-of-period inventories, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Inventories (short tons)

1 13,765 15,563 16,238 16,052 15,829

Ratio to production (percent) 26.5 34.4 63.0 65.3 175.7

Ratio to U.S. shipments (percent) 36.2 66.0 122.9 149.6 248.3

Ratio to total shipments (percent) 29.3 41.1 62.8 69.7 119.8

1

 *** reported that it had incorrectly reported inventories of work-in-progress and product owned by customers but

held by ***. These inventories for *** are no longer included in the data. Petitioners' posthearing brief, p. A-14

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 unfinished drill pipe are presented in table III-7a. ***

U.S. producers of drill pipe reported imports or purchases from China or other countries. *** reported

importing unfinished drill pipe from China, while *** reported purchasing imports from China. Imports

of unfinished drill pipe from all other countries were reported by ***, while *** reported purchasing

imports from all other countries.

 23 *** U.S. producers of finished drill collars reported increased ratios of inventories to production, particularly in

January-June 2010 compared with January-June 2009.

 24 *** reported that inventories consisted of partial order production, and primarily, orders for which customers

did not pay. Petitioners’ posthearing brief, p. A-14.

 25 The only exception occurred in January-June 2010 when ***’s end-of-period inventories decreased relative to

January-June 2009 levels.

III-13
Table III-7a

Unfinished drill pipe: U.S. producers’ imports and purchases, 2007-09, January-June 2009, and

January-June 2010

* * * * * * *

U.S. producers’ imports and purchases of finished drill pipe are presented in table III-7b. ***

U.S. producers of drill pipe reported imports or purchases from China or other countries. *** reported

imports from China and all other countries, while *** reported imports from all other countries.26

Table III-7b

Finished drill pipe: U.S. producers’ imports and purchases, 2007-09, January-June 2009, and

January-June 2010

* * * * * * *

There were no reported imports or purchases of imports of unfinished drill collars by U.S.

producers, thus table III-7c is not shown.

U.S. producers’ imports and purchases of finished drill collars are presented in table III-7d. ***

reported imports of finished drill collars from countries other than China, largely from related companies.

Table III-7d

Finished drill collars: U.S. producers’ imports and purchases, 2007-09, January-June 2009, and

January-June 2010

* * * * * * *

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.27 

The number of reported production and related workers (“PRWs”) for each of the four products rose in

2008, then fell in 2009, and, with the exception of unfinished drill pipe, was lower in January-June 2010

compared to January-June 2009. TMK reported that it laid off workers beginning in late 2009 and

continuing throughout 2010 in both its melt shop and its tube pipe mill.28 TMK accounted for a *** part

of the reduced number of PRWs reported for unfinished drill pipe (table III-8a) because it reported ***

PRWs in 2009, a reduction of *** PRWs compared to 2007. TSC reported at the staff conference that it

has had significant layoffs at its plant.29 TSC reported reducing its number of PRWs from 2007 to 2009

by *** PRWs, and by *** PRWs in January-June 2010 compared to January-June 2009, and is one of the

driving forces (along with ***) behind the reduced number of PRWs in finished drill pipe (table III-8b). 

VAM reported at the staff conference that it had laid off one-third of its employees and was struggling to 

 26 ***.

 27 *** was unable to provide useable employment data.

 28 Conference transcript, p. 29 (Ramsey).

 29 Conference transcript, p. 20 (Brand).

III-14
give its employees a 32 hour work week.30 In addition, every white collar employee at VAM Drilling

USA reportedly had three weeks of unpaid furlough in 2010.31 ***, which reported producing other

products on machinery used in the production of finished drill collars, reported a decline of *** PRWs

during 2007-09, largely in 2009. In addition, *** also reported a sharp decline in hourly wages and unit

labor costs.

 Productivity for each of the four products declined between 2007 and 2009, and remained at

reduced levels in January-June 2010, with the exception of unfinished drill pipe which rebounded to its

highest level.

Table III-8a

Unfinished drill pipe: U.S. producers’ employment-related data, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Production and related workers (PRWs) 143 170 24 34 44

Hours worked by PRWs (1,000 hours) 298 373 43 33 54

Hours worked per PRW 2,084 2,194 1,792 971 1,227

Wages paid to PRWs (1,000 dollars) 8,968 10,634 1,491 1,135 1,725

Hourly wages $30.09 $28.51 $34.67 $34.39 $31.94

Productivity (short tons produced per 1,000

hours) 266.8 229.7 153.4 120.2 298.9

Unit labor costs (per short ton) $112.81 $124.11 $226.08 $286.04 $106.86

Source: Compiled from data submitted in response to Commission questionnaires.

Table III-8b

Finished drill pipe: U.S. producers’ employment-related data, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Production and related workers (PRWs) 1,454 1,567 1,070 1,170 975

Hours worked by PRWs (1,000 hours) 3,830 3,988 2,752 1,548 1,194

Hours worked per PRW 2,633 2,544 2,570 1,323 1,225

Wages paid to PRWs (1,000 dollars) 61,884 69,034 46,366 25,256 20,844

Hourly wages $16.16 $17.31 $16.85 $16.32 $17.45

Productivity (short tons produced per 1,000

hours) 55.7 50.2 40.7 42.4 47.6

Unit labor costs (per short ton) $290.01 $344.60 $414.47 $385.00 $367.03

Source: Compiled from data submitted in response to Commission questionnaires.

 30 Conference transcript, p. 17 (Fields).

 31 Conference transcript, p. 18 (Fields).

III-15
Table III-8c

Unfinished drill collars: U.S. producers’ employment-related data, 2007-09, January-June 2009,

and January-June 2010

* * * * * * *

Table III-8d

Finished drill collars: U.S. producers’ employment-related data, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Production and related workers (PRWs) 196 201 133 153 105

Hours worked by PRWs (1,000 hours) 499 532 346 191 136

Hours worked per PRW (1,000 hours) 2,546 2,647 2,602 1,248 1,295

Wages paid to PRWs (1,000 dollars) 11,393 12,589 6,407 3,572 2,623

Hourly wages $22.83 $23.66 $18.52 $18.70 $19.29

Productivity (short tons produced per 1,000

hours) 104.1 85.0 74.5 64.3 33.1

Unit labor costs (per short ton) $219.39 $278.38 $248.72 $290.81 $582.24

Source: Compiled from data submitted in response to Commission questionnaires.

III-16
PART IV: U.S. IMPORTS, 

APPARENT U.S. CONSUMPTION, AND MARKET SHARES

U.S. IMPORTERS

The Commission issued questionnaires to 107 firms identified as possible 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; in addition, *** reported imports of drill collars. Staff

verified the U.S. importer questionnaire response of Command on December 9-10, 2010. Changes

pursuant to verification are reflected in the relevant sections of the Staff Report. Staff compiled data from

useable questionnaire responses submitted by 33 companies believed to account for over 90 percent of

U.S. imports of drill pipe and drill collars from China for each period for which data were collected.2

As in the preliminary phase of these investigations, Staff carefully evaluated the use of official

import statistics. However, data concerns were too extensive to justify complete reliance on these data.3

Accordingly, staff re-surveyed all questionnaire recipients from the preliminary phase as well as all

newly-identified firms that might have imported drill pipe or drill collars. Staff’s coverage estimate is

based on multiple reviews of relevant Customs data at the company level.4

 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 (landed duty value paid) or which may have imported more than one percent of total imports under 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 2007. In addition,

questionnaires were sent to firms that, based on a review of PIERS and Import Genius data, were reported (as

Consignee) to have collectively imported at least 90 percent of total imports during 2007-09.

 2

 Forty-three firms reported that they did not import drill pipe or drill collars from any source at any time since

January 1, 2007.

 3

 Specifically: {1} there is no dedicated statistical breakout for drill collars; {2} tool-joined drill pipe is routinely

entered under statistical reporting numbers intended for unfinished drill pipe; {3} quantity data for finished drill pipe

are compiled by piece, not by weight; {4} value data for tool-joined drill pipe from Mexico are ***; and {5}

quantity data for HTS statistical reporting number 7304.23.6030 appear to have a substantial error in January 2009. 

However, the issue that concerned Staff most was the substantial level of mis-reporting: more than $60 million

worth of imports of casing and tubing from China, now subject to antidumping and countervailing duty orders in the

United States, have been reported to have entered the United States in 2008 and 2009 under statistical reporting

numbers that are clearly designated for drill pipe. In addition, in the final phase of the investigations, U.S. importer

*** reported the opposite error, entering *** of imports of drill pipe from China in 2010 under a non-drill pipe HTS

statistical reporting number. *** stated that its customs broker had changed the HTS statistical reporting number to

classify the imports as parts (of offshore oil and gas rigs). Letter from ***, January, 18, 2011.

 4

 Staff’s coverage estimate began with official import statistics by value (since quantity is not collected using a

uniform standard). Staff subtracted from this figure imports from China of casing, tubing, and tubing spools, tubing

and casing heads and valve bodies recorded in Customs drill pipe data for the following companies: ***. No data

were excluded simply on the basis of a “No” questionnaire response; all exclusions were based on a combination of

documentation or follow-up telephone interviews. Then, Staff subtracted the value of ***. Next, Staff added the

value of reported imports of drill pipe that were entered under incorrect HTS statistical reporting numbers. Then,

Staff evaluated these data against questionnaire value data for unfinished and finished drill pipe from China, and

calculated a coverage figure for drill pipe from China.

After calculating the questionnaire coverage for drill pipe from China, Staff estimated that the value of

imports of drill collars from China was 10 percent of the target figure for drill pipe, based on estimates by market

participants that drill collars account for 5-10 percent of the combined length of drill pipe and drill collars on the drill

string. Staff believes this to be a conservative estimate, but official import statistics are not available for drill collars.

(continued...)

IV-1
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 by quantity, in 2009.5 6

Table IV-1

Drill pipe and drill collars: U.S. importers, sources of imports, U.S. headquarters, and shares of

imports in 2009

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 *** *** *** 

Fortis Alliance (“Fortis”) Houston, TX *** *** *** *** 

NOV Grant Prideco Houston, TX *** *** *** ***

Petromaterials Houston, TX *** *** *** ***

Soconord Corporation Houston, TX *** *** *** *** 

TPCO Enterprise2

 ("TPCO") Houston, TX *** *** *** *** 

VAM Houston, TX *** *** *** ***

Total 100.0 100.0 100.0

Table continued on next page.

 4 (...continued)

Finally, Staff calculated coverage based on the combined importer questionnaire responses for drill pipe and drill

collars from China relative to the target level of drill pipe imports plus 10 percent. The result of this estimate is over

90 percent coverage.

 5

 ***, which reported imports under the HTS statistical numbers for drill pipe, indicated that its imports consisted

of pipe with outside diameters of 30-60 inches for use in boring mining access shafts and sinking bridge piles. 

Because the company did not provide quantity data for these entries, its imports are not included in the relevant data

sets, but have been taken into consideration for purposes of coverage.

***, a firm listed as an importer of record for subject merchandise during 2007-09, was reported to be defunct as

of early 2010 and the quantities and values of its imports were unavailable. The products were used in underground

construction applications, were generally 10 or 15 feet in length, 3 inches or less in outside diameter, and priced

between $*** per joint. Staff telephone interview with ***.

*** reported that product imported under HTS statistical reporting number 7304.23.6030 in January-June 2010

were hexagon shaped tubing used to enable carbide roof bits to drill holes deep into the roof of a coal mine. Email

from ***, January 10, 2010. (The firm submitted an amendment request to move this tubing to 7304.90.3000).

 6

 *** provided a response to the importer questionnaire (including unfinished drill pipe and unfinished drill

collars from China), but Staff was unable to reconcile the reported data, so it is not included in the data presented.

*** did not provide a response in the final phase, so its preliminary phase response to the Commission’s

questionnaire was used and updated with relevant import data from official Customs data. 

IV-2
Table IV-1 – Continued

Drill pipe and drill collars: U.S. importers, sources of imports, U.S. headquarters, and shares of

imports in 2009

Firm Headquarters Source of

imports

Share of imports (percent)

China Other

Total

Finished drill pipe

Aztec Well Aztec, NM *** *** *** ***

Baosteel America, Inc. Montvale, NJ *** *** *** ***

Champions Pipe & Supply, Inc.3 Houston, TX *** *** *** ***

Command Energy Services

International Ltd. (“Command”)4 Barbados, WI *** *** *** ***

Destiny Resources5 Houston, TX *** *** *** ***

Downhole Pipe & Equipment, L.P.

(“Downhole”) Sugar Land, TX *** *** *** ***

Drill Pipe Industries Texarkana, TX *** *** *** ***

Ensign United States Drilling6 Denver, CO *** *** *** ***

Hilong USA LLC Houston, TX *** *** *** ***

Hunt Oil Tool Company 7 Lafayette, LA *** *** *** ***

Longbright (American), Inc. Alhambra, CA *** *** *** ***

NOV Grant Prideco Houston, TX *** *** *** ***

NOV ReedHycalog Houston, TX *** *** *** ***

NOV Rig Solutions Houston, TX *** *** *** ***

Petromaterials Houston, TX *** *** *** ***

Precision Casting and Design Midland, TX *** *** *** ***

Reco

Lanzenkirchen,

Austria *** *** *** ***

Savanna Energy Services Calgary, AB *** *** *** ***

Sentry Pumping Units Int’l., Inc.8 Wichita, KS *** *** *** ***

Soconord Corporation Houston, TX *** *** *** ***

Thyssen Krupp Materials North

American Inc. Southfield, MI *** *** *** ***

Table continued on next page.

IV-3
Table IV-1 – Continued

Drill pipe and drill collars: U.S. importers, sources of imports, U.S. headquarters, and shares of

imports in 2009

Firm Headquarters Source of

imports

Share of imports (percent)

China Other Total

Tiger Trading, Inc. Conroe, TX *** *** *** ***

TPCO Enterprise2 Houston, TX *** *** *** *** 

VAM Houston, TX *** *** *** ***

Viking Drilling, LLC Odessa, TX *** *** *** ***

Weatherford International, Inc. Houston, TX *** *** *** ***

Total 100.0 100.0 100.0

Unfinished drill collars

(

9

) (9) (9) (9) (9) (9)

Finished drill collars

Champions Pipe & Supply, Inc.3 Houston, TX *** *** *** ***

Command Energy Services

International Ltd. (“Command”)4 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 Company7 Lafayette, LA *** *** *** ***

John Lawrie Inc.10 Houston, TX *** *** *** ***

Longbright (American), Inc. Alhambra, CA *** *** *** ***

Precision Casting and Design Midland, TX *** *** *** ***

Reco

Lanzenkirchen,

Austria *** *** *** ***

Savanna Energy Services Calgary, AB *** *** *** ***

Schoeller-Bleckmann America, Inc. Houston, TX *** *** *** ***

Sentry Pumping Units Int’l., Inc.8 Wichita, KS *** *** *** ***

Thyssen Krupp Materials North

American Inc. Southfield, MI *** *** *** ***

Tiger Trading, Inc. Conroe, TX *** *** *** ***

Table continued on next page.

IV-4
Table IV-1 – Continued

Drill pipe and drill collars: U.S. importers, sources of imports, U.S. headquarters, and shares of

imports in 2009

Firm Headquarters Source of

imports

Share of imports (percent)

China Other Total

VAM Houston, TX *** *** *** ***

Viking Drilling, LLC Odessa, TX *** *** *** ***

Weatherford International, Inc. Houston, TX *** *** *** ***

Total 100.0 100.0 100.0

 1

 ***.

 2

 ***.

 3

 ***.

 4

 ***. 

 5

 ***. 

 6

 ***.

 7

 ***.

 8

 ***.

 9

 None of the larger U.S. manufacturers of finished drill collars reported any direct imports or purchases of imports

of unfinished drill collars, and as noted later in Part IV, there were only limited quantities of U.S. imports of unfinished

drill collars from China reported by *** and imports from all other sources reported by ***.

 10 ***.

 11 Less than 0.05 percent.

Note.–Some importers did not report imports in 2009 but did so in other periods, and therefore have been listed.

Note.–Because of rounding, figures may not add to the totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

U.S. IMPORTS7

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. *** reported

imports of unfinished drill pipe from China. Imports by *** peaked in 2008, then ceased afterwards. ***

reported a *** percent decline in imports of unfinished drill pipe from China during 2007-09 and ***

percent lower imports in January-June 2010 compared with January-June 2009. Similarly, *** reported a

*** decline in imports from nonsubject sources between 2007 and 2009.

 7 ***’s most recently submitted questionnaire, revised on December 23, 2010, indicated that the company was

unable to segregate imports of drill pipe and drill collars from China in 2007 valued at more than $***. *** stated

that it believes that well over *** percent are drill pipe and that it imported drill collars during that period largely

from nonsubject sources. In addition, U.S. importer *** submitted a revision on December 7, 2010, to its 2007-08

import data to remove ***, which were previously reflected in its import and U.S. shipment data. Other changes

since the prehearing report include import data reported by ***.

IV-5
Table IV-2a

Unfinished drill pipe: U.S. imports, by sources, 2007-09, January-June 2009, and January-June

2010

* * * * * * *

Table IV-2b presents data for U.S. imports of finished drill pipe from China and all other sources. 

 The leading sources of nonsubject imports are ***.8

 Of the firms that were reported imports from China

in 2007, only *** reported increased imports in 2009.9

 The largest importer of subject finished drill pipe

in 2009 (and January-June 2010), *** reported a *** of imports between 2007 and 2008, followed by a

decline in 2009, though ending *** percent higher than in 2007.

Table IV-2b

Finished drill pipe: U.S. imports, by sources, 2007-09, January-June 2009, and January-June 2010

* * * * * * *

There are believed to be relatively limited quantities of U.S. imports of unfinished drill collars

throughout the period for which data were collected.10 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.11 The leading nonsubject sources of finished drill pipe collars are Austria and France.

 8 Imports reported as originating from Mexico under statistical reporting number 8431.43.8040 included in the

compilation of finished drill pipe imports were ***. The value presented in the report for these imports are based on

***. According to a company representative, ***. Staff telephone interview with ***, January 27, 2010, and

November 16, 2010, and email from ***, January 10, 2011.

 9

 While many importers were active in 2007, *** first reported imports of finished drill pipe from China in

periods after 2007. *** initially reported imports based on a contract date which was prior to the import entry date. 

Import data for *** have been adjusted to reflect import entry date.

 10 *** reported importing unfinished “standard” drill collars from China *** in 2007 and *** in 2008. ***,

acting as a middleman in a special one-time situation, imported unfinished “standard” drill collars from *** in 2007

***. Similarly, *** reported importing *** unfinished drill collars from China *** in 2009 made from

non-magnetic steel. 

Among U.S. producers, ***. *** reported imports of unfinished drill collars from China ***. Staff interview

with ***. *** reported importing ***. 

In addition, *** reported importing unfinished drill collars from China *** in 2008 which were made from

non-magnetic Monel (a nickel alloy) for use in the firm's drilling operations. 

 11 Data do not include *** reported imports of finished drill collars from *** because the company was unable to

provide consistent quantity and value data. Staff notes, however, that the partial data provided by this company

suggest that it might account for a sizeable share of the value of finished drill collar sales from nonsubject countries

(***), as it specializes in high value *** drill collars. Email from ***, February 5, 2010. 

*** reported importing from China sensor housings resembling drill collars made from high nickel alloy steel

for use in MWD/LWD ***. In addition, *** reported imports in 2007-09 of non-magnetic non-steel finished drill

collars which are not included in the data.

IV-6
Table IV-2d

Finished drill collars: U.S. imports, by sources, 2007-09, January-June 2009, and January-June

2010

* * * * * * *

CRITICAL CIRCUMSTANCES

On January 11, 2011 Commerce issued its final determination of sales at LTFV with respect to

imports from China that critical circumstances exist for imports from China of drill pipe and drill collars

for the PRC-wide entity, but does not exist for the DP–Master Group or the separate rate applicants in its

antidumping duty investigations. However, in its final determination of countervailable subsidies for 

producers and exporters of drill pipe and drill collars from China, Commerce found that critical

circumstances exist for subject imports from China for the DP–Master Group and “all other” exporters. 

In its final determination of sales at LTFV, Commerce noted that it collected four months of additional

shipment data, and that based on these additional data it no longer found an increase in imports greater

than 15 percent compared with the base period for the DP-Master Group.12 Publication note: These

descriptions reflect only information available prior to the closing of the Commission’s record in these

investigations.

 In these investigations, if both Commerce and the Commission make affirmative final critical

circumstances determinations, certain subject imports may be subject to antidumping duties retroactive by

90 days from March 13, 2010, the effective date of Commerce’s preliminary affirmative CVD

determination, and from August 18, 2010, the effective date of Commerce’s preliminary affirmative

LTFV determination. Imports of subject merchandise (drill pipe and drill collars) where *** short tons

($***) for January-June 2010 compared with *** short tons ($***) in July-December 2009.13 

NEGLIGIBILITY

The statute requires that an investigation be terminated without an injury determination if imports

of the subject merchandise are found to be negligible.14 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

 12 76 FR 1966 and 76 FR 1971, January 11, 2011, presented in app. A. When petitioners file timely allegations of

critical circumstances, Commerce examines whether there is a reasonable basis to believe or suspect that (1) either

there is a history of dumping and material injury by reason of dumped imports in the United States or elsewhere of

the subject merchandise, or the person by whom, or for whose account, the merchandise was imported knew or

should have known that the exporter was selling the subject merchandise at LTFV and that there was likely to be

material injury by reason of such sales; and (2) there have been massive imports of the subject merchandise over a

relatively short period.

 13 Imports of subject merchandise, by type, are presented in the following tabulation. ***.

 14 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)).

IV-7
such countries are deemed not to be negligible.15 Imports from China accounted for one-third

(*** percent) of total quantity of imports of drill pipe and drill collars by quantity during the most recent

12-month period prior to the petition (January 2009-December 2009).16

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. Apparent U.S. consumption of finished drill pipe,

unfinished drill collars, and finished drill collars declined in 2008 and, to a greater extent in 2009, and 

was lower in January-June 2010 compared with January-June 2010, in both quantity and value terms. 

Apparent U.S. consumption unfinished drill pipe increased *** in 2008, then declined in 2009, and was

lower in January-June 2010 compared with January-June 2010 (though U.S. producers’ shipments

increased while imports declined).

Table IV-3a

Unfinished drill pipe: U.S. shipments of domestic product, U.S. imports, and apparent U.S.

consumption, 2007-09, January-June 2009, and January-June 2010

* * * * * * *

Table IV-3b

Finished drill pipe: U.S. shipments of domestic product, U.S. imports, and apparent U.S.

consumption, 2007-09, January-June 2009, and January-June 2010

* * * * * * *

Table IV-3c

Unfinished drill collars: U.S. shipments of domestic product, U.S. imports, and apparent U.S.

consumption, 2007-09, January-June 2009, and January-June 2010

* * * * * * *

Table IV-3d

Finished drill collars: U.S. shipments of domestic product, U.S. imports, and apparent U.S.

consumption, 2007-09, January-June 2009, and January-June 2010

* * * * * * *

 15 Section 771(24) of the Act (19 U.S.C. § 1677(24)).

 16 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 finished drill

collars from China accounted for *** percent of total imports of drill collars by quantity during the most recent 12-

month period. There are believed to be no U.S. imports of unfinished drill collars.

IV-8
U.S. MARKET SHARES

U.S. market share data are presented in tables IV-4a, IV-4b, IV-4c, and IV-4d. The share of U.S.

producers’ U.S. shipments of unfinished drill pipe increased *** in 2008 before falling in 2009, but was

higher in January-June 2010 compared with January-June 2009. The share of imports from China

increased in 2008 and to a greater extent in 2009, but was lower in January-June 2010 compared with 

January-June 2009. The share of U.S. producers’ U.S. shipments of both finished drill pipe and finished

drill collars declined in 2008 but increased in 2009 to above 2007 levels, and was higher in January-June

2010 compared with January-June 2009. The share of imports from China followed an opposite trend

increasing in 2008, falling in 2009 though above 2007 levels, and was lower in January-June 2010

compared with January-June 2009. 

Table IV-4a

Unfinished drill pipe: Apparent U.S. consumption and market shares, 2007-09, January-June 2009,

and January-June 2010

* * * * * * *

Table IV-4b

Finished drill pipe: Apparent U.S. consumption and market shares, 2007-09, January-June 2009,

and January-June 2010

* * * * * * *

Table IV-4c

Unfinished drill collars: Apparent U.S. consumption and market shares, 2007-09, January-June

2009, and January-June 2010

* * * * * * *

Table IV-4d

Finished drill collars: Apparent U.S. consumption and market shares, 2007-09, January-June 2009,

and January-June 2010

* * * * * * *

IV-9
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, 2007-

09, January-June 2009, and January-June 2010

* * * * * * *

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, 2007-09,

January-June 2009, and January-June 2010

* * * * * * *

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,

2007-09, January-June 2009, and January-June 2010

* * * * * * *

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, 2007-

09, January-June 2009, and January-June 2010

* * * * * * *

IV-10
PART V: PRICING AND RELATED INFORMATION

FACTORS AFFECTING PRICES

Raw Material Costs

The key raw materials for drill pipe and drill collar production include steel billets, bars, tube

bodies, and tool joints. Raw materials as a share of cost of goods sold for U.S. producers of finished drill

pipe increased slightly from 64.6 percent in 2007 to 68.6 percent in 2008, decreased to 67.1 percent in

2009, and then increased to 68.9 percent in the first half of 2010. Finished drill collars’ cost share of raw

materials was 60.9 percent in 2007, 65.1 percent in 2008, 60.6 percent in 2009, and 62.9 percent in the

first half of 2010. The cost share of raw materials is higher for unfinished drill pipe and drill collars than

for finished.1

 The price of scrap used to make billets and bars was relatively stable during 2007, doubled

over the first three quarters of 2008 before decreasing below early 2007 levels in the final quarter of 2008,

and then increased irregularly in 2009 and 2010 (figure V-1). Natural gas, electricity, and iron ore prices

rose between 2007 and 2008, with noticeable increases for each in 2008; in 2009 the prices of electricity

and iron ore were stable while gas prices fell sharply before stabilizing in 2010 (table V-1).

Figure V-1

Ferrous scrap prices: No. 1 heavy melt, Chicago and Pittsburgh average consumer prices,

monthly, January 2007-December 2010

Source: American Metal Market LLC.

 1 See Part VI of this report for further details.

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, 2007-10 (partial)

Item 2007 2008 2009 2010

U.S. natural gas industrial price1 $7.68 $9.67 $5.28 $5.42 

Electricity industrial price2 6.39¢ 6.83¢ 6.70¢ 6.85¢ 

Iron ore3 $59.64 $70.43 $70.00 NA

 1 Price to industrial users in dollars per thousand cubic feet. 2010 data are for January–October 2010.

 2

 Price to industrial users in cents per kilowatt-hour. 2010 data are for January–September 2010.

 3

 Price per metric ton. 2010 data were unavailable as of the closing of the record.

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, and

http://minerals.usgs.gov/minerals/pubs/commodity/iron_ore/mcs-2010-feore.pdf,

U.S. Inland Transportation Costs

U.S. producers and importers generally reported that U.S. inland transportation costs of drill pipe

and drill collars are up to 5 percent of the delivered price.2

 Three of 13 responding U.S. producers

reported that the majority of their sales were within 100 miles of their facility, 5 reported half or more of

their sales were between 101 and 1,000 miles from their facility, and 4 reported the majority of their sales

were beyond 1,000 miles from their facility.3

 Nine of 19 responding importers of product from China

reported that the majority of their sales were within 100 miles of their facilities, 6 reported selling the

majority between 101 and 1,000 miles, and 4 sold half or more over 1,000 miles.

PRICING PRACTICES

Pricing Methods

Twelve of 13 U.S. producers use transaction-by-transaction negotiations.4

 ***. Fourteen of 17

responding importers of products from China use transaction-by-transaction negotiations and three use

contracts. Eleven of 13 responding U.S. producers quote prices on an f.o.b. basis, while one quotes prices

on both an f.o.b. and on a delivered basis, and one reported selling mainly on a delivered basis. Eight of

16 responding importers quote prices of drill pipe and drill collars on an f.o.b. basis, 7 quote on a

delivered basis, and 1 quotes on an ex-warehouse basis.

 2 Two importers reported costs higher than 5 percent.

 3

 One firm sold at least 25 percent in each of the distance ranges.

 4

 One U.S. producer, ***, reported using price lists.

V-2
Sales Terms and Discounts

 The majority of producers and importers reporting selling drill pipe on a spot basis.5

 Similarly,

all U.S. producers of drill collars reported either spot or short-term contract sales and all six responding

importers reported selling drill collars only on a spot basis.6

U.S. producers’ short-term contracts range in length from 30 days to 12 months. Three of five

responding producers allow for price renegotiation during a contract; all reported that contracts fixed

prices while three reported fixed quantities; and two of 4 responding producers reported meet or release

provisions. Importers’ short-term contract length averaged 3 months while long-term contracts averaged

*** months. All importers reported that their contracts do not allow price renegotiation, fix both price

and quantity, and do not contain meet or release provisions. U.S. producers typically sell using noncancellation clauses; cancellations only occur if the purchaser is unable to sell.7

 Respondents report that

importers have non-cancellation clauses for special orders but are more lenient for API grade material.8

Seven of 13 responding U.S. producers offer no discounts; 3 offer quantity discounts or annual

total quantity discounts; and 3 reported other discounts.9

 Fifteen of 18 responding importers of product

from China reported no discounts; the remaining 3 reported quantity discounts or annual total quantity

discounts. Respondents report that smaller customers are quoted published prices which can be 25 to 50

percent higher than prices offered to large customers.10

Price Leaders

Twenty-five purchasers reported one or more firms to be price leaders.11 Most often cited were

U.S. producers, including NOV Grant Prideco (19 purchasers), Smith (14), and VAM (7). Chinese

producers DP Master (5) and Hilong (2) were also cited. Purchasers were asked if U.S., Chinese, or other

foreign produced drill pipe and drill collars were offered to them at the lowest prices since January 2007. 

Eleven of 34 responding purchasers reported that U.S. product was offered at the lowest price, 15

reported Chinese product was offered at the lowest price, and 8 gave other responses.12 Of the largest

 5 Specifically, seven of 12 U.S. producers 2009 drill pipe sales were solely spot sales, 3 sold *** on short-term

contracts and the remainder ***; 1 sold *** percent spot and *** percent short-term contracts; and 1 sold ***

percent long-term contracts, *** percent short-term contracts, and *** percent spot. *** of nine responding

importers sold all drill pipe from China in spot sales; *** sold only using short-term contracts; and *** reported

selling *** percent of drill pipe in spot sales and the remainder using long-term contracts. 

 6

 Specifically, three of seven U.S. producers of drill collars reported that *** of their sales are spot sales; one sold

*** drill collar using short-term contracts; one reported *** percent of its sales were on a short-term contract basis;

one reported selling *** percent using short-term contracts and *** percent using spot sales; and one firm sold ***

percent of its collar using spot sales and *** percent using short-term contracts. 

 7

 Hearing transcript, pp. 105-106, 203 (Brand, Fields, and Murphy).

 8

 Hearing transcript, pp. 286-288 (Garvey and Lesco).

 9

 These other discounts were those based on market conditions, dealer discounts, and lower prices for distributors. 

 10 Hearing transcript, p. 225 (Mostoway).

 11 The questionnaire defined price leaders as “(1) one or more firms that initiate a price change, either upward or

downward, that is followed by other firms, or (2) one or more firms that have a significant impact on prices. A price

leader does not necessarily have to be the lowest priced supplier.” Price leaders cited only once are not reported.

 12 One purchaser reported that Austria offered the lowest price for drill pipe, and the remaining purchasers

reported that there was no single country offering the lowest prices. Of the 15 purchasers that purchased Chinese

product, 9 reported that Chinese product was lowest priced, 1 reported U.S. was lowest price, 2 reported the market

determined price, 1 did not answer the question, and for 2, ***. Three purchasers imported, rather than purchased,

(continued...)

V-3
eight purchasers, two reported U.S. prices were lowest, one reported that U.S. and European prices were

lowest, two reported that Chinese prices were lowest, one, ***, reported that prices were the same

regardless of the country of origin, one, ***, reported that lowest prices “varied with demand, with high

demand Chinese price was lower,” and one, ***.13

Add-Ons

Drill pipe is sold with a range of different add-ons.14 The most important are interior plastic

coating or lining and hard banding. By the time drill pipe is used in downhole applications, it typically

has both plastic coating and hard banding. Add-ons may be either applied by the manufacturer or by a

sub-contractor for the manufacturer, or the purchaser may contract to have them applied after purchase. 

These add-ons are estimated to increase a manufacturer’s selling price by about $*** per foot for

plastic coating and $*** per foot for hard banding.15 Make-or-break treatment,16 which is designed to

make connecting drill pipe sections in the field easier, can increase the selling price by about $*** per

foot; increased tong space on the connections may add from $*** per foot; differences in product

inspection may add *** per foot; and differences in the tool joints add an estimated *** percent to the

weight of the finished drill pipe with every quarter inch decrease in the interior diameter of the tool

joint.17 Firms report that these add-ons frequently explain quarter-to-quarter variations in their prices as

well as differences among different firms’ prices in any quarter.18 Producers and importers report that

they typically do not track these add-ons and would have to go back to the original invoices to provide

detailed information.19 Respondents report that add-ons may be completed either in China or in the

United States. Importers ordering product for inventory, however, are less likely have the add-ons

completed in China so that they can provide individual purchasers with the add-ons they prefer.20 The

following tabulation reports the estimated share of product sold by firms with the listed add-ons.21

*******

 12 (...continued)

product from China including, ***. 

 13 *** of the eight largest purchasers purchased both domestic and Chinese products. ***.

 14 Heavy-weight drill pipe, unfinished drill pipe, and finished and unfinished drill collars are not typically sold

with these add-ons. 

 15 Staff telephone interview with ***; email from counsel for petitioners, November 17, 2010; and email from

counsel for respondents, November 17, 2010. 

 16 Finished drill collars may have make-or-break treatment. 

 17 Staff telephone interview with ***. 

 18 The abrupt decline in demand in mid-2008 also contributed to price variability. Some purchasers, faced with

lengthening delivery dates in the first half of 2008, contracted for future deliveries at relatively high prices. The

actual delivery, however, occurred in the second half of 2008 and in the first quarter of 2009, when the spot price

had fallen. At the same time, demand for drill pipe and drill collars fell to such an extent that these earlier contracts

in some cases represented a large share of all sales in these later quarters. While few firms reported quantity

discounts, prices set on a transaction by transaction basis may vary with the size of purchase/purchaser without any

explicit quantity discounts. Importer ***.

 19 Staff telephone interview with ***.

 20 Hearing transcript, p. 307 (Lesco).

 21 Staff telephone interview with ***; email from counsel for petitioners, November 17, 2010; and email from

counsel for respondents, November 17, 2010.

V-4
Price Lags

Non-cancellation clauses in purchase contracts require the purchase of ordered product at the

agreed-upon price. Without such clauses, either the price or the quantity (or both) of drill pipe and drill

collars purchased could be expected to react relatively quickly to changes in demand. However, with

non-cancellation clauses, purchasers are required to continue purchasing orders placed when prices

reflected higher or lower demand. In addition, in a sharp downturn, purchasers would generally have

fewer opportunities to offset higher-priced purchases with orders reflecting the lower spot prices.

Petitioners report that U.S. producers do not produce for inventories but produce to order using

non-cancellation clauses which are enforced unless the purchaser is actually unable to pay.22 Respondents

report that at the time of the 2008 market disruption, U.S. producers NOV Grant Prideco and VAM had at

least a 10-month order backlogs with non-cancellation clauses.23 In addition, respondents report that

during periods of high demand, U.S. producers required purchasers to agree to price escalators for raw

material and energy costs.24 Respondents report that importers also use non-cancellation clauses for

some, but not for all, orders.25 

In 2008, purchasers had contracts to buy U.S. and Chinese products into the future subject to noncancellation clauses. This initially limited the decline in U.S. and Chinese sales and prices, after the

economic downturn, while these contracts were in force.

PRICE DATA

The Commission requested U.S. producers and importers to provide quarterly data for the total

quantity26 and f.o.b. value of selected finished and unfinished products shipped to unrelated U.S.

customers during January 2007-June 2010.27 The products for which pricing data were requested are as

follows:28

Product 1.—Drill pipe, finished, 5" O.D., 19.5 lbs./ft., grade G-105 with tool joints attached. 

(For this product a common tool joint would be API NC 50 with 6 5/8 in. O.D., 3 1⁄4

in. ID.)

 22 Hearing transcript, pp. 104-106 (Fields and Brand).

 23 Hearing transcript, p. 203 (Leibowitz).

 24 Hearing transcript, p. 203 (Murphy). ***. Staff correspondence with *** and staff interview with ***. 

 25 Hearing transcript, pp. 286-287 (Garvey and Lesco).

 26 Firms were requested to provide both quantity in feet and in short tons. Feet are presented rather than short

tons as these data appear to be more accurately provided, and two firms provided feet data only. 

 27 Product definitions included a common type of tool joint or connector attached to finished drill pipe or finished

drill collar. Firms were requested to report if the tool joints or connectors attached to drill pipe or drill collar differed

from that in the definition and to report what type of tool joint or connection was attached. Responses on tool joint

or connection were limited.

 28 Pricing items 1, 2, 5, and 6 were drawn from the petition, p. 12. Price item 3 was provided by petitioners

following the preliminary phase of these investigations (petitioners’ response to the questionnaire, p. 30). Price item

4 was identified with ***, staff telephone interview, September 10 and 15, 2010. Also see Drill Pipe and Drill

Collars from China, Investigation Nos. 701-TA474 and 731-TA-1176 (Preliminary), USITC Publication 4127,

March 2010, p. 30, n. 227. No pricing data were requested for unfinished drill collars or premium drill pipe since

these imports were extremely limited. 

V-5
Product 2.—Drill pipe, finished, 4 1⁄2" O.D., 16.6 lbs./ft., grade G-105 with tool joints

attached. (For this product a common tool joint would be API NC 46 with 6 1/4 in.

O.D., 3 in. ID.)

Product 3.—Drill pipe, finished 5" O.D. 19.5 lbs./ft., grade S-135 with tool joints attached. 

(For this product a common tool joint would be API NC 50 with 6 5/8 in. O.D., 2 3⁄4

in. ID.)

Product 4.—Drill pipe, unfinished, 5" O.D., 18.85 lbs./ft., 0.382" wall, specification 301

chemistry.

Product 5.—Heavy -weight drill pipe, 5" O.D., 50.1 lbs./ft., with tool joints attached. (For

this product a common tool joint would be API NC 50 with 6 5/8 in. O.D., 3 in. ID.)

Product 6.—Drill collars, 6 1⁄2" O.D., x 2 13/16" ID with connections attached. (For this

product a common connection would be API NC 46.)

Six U.S. producers and 12 importers of product from China provided pricing data, although not

all firms reported pricing data for all products for all quarters.29 Pricing data reported for finished drill

pipe products (products 1-3 and 5) accounted for *** percent of the value of U.S. producers’ U.S.

shipments of finished drill pipe30 and *** percent of the value of U.S. importers’ U.S. shipments of

finished drill pipe from China during January 2007-June 2010.31 Pricing data reported for the unfinished

drill pipe product (product 4) accounted for *** percent of the value of U.S. producers’ U.S. shipments of

unfinished drill pipe and *** percent of the value of U.S. importers’ U.S. shipments of unfinished drill

pipe from China. Pricing data reported for the finished drill collar product (product 6) accounted for ***

percent of the value of U.S. producers’ U.S. shipments of finished drill collars and *** percent of the

value of U.S. importers’ U.S. shipments of finished drill collars from China. 

Data segregated by companies selling primarily to end users and those selling primarily to

distributors is provided in appendix G. In addition, to examine the relationship between purchase size

and drill pipe prices, purchaser price data for product 1 were requested. Ten purchasers provided usable

data; these data are presented in appendix G. *** of these 10 purchasers reported prices for product from

both the United States and China; these data are also shown separately in appendix G. 

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-7 and in figures V-2 through V-7. The price of all four finished drill

pipe products, products 1-3 and 5, declined over the period examined, as did the price of finished drill

collars. The price of U.S. produced unfinished drill pipe, product 4, in contrast, increased over the period

examined, although there was ***.32 Table V-8 summarizes the number of quarters, high and low prices,

and change in prices over the period.

 29 The Commission also requested pricing data on sales of imports from nonsubject sources (appendix H).

 30 U.S. producers’ coverage is calculated using ***.

 31 ***. 

 32 ***.

V-6
In addition to weighted-average sales prices, tables V-2 through V-7 also show Command’s

purchase prices and quantities for its direct imports from China.33 Staff requested Command to report its

landed, duty paid prices because the company was not only the *** importer of finished drill pipe from

China in 2009 but also, ***. Although co-respondent Downhole also was *** importer, by 2007 ***.34

Table V-2

Drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported product 11

 and

margins of underselling/(overselling), by quarters, January 2007-June 2010

Period

Sales data

Command’s purchase

data

United States2 China China

Price

(per foot)

Quantity

(feet)

Price

(per foot)

Quantity

(feet)

Margin

(percent)

Price

(per foot)

Quantity

(feet)

2007:

 Jan.-Mar. $55.42 376,397 $*** *** *** $*** ***

 Apr.-June *** *** *** *** *** *** ***

 July-Sept. *** *** *** *** *** *** ***

 Oct.-Dec. *** *** *** *** *** *** ***

2008:

 Jan.-Mar. *** *** *** *** *** *** ***

 Apr.-June 55.13 183,050 *** *** *** *** ***

 July-Sept. *** *** 57.16 138,978 *** *** ***

 Oct.-Dec. 57.02 143,482 *** *** *** *** ***

2009:

 Jan.-Mar. *** *** *** *** *** *** ***

 Apr.-June *** *** *** *** *** *** ***

 July-Sept. *** *** *** *** *** *** ***

 Oct.-Dec. *** *** -- 0 -- *** ***

2010:

 Jan.-Mar. -- 0 *** *** -- *** ***

 Apr.-June *** *** *** *** *** *** ***

 1

 Drill pipe, finished, 5" O.D., 19.5 lbs./ft., grade G-105 with tool joints attached. (For this product a common

tool joint would be API NC 50 with 6 5/8 in. O.D., 3 1⁄4 in. ID.)

 2

 This includes some product ***.

Source: Compiled from data submitted in response to Commission questionnaires.

 33 In addition to its direct imports, Command also reported that ***.

 34 Command reported that the majority of the drill pipe it brought into the United States had add-ons provided in

the United States. Hearing transcript, p. 308 (Garvey).

V-7
Table V-3

Drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported product 21

 and

margins of underselling/(overselling), by quarters, January 2007-June 2010

Period

Sales data

Command’s purchase

data

United States2 China China

Price

(per foot)

Quantity

(feet)

Price

(per foot)

Quantity

(feet)

Margin

(percent)

Price

(per foot)

Quantity

(feet)

2007:

 Jan.-Mar. $41.98 195,680 $*** *** *** $*** ***

 Apr.-June *** *** 46.57 126,182 *** *** ***

 July-Sept. *** *** *** *** *** *** ***

 Oct.-Dec. *** *** *** *** *** *** ***

2008:

 Jan.-Mar. *** *** *** *** *** *** ***

 Apr.-June *** *** 53.23 99,661 *** *** ***

 July-Sept. *** *** 52.42 179,599 *** *** ***

 Oct.-Dec. 48.94 296,759 *** *** *** *** ***

2009:

 Jan.-Mar. *** *** 52.35 35,219 *** *** ***

 Apr.-June *** *** *** *** *** *** ***

 July-Sept. *** *** *** *** *** *** ***

 Oct.-Dec. *** *** *** *** *** *** ***

2010:

 Jan.-Mar. *** *** *** *** *** *** ***

 Apr.-June *** *** 35.25 72,014 *** *** ***

 1

 Drill pipe, finished, 4 1⁄2" O.D., 16.6 lbs./ft., grade G-105 with tool joints attached. (For this product a common

tool joint would be API NC 46 with 6 1/4 in. O.D., 3 in. ID.)

 2

 This includes some product ***.

Source: Compiled from data submitted in response to Commission questionnaires.

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 2007-June 2010

******

Table V-5

Unfinished drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported

product 4 and margins of underselling/(overselling), by quarters, January 2007-June 2010

******

V-8
Table V-6

Drill pipe: Weighted-average f.o.b. prices and quantities of domestic and imported product 5 and

margins of underselling/(overselling), by quarters, January 2007-June 2010

******

Table V-7

Drill collars: Weighted-average f.o.b. prices and quantities of domestic and imported product 6

and margins of underselling/(overselling), by quarters, January 2007-June 2010

******

Figure V-2

Drill pipe: Weighted-average f.o.b prices and quantities of domestic and imported product 1, by

quarters, January 2007-June 2010

* * * * * *

Figure V-3

Drill pipe: Weighted-average f.o.b prices and quantities of domestic and imported product 2, by

quarters, January 2007-June 2010

******

Figure V-4

Drill pipe: Weighted-average f.o.b prices and quantities of domestic and imported product 3, by

quarters, January 2007-June 2010

* * * * * *

Figure V-5

Unfinished drill pipe: Weighted-average f.o.b prices and quantities of domestic and imported

product 4, by quarters, January 2007-June 2010

******

Figure V-6

Drill pipe: Weighted-average f.o.b prices and quantities of domestic and imported product 5, by

quarters, January 2007-June 2010

* * * * * *

Figure V-7

Drill collars: Weighted-average f.o.b prices and quantities of domestic and imported product 6, by

quarters, January 2007-June 2010

******

Table V-8

Drill pipe and drill collars: Summary of weighted-average f.o.b. prices for products 1-6 by source

******

V-9
Price Comparisons

Margins of underselling and overselling for the period are presented by product category in table 

V-9. Prices of imports from China were lower than the U.S. producers’ prices in 25 out of 62 quarterly

comparisons, by margins ranging from 0.2 percent to 31.1 percent. Prices of imports from China were

higher than U.S. producers’ prices in 37 quarterly comparisons, by margins ranging from 0.5 to 45.9

percent. 

Table V-9

Drill pipe and drill collars: Instances of underselling/overselling and the range and average of margins

for products 1-6, January 2007-June 2010

Product or

Period

Number of

quarters of

underselling

Number of

quarters of

overselling

Margins of underselling Margins of (overselling)

Average

(percent)

Range (percent) Average

(percent)

Range (percent)

Min Max Min Max

By product:

1 3 9 *** *** *** *** *** ***

2 6 8 *** *** *** *** *** ***

3 8 4 *** *** *** *** *** ***

4 1 1 *** *** *** *** *** ***

5 2 11 *** *** *** *** *** ***

6 5 4 *** *** *** *** *** ***

By period:

 2007 7 12 *** *** *** *** *** ***

 2008 5 14 *** *** *** *** *** ***

 2009 8 9 *** *** *** *** *** ***

 Jan.-June 2010 6 2 *** *** *** *** *** ***

 Total1 25 37 10.8 0.2 31.1 (10.5) (0.5) (45.9)

 1 Total number of instances for all cited products, range of margins for all cited products, and average margin for all cited

products.

Note.–Chinese data for product 1 (5" G-105 drill pipe) in the first quarter of 2010 correspond to sales to *** by ***, including

***. In this same quarter, U.S. producers reported no sales to customers of product 1; accordingly, no price comparison can

be calculated. 

Source: Compiled from data submitted in response to Commission questionnaires.

***.35

 35 ***. 

V-10
 Prices can vary from quarter to quarter because of differences in product specifications such as

internal coatings, hard banding, and other adders. Half year prices are presented in table V-10 to reduce

this quarter to quarter variation caused by differences in adders.36 However, this aggregation does not

address other sources of price variation.37

Table V-10

Drill pipe and drill collars: Half yearly weighted-average f.o.b. prices and quantities reported by the

purchasers of domestic and imported product 1-6, January 2007-June 2010

******

LOST SALES AND LOST REVENUES

U.S. producers reported *** lost sales allegations38 valued at a total of $*** and *** lost

revenues allegations39 valued at a total of $***, due to competition from imports from China since

January 2006.

40 Staff received responses from purchasers regarding *** lost sales allegations valued at

$*** and *** lost revenues allegations valued at $***. The responding firms confirmed *** allegations

totaling $***41 and denied *** allegations totaling $***. In the *** remaining allegations, purchasers did

not respond to the specific transactions cited but provided other responses. The specific allegations are

shown in tables V-11 and V-12, and purchasers’ detailed responses are discussed below.

*** was cited in a lost *** allegation involving *** short tons of drill *** valued at $***

allegedly occurring in ***. It disagreed with the allegation, stating that ***.

*** was cited in an *** lost *** allegation involving *** short tons of drill pipe valued at $***. 

It disagreed with the allegation, stating that ***. ***

Table V-11

Drill pipe and drill collars: U.S. producers’ and converters’ lost sales allegations 

******

Table V-12

Drill pipe and drill collars: U.S. producers' and converters' lost revenue allegations

******

*** was cited in *** allegations involving *** short tons of *** valued at $*** allegedly

occurring in 2006 through 2009 and *** involving *** short tons of drill pipe valued at $*** allegedly

 36 According to one large market participant, differences in product mix between and among suppliers were more

pronounced on a quarter-to-quarter basis but would tend to smooth out over longer periods of time. Staff telephone

interview with ***, November 15, 2010. 

 37 Respondents offer several observations regarding the aggregation of price data into six-month periods, which

they correctly note is not typical in Commission investigations. First, price variability is simply a feature of certain

markets examined by the Commission. Second, aggregation further compresses an already-limited number of price

observations. Third, price variations reflect quarter-by-quarter changes in product mix. Fourth, half yearly prices

continue to exhibit a high level of period-to-period variability. Respondents’ prehearing brief, Appendix IV.

 38 *** of the lost sales allegations involved drill pipe and the remaining *** involved drill collars.

 39 *** of the lost revenues allegations involved drill pipe and the remaining *** involved drill collars.

 40 The lost revenues allegations provided involved sales of ***.

 41 All eight lost sales allegations to which purchasers agreed were for drill pipe.

V-11
occurring in ***. *** agreed to *** lost *** allegations involving *** short tons of drill pipe valued at

$***. 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 to compete with subject imports.

*** was cited in a *** involving *** short tons of drill pipe valued at $*** and *** involving

more than *** short tons of drill pipe valued at $***. It reported that ***, but that it disagreed with ***. 

It reported that it had switched *** percent of its purchases from U.S. producers to Chinese import

suppliers since *** because U.S. producers could not meet its demand. It further reported that ***.

*** was cited in a *** allegation involving *** of drill pipe valued at nearly $***. It did not

respond to the specific allegation but reported that ***. 

*** was cited in one lost *** allegation involving *** drill pipe at $***. It disagreed with the

allegation, reporting that ***.

*** was cited in *** lost *** allegations involving ***. ***, it reported that ***.

 *** was cited in a *** allegation involving *** of drill pipe valued at nearly $***. It disagreed

with the allegation, stating that it switched from purchasing U.S.-produced to imports from China because

lead times from U.S. producers were *** months, whereas the imported product from China was readily

available. 

*** was cited in *** valued at $***. It disagreed with *** allegations reporting that ***.

*** was cited in a *** allegation involving *** short tons of drill pipe valued at $***. 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 ***. ***.42 ***. ***.

*** 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 *** allegation involving *** short tons of drill pipe valued at $***. It reported

that it has switched its purchases from U.S. producers to Chinese import suppliers due to price and that

U.S. producers have reduced prices to compete with subject imports.

*** was cited in a *** allegation involving *** short tons of drill pipe valued at more than $***. 

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 but that ***.

*** was cited in *** lost sales allegations involving *** short tons of drill pipe valued at $***

allegedly occurring in ***. It disagreed with ***, reporting that ***.

*** was cited in *** lost sales allegations, *** involving *** short tons of *** valued at $***

and ***. It disagreed with *** reporting that it paid $*** and purchased Chinese product because ***. It

purchased ***.

*** 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 ***.

*** was cited in *** lost sales allegations involving *** short tons of drill pipe valued at $***. It

*** with the allegation.

*** was cited in one lost sales allegation involving *** short tons of drill pipe valued at $***. It

*** with the allegation, reporting that ***. It reported that ***. It further reported that ***.

***.43 ***. 

***.

***.

***.

 42 ***.

 43 ***.

V-12
PART VI: FINANCIAL EXPERIENCE OF THE U.S. PRODUCERS

BACKGROUND

Twelve U.S. producers reported financial results related to drill pipe and drill collar operations.1

With two exceptions, U.S. producers reported their financial results based on U.S. generally accepted

accounting principles (“GAAP”) with annual periods reported on a calendar-year basis.2 3

 Because the

majority of revenue reflects commercial sales, a single total sales line item is presented in the tables

below.4

 Staff verified VAM’s response to the U.S. producers’ questionnaire on November 3-4, 2010. 

Changes pursuant to verification are reflected in the relevant sections of the Staff Report, as are

adjustments to eliminate *** of drill pipe ***.

The finished and unfinished portions of the U.S. industry generally differ in terms of the relative

importance of drill pipe and drill collar operations to their overall and facility-specific operations.

Timken, TMK, and U.S. Steel reported that casing, tubing, and/or other tubular products represent the

substantial majority of the sales generated from the facilities where unfinished drill pipe is produced. In

contrast and with some exceptions, finished drill pipe and drill collar producers generally reported that

finished drill pipe and drill collars represent the majority of sales generated from the facilities where these

products are produced. 

The scale of operations is a primary difference among the various companies. NOV Grant

Prideco, Smith, and VAM are part of large multinational companies such that their finished drill pipe

sales, as reported to the Commission, reflect a relatively small share of consolidated sales.5

 In contrast,

the other finished drill pipe and drill collar producers are generally stand-alone entities in which finished

drill pipe and drill collars represent the majority of overall sales. These stand-alone producers,

particularly with respect to finished drill pipe operations, also tend to be relatively newer entrants. 

While all finished drill pipe and drill collar producers other than *** reported export sales, the

absolute value and share of exports reported by ***. With respect to ***. For both ***, in varying

degrees in each period, the majority of finished drill pipe export sales consisted of ***. 

 1 *** did not report complete financial results and therefore are not reflected in this section of the report. 

 2

 ***. USITC auditor final-phase notes. ***. 

 3

 Sales of finished drill pipe are generally invoiced in feet. VAM verification report, p. 6. As a result, reporting

the aggregate weight of corresponding finished drill pipe was a challenge for responding companies; e.g., ***. 

USITC auditor final-phase notes. Staff generally believes that U.S. producers provided reasonable estimates of sales

volume in short tons. 

 4

 ***. Staff telephone interview with ***, January 20, 2010 (USITC auditor notes (preliminary phase)). ***. 

USITC auditor final-phase notes. 

 ***. E-mail with attachments from *** to USITC auditor, October 26, 2010.

 ***. 

 5

 The operations reported by NOV Grant Prideco are reflected in NOV’s Petroleum Services & Supplies segment.

Grant Prideco 2008 10-K, p. 2. During the period examined Smith’s drill pipe operations were included in its 

Oilfield segment, while VAM Drilling USA, along with a number of other entities, is part of Vallourec’s Oil and

Gas division. Smith 2009 10-K, p. 3. Vallourec registered document 2009, p. 31. VAM’s U.S. operations on

finished drill pipe and drill collars represent the former operations of OMSCO which were purchased by Vallourec

in 2006. Hearing transcript, p. 32 (Fields). As noted in part III, Smith was acquired by Schlumberger in August

2010 and Grant Prideco was purchased by NOV in April 2008. 

VI-1
Each U.S. producer is also unique in terms of items such as underlying product mix,

manufacturing, cost classification, and marketing.6 7

 Specific 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 in-house heat treatment capacity.8

 

Notwithstanding the above differences, a number of U.S. producers reported similar cost-cutting

measures (in large part consisting of employee layoffs and/or reduced hours and corresponding reduced

production activity) in response to notably lower sales volume in 2009.9

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 tables VI-1a, VI-1b, VI-1c, and VI-1d.10 Tables VI-2a

and VI-2b present selected company-specific financial information with subtotals for operations on

unfinished and finished drill pipe and unfinished and finished drill collars, respectively. A variance

analysis of the financial results of each of the above-referenced categories is presented in tables VI-3a,

VI-3b, VI-3c, and VI-3d.11

 6 Underlying product mix is presumed to be a 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 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. As noted in the relevant tables

below, several companies were unable to report the components of COGS separately. 

 7

 With respect to prospective changes in marketing activity, the 10-year agreement pursuant to which Smith sold

TCS’s finished drill pipe and drill collars was terminated in early December 2010. Hearing transcript, p. 39 (Brand). 

Smith, which was described as selling a full-line of drill stem products, was purchased by Schlumberger in August

2010. Ibid. ***. 

 8

 Four companies reported input purchases from related parties: ***. USITC auditor final-phase notes. 

 With respect to finished drill pipe financial results and inputs from related parties, ***. E-mail from *** to

USITC auditor, January 19, 2011. ***. USITC auditor final-phase notes. 

 Supplemental information in table VI-1b presents the industry’s overall finished drill pipe operating income

***. 

 9

 Charles Machine, RDT, Smith, Sunbelt, TSC, Timken, U.S. Steel, VAM, responses to question II-2, U.S.

producer questionnaire (final). E-mail from *** to USITC auditor, January 28, 2010. 

 10 Overall consolidations of unfinished drill pipe and unfinished drill collar operations and finished drill pipe and

finished drill collar operations, respectively, are presented in appendix C. Financial results on subcategories of

finished drill pipe operations identified as “premium finished drill pipe” and “non-premium finished drill pipe” are

presented in appendix D.

 11 The Commission’s 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 the respective tables, 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. 

 As indicated below, while some producers reported that their product mix was essentially unchanged during the

period examined, others indicated that product mix changed. All things being equal, a stable overall product mix

generally enhances the utility of the Commission’s variance analysis.

VI-2
Unfinished and Finished Drill Pipe Operations

As shown in table VI-2a, Timken, TMK, and U.S. Steel reported financial results on unfinished

drill pipe, while Charles Machine, Drill Pipe International, NOV Grant Prideco, RDT, Smith, Superior,

TSC, and VAM reported usable financial results on finished drill pipe. NOV Grant Prideco accounts for

a substantial share of overall finished drill pipe activity.12 With the exception of a relatively small volume

of exports, 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 8 above, *** represent a large share of the

remaining unfinished drill pipe consumed in the production of finished drill pipe in the United States. 

Sales Volume and Value

A notable trend reflected in the financial results of both drill pipe product categories is the pattern

of sales volume; peaking in 2007 and 2008 for finished drill pipe and unfinished drill pipe, respectively,

followed by substantial declines in sales volume in 2009. As shown in the variance analysis tables for

unfinished drill pipe and finished drill pipe (tables VI-3a and VI-3b), both categories reported overall net

negative volume variances between 2007 and 2009. In the case of unfinished drill pipe, the entire net

negative volume variance is attributable to the decline in sales volume between 2008 and 2009, while for

finished drill pipe part of the overall net negative volume variance is also attributable to a decline in sales

volume between 2007 and 2008. With several exceptions, company-specific information presented in

table VI-2a shows that U.S. producers of unfinished and finished drill pipe reported the same basic

pattern of substantially lower sales volume in 2009.13 

On an overall basis average sales value for unfinished and finished drill pipe exhibited different

trends; unfinished drill pipe reached its highest level in 2008 while finished drill pipe reached its highest

level in the first half of 2009. This divergence is reflected in the variance analysis tables of both

categories which indicate that unfinished drill pipe operations generated a relatively smaller positive price

variance between 2007 and 2009 compared to finished drill pipe. This difference is also reflected in the

averages sales values on a company and category-specific basis shown in table VI-3a. 

With regard to unfinished drill pipe, *** average sales value in 2009 compared to 2008, while

*** reported lower average sales value. ***. ***.14 While the overall unfinished drill pipe category

generated a higher average sales value in interim 2010 compared to 2009, ***. 

With respect to finished drill pipe, *** in average sales value between 2007 and 2009 which the

company generally attributed to a combination of changes in average sales value and product mix.15 ***. 

*** average sales value during the full-year period. According to the company, its average sales value

***.16 ***. 

 12 As indicated above, ***. 

 13 ***. Conference transcript (Morris), pp. 21-22. USITC auditor final-phase notes.

 14 According to TMK, ***. E-mail with attachment from *** to USITC auditor, October 25, 2010.

 U.S. Steel stated that ***. E-mail with attachment *** to USITC auditor, October 26, 2010.

 According to Timken, ***. E-mail with attachment from *** to USITC auditor, November 16, 2010. 

 15 E-mail with attachments from *** to USITC auditor, November 9, 2010.

 16 VAM verification report, pp. 6-7.

VI-3
Table VI-1a

Unfinished drill pipe: Results of operations, 2007-09, January-June 2009, and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Quantity (short tons)

Total net sales quantity 78,561 90,178 8,833 6,160 13,826

Value ($1,000)

Total net sales value 117,250 178,647 14,323 10,007 23,223

Cost of goods sold:

 Raw materials 38,686 58,876 4,223 2,883 7,875

 Direct labor 12,007 14,402 2,335 1,736 2,242

 Other factory costs 21,781 35,190 6,306 4,199 5,403

 Total cost of goods sold 72,474 108,468 12,864 8,818 15,520

Gross profit 44,776 70,179 1,459 1,189 7,703

Selling expenses 447 573 127 85 73

General and administrative expenses 8,821 10,465 1,643 1,153 1,880

 Total SG&A expenses 9,268 11,038 1,770 1,238 1,953

Operating income or (loss) 35,508 59,141 (311) (49) 5,750

Interest expense (1,020) (1,826) (79) 3 (205)

Other expenses 175 11 33 18 198

Other income items 247 163 12 4 5

Net income or (loss) 36,600 61,119 (253) (66) 5,762

Depreciation/amortization 3,252 7,549 1,534 1,149 1,521

Estimated cash flow from operations 39,852 68,668 1,281 1,083 7,283

Table continued on next page.

Profitability

As shown in table VI-3a, company-specific changes in the average raw material cost of finished

drill pipe producers were mixed; some producers reported their highest average raw material cost in 2008,

while others reported their highest average raw material cost in 2009. In contrast, unfinished drill pipe

producers all reported their highest average raw material cost in 2008. With respect to conversion costs,

several companies confirmed Staff’s general conclusion that the increase in average direct labor and other

factory costs, in large part, reflects reduced fixed cost absorption due to lower production/sales

VI-4
Table VI-1a--Continued

Unfinished drill pipe: Results of operations, 2007-09, January-June 2009, and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Ratio to net sales (percent)

Raw material 33.0 33.0 29.5 28.8 33.9

Direct labor 10.2 8.1 16.3 17.3 9.7

Other factory costs 18.6 19.7 44.0 42.0 23.3

 Cost of goods sold 61.8 60.7 89.8 88.1 66.8

Gross profit 38.2 39.3 10.2 11.9 33.2

SG&A expenses 7.9 6.2 12.4 12.4 8.4

Operating income or (loss) 30.3 33.1 (2.2) (0.5) 24.8

Net income or (loss) 31.2 34.2 (1.8) (0.7) 24.8

Unit value (dollars per short ton)

Total net sales 1,492 1,981 1,622 1,625 1,680

Cost of goods sold:

 Raw material 492 653 478 468 570

 Direct labor 153 160 264 282 162

 Other factory costs 277 390 714 682 391

 Total cost of goods sold 923 1,203 1,456 1,431 1,123

Gross profit 570 778 165 193 557

SG&A expenses 118 122 200 201 141

Operating income or (loss) 452 656 (35) (8) 416

Number of producers reporting

Operating losses 00220

Data 33333

Source: Compiled from data submitted in response to Commission questionnaires.

volume.17 In addition, two companies indicated that lower production volumes also impacted variable

costs.18 Table VI-1a (unfinished drill pipe financial results) compared to table VI-1b (finished drill pipe

financial results) shows that in 2009 the COGS-to-sales ratio for unfinished drill pipe was substantially

 17 E-mail with attachments from *** to USITC auditor, November 9, 2010. E-mail with attachment from *** to

USITC auditor, October 25, 2010. E-mail with attachment from *** to USITC auditor, October 26, 2010. E-mail

with attachments from *** to USITC auditor, October 27, 2010. E-mail with attachment from *** to USITC

auditor, November 16, 2010. 

 ***. VAM verification report, p. 7. 

 18 TMK stated that its ***. E-mail with attachment from *** to USITC auditor, October 25, 2010. 

 According to Timken, ***. E-mail with attachment from *** to USITC auditor, November 16, 2010. 

VI-5
Table VI-1b

Finished drill pipe: Results of operations, 2007-09, January-June 2009, and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Quantity (short tons)

Total net sales quantity 214,579 197,580 119,837 59,153 60,597

Value ($1,000)

Total net sales value 1,151,659 1,155,499 791,095 393,558 319,166

Cost of goods sold:

 Raw materials 460,514 495,295 371,183 193,957 151,365

 Direct labor 23,150 31,789 26,240 13,579 11,160

 Other factory costs 229,579 194,883 155,445 75,371 57,119

 Total cost of goods sold 713,243 721,967 552,867 282,907 219,644

Gross profit 438,416 433,532 238,227 110,651 99,522

Selling expenses 24,606 35,675 35,960 16,189 18,542

General and administrative expenses 10,716 16,528 16,421 8,615 8,624

 Total SG&A expenses 35,322 52,202 52,380 24,804 27,166

Operating income1 403,094 381,330 185,847 85,847 72,357

Interest expense 1,786 1,919 1,932 841 928

Other expenses 1,821 1,455 7,285 7,912 (1,428)

Other income items 555 1,043 2,154 91 272

Net income 400,042 378,998 178,784 77,185 73,129

Depreciation/amortization 16,322 18,489 19,132 13,278 14,296

Estimated cash flow from operations 416,364 397,487 197,916 90,464 87,425

Ratio to net sales (percent)

Raw material 40.0 42.9 46.9 49.3 47.4

Direct labor 2.0 2.8 3.3 3.5 3.5

Other factory costs 19.9 16.9 19.6 19.2 17.9

 Cost of goods sold 61.9 62.5 69.9 71.9 68.8

Gross profit 38.1 37.5 30.1 28.1 31.2

SG&A expenses 3.1 4.5 6.6 6.3 8.5

Operating income1 35.0 33.0 23.5 21.8 22.7

Net income 34.7 32.8 22.6 19.6 22.9

Table continued on next page.

VI-6
Table VI-1b--Continued

Finished drill pipe: Results of operations, 2007-09, January-June 2009, and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Unit value (dollars per short ton)

Total net sales 5,367 5,848 6,601 6,653 5,267

Cost of goods sold:

 Raw material 2,146 2,507 3,097 3,279 2,498

 Direct labor 108 161 219 230 184

 Other factory costs 1,070 986 1,297 1,274 943

 Total cost of goods sold 3,324 3,654 4,613 4,783 3,625

Gross profit 2,043 2,194 1,988 1,871 1,642

SG&A expenses 165 264 437 419 448

Operating income1 1,879 1,930 1,551 1,451 1,194

Number of producers reporting

Operating losses1 10222

Data 8 8 8 88.0

 1 ***.

Source: Compiled from data submitted in response to Commission questionnaires and supplemental information

provided by NOV Grant Prideco.

Table VI-1c

Unfinished drill collars: Results of operations, 2007-09, January-June 2009, and January-June

2010

* * * * * * *

higher compared to finished drill pipe operations. This pattern is generally consistent with the much

larger percentage decline in sales volume reported by unfinished drill pipe producers (88.8 percent

between 2007 and 2009) compared to finished drill pipe producers (48.4 percent between 2007 and 2009)

and its greater impact on corresponding average costs. 

***.19 ***.

 19 VAM verification report, pp. 7-8.

VI-7
Table VI-1d

Finished drill collars: Results of operations, 2007-09, January-June 2009, and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Quantity (short tons)

Total net sales quantity 46,908 37,865 27,034 12,381 6,676

Value ($1,000)

Total net sales value 153,993 148,745 78,438 43,071 18,965

Cost of goods sold:

 Raw materials 60,281 65,371 35,014 19,578 9,021

 Direct labor 8,964 8,516 5,535 3,031 1,327

 Other factory costs 29,731 26,495 17,244 9,506 3,989

 Total cost of goods sold 98,976 100,382 57,793 32,115 14,337

Gross profit 55,017 48,363 20,645 10,956 4,628

Selling expenses 7,230 8,766 3,290 2,123 1,294

General and administrative expenses 1,456 1,794 1,418 540 462

 Total SG&A expenses 8,686 10,560 4,708 2,663 1,756

Operating income1

 46,331 37,803 15,937 8,293 2,872

Interest expense 167 286 282 128 82

Other expenses 570 838 699 276 225

Other income items 61 92 156 (20) 17

Net income 45,655 36,771 15,112 7,869 2,582

Depreciation/amortization 3,074 3,648 3,609 2,068 1,762

Estimated cash flow from operations 48,729 40,419 18,721 9,937 4,344

Ratio to net sales (percent)

Raw material 39.1 43.9 44.6 45.5 47.6

Direct labor 5.8 5.7 7.1 7.0 7.0

Other factory costs 19.3 17.8 22.0 22.1 21.0

 Cost of goods sold 64.3 67.5 73.7 74.6 75.6

Gross profit 35.7 32.5 26.3 25.4 24.4

SG&A expenses 5.6 7.1 6.0 6.2 9.3

Operating income1

 30.1 25.4 20.3 19.3 15.1

Net income 29.6 24.7 19.3 18.3 13.6

Table continued on next page.

VI-8
Table VI-1d--Continued

Finished drill collars: Results of operations, 2007-09, January-June 2009, and January-June 2010

Item

Calendar year January-June

2007 2008 2009 2009 2010

Unit value (dollars per short ton)

Total net sales 3,283 3,928 2,901 3,479 2,841

Cost of goods sold:

 Raw material 1,285 1,726 1,295 1,581 1,351

 Direct labor 191 225 205 245 199

 Other factory costs 634 700 638 768 598

 Total cost of goods sold 2,110 2,651 2,138 2,594 2,148

Gross profit 1,173 1,277 764 885 693

SG&A expenses 185 279 174 215 263

Operating income1

 988 998 590 670 430

Number of producers reporting

Operating losses 00101

Data 44444

 1 ***.

Source: Compiled from data submitted in response to Commission questionnaires and supplemental information

provided by NOV Grant Prideco.

Table VI-2a

Unfinished and finished drill pipe: Results of operations, by firm, 2007-09, January-June 2009, and

January-June 2010

* * * * * * *

Table VI-2b

Unfinished and finished drill collars: Results of operations, by firm, 2007-09, January-June 2009,

and January-June 2010

* * * * * * *

VI-9
Table VI-3a

Unfinished drill pipe: Variance analysis of financial results, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year Jan.-June

2007-09 2007-08 2008-09 2009-10

Value ($1,000)

Total net sales:

 Price variance 1,140 44,059 (3,176) 762

 Volume variance (104,067) 17,338 (161,148) 12,454

 Total net sales variance (102,927) 61,397 (164,324) 13,216

Cost of sales:

 Raw materials:

 Cost variance 127 (14,469) 1,544 (1,404)

 Volume variance 34,336 (5,721) 53,109 (3,588)

 Net raw material variance 34,463 (20,190) 54,653 (4,992)

 Direct labor:

 Cost variance (985) (619) (924) 1,654

 Volume variance 10,657 (1,776) 12,991 (2,160)

 Net direct labor variance 9,672 (2,395) 12,067 (506)

 Other factory costs:

 Cost variance (3,857) (10,188) (2,859) 4,022

 Volume variance 19,332 (3,221) 31,743 (5,226)

 Net other factory cost 15,475 (13,409) 28,884 (1,204)

 Net cost of sales:

 Cost variance (4,715) (25,277) (2,239) 4,272

 Volume variance 64,325 (10,717) 97,843 (10,974)

 Total net cost of sales 59,610 (35,994) 95,604 (6,702)

Gross profit variance (43,317) 25,403 (68,720) 6,514

SG&A expenses:

 Expense variance (728) (400) (689) 826

 Volume variance 8,226 (1,370) 9,957 (1,541)

 Total SG&A variance 7,498 (1,770) 9,268 (715)

Operating income variance (35,819) 23,633 (59,452) 5,799

Summarized as:

 Price variance 1,140 44,059 (3,176) 762

 Net cost/expense variance (5,443) (25,677) (2,928) 5,097

 Net volume variance (31,516) 5,251 (53,348) (61)

Source: Compiled from data submitted in response to Commission questionnaires.

VI-10
Table VI-3b

Finished drill pipe: Variance analysis of financial results, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year Jan.-June

2007-09 2007-08 2008-09 2009-10

Value ($1,000)

Total net sales:

 Price variance 147,922 95,080 90,254 (84,003)

 Volume variance (508,486) (91,239) (454,658) 9,610

 Total net sales variance (360,564) 3,841 (364,405) (74,392)

Cost of sales:

 Raw materials:

 Cost variance (113,997) (71,265) (70,773) 47,328

 Volume variance 203,329 36,484 194,886 (4,736)

 Net raw material variance 89,331 (34,781) 124,112 42,592

 Direct labor:

 Cost variance (13,311) (10,473) (6,959) 2,750

 Volume variance 10,221 1,834 12,508 (332)

 Net direct labor variance (3,090) (8,639) 5,549 2,419

 Other factory costs:

 Cost variance (27,231) 16,507 (37,243) 20,093

 Volume variance 101,365 18,188 76,681 (1,840)

 Net other factory cost 74,134 34,696 39,439 18,253

 Net cost of sales:

 Cost variance (154,539) (65,231) (114,975) 70,172

 Volume variance 314,914 56,506 284,075 (6,908)

 Total net cost of sales 160,375 (8,725) 169,100 63,264

Gross profit variance (200,188) (4,884) (195,305) (11,129)

SG&A expenses:

 Expense variance (32,654) (19,679) (20,718) (1,756)

 Volume variance 15,595 2,798 20,540 (606)

 Total SG&A variance (17,059) (16,880) (178) (2,362)

Operating income variance (217,247) (21,764) (195,483) (13,490)

Summarized as:

 Price variance 147,922 95,080 90,254 (84,003)

 Net cost/expense variance (187,193) (84,909) (135,694) 68,416

 Net volume variance (177,976) (31,935) (150,043) 2,096

Source: Compiled from data submitted in response to Commission questionnaires.

VI-11
Table VI-3c

Unfinished drill collars: Variance analysis of financial results, 2007-09, January-June 2009, and

January-June 2010

* * * * * * *

In the final phase of these investigations, ***.20 The company also confirmed that, with respect

to both the preliminary and final phase, its reported financial results ***.21 According to the company

and as indicated above, the primary reason for ***. Based on supplemental information provided by

NOV Grant Prideco, ***.22 

For both product categories, as indicated above, the net negative volume variance between 2007

and 2009 was the largest single factor explaining full-year declines in absolute profitability, while the

price and cost/expense variances varied in relative importance.23 In large part, differences in categoryspecific relative profitability can be attributed to varying magnitudes of price variances; i.e., while

average sales values for both finished and unfinished drill pipe were higher in 2009 compared to 2007,

the relatively larger increase in finished drill pipe average sales value offset more of the corresponding

increase in average COGS and SG&A expenses. This in turn is reflected in smaller increases in the

COGS-to-sales ratio for finished drill pipe as the period progressed and a smaller contraction in

corresponding profitability margins. In contrast, with respect to unfinished drill pipe, a smaller increase

in average sales value in 2008 compared to 2007, followed by an overall decline in 2009, resulted in only

a minimal offset to average COGS and SG&A expenses. This pattern in turn is reflected in the sharp

jump in the unfinished drill pipe COGS-to-sales ratio and the corresponding deterioration of that

category’s profitability to an operating loss in 2009.24

 20 E-mail with attachment from *** to USITC auditor, January 11, 2011. Staff notes that NOV’s 2008 10-K

distinguishes between fair value acquisition step up adjustments which increased the value of inventory ($89.1

million), as well as established preliminary values for intangible assets. The intangible assets represented trade

names, patents, and customer relationships which were collectively valued at $3.7 billion. NOV 2008 10-K, pp. 70-

71. While a portion of the amount assigned to trade names was identified as having an indefinite life, the remaining

items generally had definite lives and were therefore subject to amortization. 

 21 According to NOV’s 2009 10-K, “{b}ased on the Company’s indefinite-lived 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 forecasts in rig activity for the remainder of 2009, 2010, and 2011 compared to rig count

forecast at the beginning of 2009 and a decline in the revenue forecast for the drill pipe business unit for the

remainder of 2009, 2010, and 2011.” NOV 2009 10-K, pp. 47. ***. USITC auditor final-phase notes. 

 22 ***. A review of segment information reported in NOV Grant Prideco’s 2009 10-K also indicates that the asset

impairment, while identified in a separate line item, was included in operating income. NOV 2009 10-K, p. 93.

 23 The net negative volume variance represents the amount by which operating income declined due to lower sales

volume. In addition to the change in underlying sales volume, the net negative volume variance is based on the

initial average unit values for sales and costs/expenses. 

 24 If the combined adjustments reflected in the note to table VI-1b were incorporated into the finished drill pipe

variance analysis (table VI-3b), the operating income variance summary would be as follows: ***.

VI-12
Table VI-3d

Finished drill collars: Variance analysis of financial results, 2007-09, January-June 2009, and

January-June 2010

Item

Calendar year Jan.-June

2007-09 2007-08 2008-09 2009-10

Value ($1,000)

Total net sales:

 Price variance (10,311) 24,439 (27,760) (4,259)

 Volume variance (65,244) (29,687) (42,547) (19,847)

 Total net sales variance (75,555) (5,248) (70,307) (24,106)

Cost of sales:

 Raw materials:

 Cost variance (273) (16,711) 11,658 1,536

 Volume variance 25,540 11,621 18,699 9,021

 Net raw material variance 25,267 (5,090) 30,357 10,557

 Direct labor:

 Cost variance (369) (1,280) 545 307

 Volume variance 3,798 1,728 2,436 1,397

 Net direct labor variance 3,429 448 2,981 1,704

 Other factory costs:

 Cost variance (109) (2,496) 1,672 1,137

 Volume variance 12,596 5,732 7,579 4,380

 Net other factory cost 12,487 3,236 9,251 5,517

 Net cost of sales:

 Cost variance (751) (20,487) 13,875 2,980

 Volume variance 41,934 19,081 28,714 14,798

 Total net cost of sales 41,183 (1,406) 42,589 17,778

Gross profit variance (34,372) (6,654) (27,718) (6,328)

SG&A expenses:

 Expense variance 298 (3,549) 2,831 (320)

 Volume variance 3,680 1,675 3,021 1,227

 Total SG&A variance 3,978 (1,874) 5,852 907

Operating income variance (30,394) (8,528) (21,866) (5,421)

Summarized as:

 Price variance (10,311) 24,439 (27,760) (4,259)

 Net cost/expense variance (453) (24,035) 16,707 2,660

 Net volume variance (19,630) (8,932) (10,813) (3,821)

Source: Compiled from data submitted in response to Commission questionnaires.

VI-13
Unfinished and Finished Drill Collar Operations

As shown in table VI-2b, unfinished drill collar financial results represent the operations of two

companies, Sunbelt and Timken, while finished drill collar financial results were reported by four U.S.

producers: NOV Grant Prideco, RDT, Smith, and VAM.25

Sales Volume and Value

The sales volume for both unfinished and finished drill collars was highest in 2007 and

subsequently declined throughout the rest of period. As shown in table VI-2b, for unfinished drill collars

this pattern was ***. With regard to finished drill collars and ***, company-specific finished drill collars

sales volume followed a pattern of overall decline throughout the period.26 

Average sales values for unfinished drill collars and finished drill collars reflect positive price

variances between 2007 and 2008. While both categories reported declines in average sales value in

2009 compared to 2008, finished drill collars generated a substantially larger negative price variance

between 2008 and 2009 compared to unfinished drill collars. With some exceptions, company-specific

average sales values followed a similar trend. As shown in table VI-2b, ***.27 

Profitability

Similar to the pattern reported for drill pipe operations, absolute operating income for both

categories of drill collars declined substantially during the full-year period. As shown in the

corresponding variance analysis tables (table VI-3c (unfinished drill collars) and table VI-3d (finished

drill collars)), negative net volume variances were the principal components contributing to the absolute

decline in operating income. In contrast, the relative importance of the other two variances (price and

cost/expenses) differed; unfinished drill collars exhibited a net positive price variance between 2007 and

2009, while finished drill collars exhibited a net negative price variance. Although both categories

generated net negative cost/expense variances between 2007 and 2009, the combined average COGS and

SG&A expenses for finished drill collars peaked in 2008 and subsequently declined; ***.28 The

combined average COGS and SG&A expenses for unfinished drill collars, on the other hand, continued to

increase throughout the period. ***.29 30 31 

 25 ***. USITC auditor final-phase notes.

 26 ***. 

 27 ***. E-mail with attachment from *** to USITC auditor, November 16, 2010. 

 28 ***. 

 29 As shown in table VI-1d, the *** unfinished drill collar sales represent tolling activity. Corresponding tolling

costs represent conversion costs (direct labor and other factory costs) and therefore would be expected to be lower

than average non-tolling COGS which also include raw materials. 

 30 As indicated in the finished drill pipe section above, ***.

 31 If the adjustments reflected in the note to table VI-1d were incorporated into the finished drill collar variance

analysis (table VI-3d), the operating income variance summary would be as follows: ***.

VI-14
CAPITAL EXPENDITURES, RESEARCH AND DEVELOPMENT EXPENSES, 

ASSETS, AND RETURN ON INVESTMENT

Data on capital expenditures and research and development (“R&D”) expenses related to drill

pipe (unfinished and finished) and drill collars (finished and unfinished) are presented in table VI-4. 

Table VI-5 presents data on assets and return on investment related to unfinished drill pipe and drill

collars (aggregated) and finished drill pipe and drill collars (aggregated), respectively.32

Table VI-4

Operations on drill pipe and drill collars: Capital expenditures and R&D expenses, by firm, 2007-

09, January-June 2009, and January-June 2010

* * * * * * *

Table VI-5

Operations on drill pipe and drill collars: Total assets and return on investment, by firm, 2007-09,

January-June 2009, and January-June 2010

* * * * * * *

As shown in table VI-4, the majority of capital expenditures were reported in the finished drill

pipe category with company-specific trends generally reflecting material expansions/upgrades undertaken

during the period. The overall decline in the level of capital expenditures during the period examined is

also consistent with a decline in corresponding estimated cash flow from operations.

***. ***.33 RDT, with *** of cumulative finished drill pipe capital expenditures, reported that,

because of poor market conditions at the end of the full-year period, the installation of equipment related

to a second welding line was postponed pending the outcome of these investigations.34

 

 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. The U.S.

producers’ responses are presented in appendix I. 

 32 While additional information on premium finished drill pipe operations (i.e., a subset of overall finished drill

pipe) is presented in appendix D, responding companies were generally unable to distinguish capital expenditures

specific to this subset of operations. Therefore capital expenditures on premium finished drill pipe, while reflected

in the overall finished drill pipe capital expenditures presented here, are not presented separately in appendix D.

 33 VAM verification report, p. 8.

 34 Conference transcript, pp. 23, 84-85 (Morris). Hearing transcript, p. 45 (Morris). ***. Staff telephone

interview with ***, February 2, 2010.

VI-15
 
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 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

Overview1

According to the World Steel Association (WSA), 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 (table VII-1). The WSA reported that, in 2009, China produced 16 times more seamless

tubular products than Japan and almost 23 times more than the United States. Regionally, Asia accounted

for almost 70 percent of global production of seamless tubular products in 2007. 

According to ***,3

 China passed 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 *** short tons, more than *** times that of the United States, the

world’s second largest producer.4

 *** reported that among the most important developments in the

OCTG global supply has been the steady rise of China’s production, especially in seamless OCTG.5

Industry sources estimated that China's current capacity for finished drill pipe is approximately

652,000 - *** net tons per year.6

 1 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, and drill pipe. See part I for more details on different categories of steel tubular goods. 

 2

 The WSA, formerly known as the International Iron and Steel Institute (IISI), is an international organization

representing approximately180 steel producers, national and regional steel industry associations, and steel research

institutes. WSA members produced about 85 percent of the world’s steel in 2007. WSA provides data for all

seamless tubular products, a much broader category than the subject products. The year of 2007 is used here as a

benchmark because more countries reported to the WSA in 2007 than in 2008 and 2009 (when several EU countries,

including Germany and France, did not provide data to the WSA). 

 3

 ***.

 4

 *** provides data for seamless OCTG, a category that is broader than the subject products.

 5

 ***.

 6

 Petitioners’ prehearing brief, p. 65 and “China capacities and international markets, December 2010,” presented

by VAM at Commission’s hearing, January 5, 2010, hearing transcript, p. 326.

VII-1
Table VII-1

Seamless tubular products: Global production, by region, 2007-09

Region Calendar year

2007 2008 2009

Quantity (1,000 short tons)

North America

 United States 1,908 2,338 1,053

 Mexico 732 750 645

 Canada (1

) 280 168

 Subtotal 2,640 3,368 1,866

South America

 Argentina 925 553 1,006

 All others (

1

) 3 (

1

)

 Subtotal 925 556 1,006

European Union (15)

 Austria 492 377 335

 Brazil (

1

) (1) (1)

 All others (

1

) (1) (1)

 Germany 2,011 (

1

) (1)

 Italy 933 (1

) (1)

 France 929 (

1

) (1)

 All others 522 (

1

) (1)

 Subtotal 4,886 377 335

Asia

 China 20,039 21,152 21,786

 Japan 2,281 2,106 1,342

 All others 22 (

1

) (1)

 Subtotal 22,341 23,258 23,128

All others 1,595 1,033 2,534

Total 32,388 28,592 28,869

 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 2010, 2010, table 25, p. 60.

VII-2
China is 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.7

 The Chinese government reportedly plans to

increase the share of natural gas as part of total national energy consumption to 10 percent by 2030.8

Currently, most Chinese oil and gas drilling activities are concentrated in onshore fields in the western

provinces of Xinjiang, Gansu, and Inner Mongolia.9 Approximately 65 percent of China’s natural gas

production is concentrated in Sichuan Province in the southwest (Changqing Basin), Shaanganing

Province (Ordos Basin), the Xinjiang Uygur Autonomous Region, and Qinghai in the northwest (Tarim,

Chungeer, and Caidamu Basins)10

Shale gas drilling is being explored in many regions in cooperation with global companies. Hess

Corp., a Houston-based global energy company, signed a memorandum of understanding with PetroChina

to explore shale potentials in Daqing region.11 In January 2010, PetroChina and Shell announced that

they had begun jointly assessing a shale gas field in the Sichuan province.12 Sunwing Energy Ltd. (a

subsidiary of Canada-based Ivanhoe Energy Inc.) recently discovered additional natural gas in Sichuan.13

Another Canadian energy company, Husky Energy Inc., recently agreed to formally cooperate with China

National Offshore Oil Corp. (CNOOC) to explore deepwater gas fields in the South China Sea.14 In late

2010, Tenaris, the world’s largest producer of seamless pipes, declared that it planned to play a key role

in unconventional gas projects in China.15

Global leading drill pipe makers have also formed joint ventures with Chinese companies. As

indicated in table VII-2, a leading U.S. importer of unfinished drill pipe and producer of finished drill

pipe, NOV Grant Prideco, either owns or has formed joint ventures with three Chinese operations. 

Another leading global drill pipe maker, France’s Vallourec Group, recently purchased a 19.5-percent

 7 China’s real gross domestic product (GDP) grew at an estimated 8.7 percent in 2009, while the country

registered an average growth rate of 10 percent between 2000 and 2008. The current global economic crisis reduced

Chinese annual economic growth from 13 percent in 2007. Most analysts expect China to grow by 10 percent in

2010. See Energy Information Administration, U.S. Department of Energy, November 2010, found at

http://www.eia.doe.gov/emeu/cabs/China/Background.html, retrieved November 19, 2010.

 8

 In part to reduce the high pollution caused by the country’s substantial use of coal. U.S. Department of Energy,

Energy Information Administration (EIA), “China Energy Profile,” November 2010.

 9

 U.S. Department of Energy, Energy Information Administration (EIA), “China Energy Profile,” July 2009.

 10 U.S. Department of Energy, Energy Information Administration (EIA), “China Energy Profile,” November

2010.

 11 Paula Dittrick, “Hess Plans to Add Another Rig to Bakken Play,” Oil and Gas Financial Journal, November 1,

2010, found at 

http://www.ogj.com/index/article-tools-template/_printArticle/articles/oil-gas-journal/drilling-production-2/2010/11/

hess-plans_to_add.html, retrieved November 18, 2010. Petrochina is an affiliate of state-owned China National

Petroleum Corporation (CNPC), headquartered in Beijing.

 12 Angel Gonzales, “China Turns to Texas for Drilling Know-How,” Wall Street Journal, October 12, 2010, p.

B1.

 13 Oil and Gas Journal Editors, "Ivanhoe Discovers More Sichuan Gas in China," December 29, 2010, found at

http://www.pennenergy.com/index/articles/pe-article-tools-template/_printArticle/articles/oil-gas-journal/exploration

-development-2/discoveries/2010/12/ivanhoe-discovers.html, retrieved December 30, 2010.

 14 Husky Enegy Inc. New release, "Husky, CNNOC Ink Development Agreement for Liwan 3-1 Natural Gas

Field in the South China Sea," December 8, 2010, found at http://www.pennergy.com. 

 15 Rodrigo Orihueloa, "Tenaris ‘Could Be A Player' for Unconventional Gas in China," Bloomberg L.P.,

November 5, 2010, found at

http://www.bloomberg.com/news/print/2010-11-05/tenaris-could-be-a-player-for-unconventional-gas-in-china.html,

retrieved November 20, 2010.

VII-3
stake in Tianda Oil Pipe Co., a Chinese producer of seamless line pipe, casing, and tubing (but not drill

pipe or drill collars) in order to supply the Chinese market with proprietary-threaded product.16

Operations on Drill Pipe and Drill Collars

According to the petitioners, China has excess capacity to produce seamless pipe products (which

include unfinished drill pipe).17 Petitioners further report that *** catalogue the existence of ***

producers with at least *** friction welding lines (many with a capacity of at least *** tons).18 ***

estimates that many of these producers are ***, with an average utilization rate of *** percent.19

Respondents argue that the capacity reported by the Petitioners is overstated as many of the new

producers are produce inferior product which they are unqualified to sell in the Chinese or U.S. markets,

and that these producers have ceased production or are expected to shut down over the next year.20

Respondents furthermore maintain that Chinese capacity is limited by the supply of “good” green tubes,

and other technical factors.21 Respondents contend that the Chinese home market and third-country

demand has and will continue to absorb the majority of Chinese production capacity,22 pointing to the

increase in China’s exports to markets other than the United States.23 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.24 Petitioners, however,

counter that China produces only one-ninth as much natural gas as the United States and less than half as

much oil.25

 Table VII-2 presents 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.26

These firms claimed to account for approximately *** percent of total production of unfinished drill pipe

in China, *** percent of finished drill pipe production in China, *** percent of unfinished drill collar

production in China, and *** percent of finished drill collar production in China.27

 16 “Vallourec Reinforces its Presence on the Chinese Oil & Gas Market By Acquiring 19.5 Percent of

Tianda Oil Pipe,” Vallourec Press Release, September 15, 2010; found at 

http://www.vallourec.fr/en/media/press-releases/Press%20Releases/Vallourec-Tianda-press-release-15-September-2

010.pdfhttp://www.metalbulletin.com/Article.aspx?ArticleId=2714008, retrieved November 19, 2010. See also

hearing transcript, p. 36 (Fields).

 17 Petition, p. 21.

 18 Petitioners’ postconference brief, p. 41 and exh. 6; Petitioners’ posthearing brief, exh. 2. Friction weld lines

join the tool joints to the tube body, creating finished drill pipe. Ibid.

 19 Petitioners’ posthearing brief, exh. 2.

 20 Hearing transcript, pp. 204-208 (Murphy), and Respondents’ posthearing brief, exh. 24.

 21 Hearing transcript, p. 294 (Wu) and Respondents’ posthearing brief, pp.11-12.

 22 Hearing transcript, p. 200 (Leibowitz) and Respondents’ postconference brief, p. 26.

 23 Respondents’ posthearing brief, p. 12.

 24 Ibid.

 25 Petitioners’ postconference brief, p. 42.

 26 *** provided unuseable data for unfinished drill pipe. *** reported production of approximately *** tons of

unfinished drill pipe, *** of which was exported to the United States.

 27 The Commission received 7 of the 12 firms identified by responding Chinese producers as the largest producers

of drill pipe in China, and 5 of the 12 firms identified as the largest producers of drill collars in China.

VII-4
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, 2009

Foreign producer/exporter

2009 Production

2009 Exports to the United

States

Quantity (short

tons) Share (percent)

Quantity (short

tons) Share (percent)

Unfinished drill pipe

Jiangyin 1 *** *** *** ***

NOV Grant Prideco 2 *** *** *** ***

Shengli 3 *** *** *** ***

Wuxi 4 *** *** *** ***

Total *** *** *** ***

Finished drill pipe

Baoshan 5 *** *** *** ***

DP Master 6 *** *** *** ***

Henan 7 *** *** *** ***

Jiangsu 8 *** *** *** ***

Jiangyin 1 *** *** *** ***

NOV Grant Prideco 2 *** *** *** ***

Shanxi Fenglei 9 *** *** *** ***

Shanxi Huanjie 10 *** *** *** ***

Shengli 3 *** *** *** ***

Wuxi 4 *** *** *** ***

Total *** *** *** ***

Unfinished drill collars

Henan 7 *** *** *** ***

Jiangsu 8 *** *** *** ***

Total *** *** *** ***

Finished drill collars

DP Master 6 *** *** *** ***

Henan 7 *** *** *** ***

Jiangsu 8 *** *** *** ***

Jiangyin1 *** *** *** ***

Shanxi Fenglei 9 *** *** *** ***

Shanxi Huanjie 10 *** *** *** ***

Total *** *** *** ***

Table continued on next page.

VII-5
Table VII-2--Continued

Drill pipe and drill collars: Reporting manufacturers/exporters in China, and quantities and

shares of reported production and exports to the United States, 2009

1

 ***.

2

 ***.

3

 ***.

4

 ***.

5

 ***.

6

 ***.

7

 ***.

8

 ***.

9

 ***.

10 ***.

11 Undefined.

Note.– Because of rounding, figures may not add to totals shown.

Source: Compiled from data submitted in response to Commission questionnaires.

Tables VII-3a, VII-3b, VII-3c, and VII-3d present information on Chinese producers’ unfinished

drill pipe, finished drill pipe, unfinished drill collars, and finished drill collars operations, respectively, as

compiled from responses to the Commission’s questionnaires. Three companies reported production of

unfinished drill pipe, although only one, ***, reported exports to the United States, and then only in

***.28 *** accounted for all reported internal consumption of unfinished drill pipe.29 In 2009, internal

consumption of drill pipe accounted for *** percent of total shipments of Chinese unfinished drill pipe. 

All foreign producers reported production of finished drill pipe, with only three firms, ***, reporting no

exports to the United States.30 Two firms reported production of unfinished drill collars; both reporting

exports to the United States.31 32 The largest producer, ***, reported low capacity utilization rate ranging

from *** percent.33 Six firms responded that they produce finished drill collars, with all but one, ***,

reporting exports to the United States during 2007-09. A greater percentage of China’s exports of

finished drill pipe and finished drill collars were to markets other than the United States. Chinese exports

of finished drill pipe to non-U.S. markets increased from 2007 through 2009 by *** percent. During the

 28 *** reported production of unfinished drill pipe, but did not provide useable data.

 29 *** 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. *** reported production

capacity greater than 100 percent in 2007 and 2008 as a result of ***. Email from ***, November 17, 2010.

 30 One firm *** reported capacity utilization greater that 100 percent in 2007, and to a lesser extent in 2008 as a

result of being able to add a second shift, in conjunction with an abundance of skilled workers, large number of drill

pipe orders, and a good supply of acceptable tool joints. *** noted that this situation was unusual and currently it

does not have sufficient skilled workers to full shifts on their existing weld lines. Email from ***, January 20, 2011.

 31 *** reported as its U.S. importers, ***, reported importing ***. *** reported as its U.S. importers of

unfinished drill collars (***) reported importing ***.

 32 Staff believes that a substantial portion of the difference between the reported exports from China to the United

States of (1) unfinished drill pipe and (2) finished drill pipe and the reported U.S. imports from China of unfinished

drill pipe and finished drill pipe consists of exports by Chinese producers ***, which failed to provide responses to

the Commission’s foreign producers’ questionnaire.

 33 *** reported the same production capacity for unfinished drill collars and finished drill collars (for which

capacity utilization ranged from *** percent). 

VII-6
same period, Chinese exports of finished drill pipe to the United States decreased by 28.6 percent.34

Chinese exports of finished drill collars to non-U.S. markets increased from 2007 through 2009 by ***

percent. During the same period, Chinese exports of finished drill pipe to the United States decreased by

*** percent.

Table VII-3a

Unfinished drill pipe: Chinese production capacity, production, shipments, and inventories, 2007-

09, January-June 2009, January-June 2010, and projected 2010-11

* * * * * * *

 34 Reported exports from China to the United States during January 2007 - June 2010 were equivalent to

approximately 70.7 percent of reported U.S. imports from China during this same period (as opposed to exports of

finished drill collars, equivalent to only 28.6 percent of U.S. imports). This calculation excludes imports by ***

which consisted of ***.

VII-7
Table VII-3b

Finished drill pipe: Chinese production capacity, production, shipments, and inventories, 2007-

09, January-June 2009, January-June 2010, and projected 2010-11

Item

Actual experience Projections

2007 2008 2009

January-June

2009 2010 2010 2011

Quantity (short tons)

Capacity 146,054 200,775 191,346 98,662 96,817 176,875 181,875

Production 143,437 163,498 82,969 48,126 52,726 83,296 96,223

End of period inventories 14,015 29,750 23,865 26,551 21,881 16,899 10,999

Shipments:

Internal consumption 0000000

Home market 75,563 70,064 38,807 22,313 29,827 43,884 52,214

Exports to--

The United States 22,327 24,447 15,949 12,018 8,404 13,391 13,530

European Union *** *** *** *** *** *** ***

Russia *** *** *** *** *** *** ***

All other markets *** *** *** *** *** *** ***

Total exports 55,488 76,744 49,143 28,371 24,892 46,585 49,959

Total shipments 131,051 146,808 87,950 50,684 54,719 90,469 102,173

Ratios and shares (percent)

Capacity utilization 98.2 81.4 43.4 48.8 54.5 47.1 52.9

Inventories to production 9.8 18.2 28.8 27.6 20.8 20.3 11.4

Inventories to total

shipments 10.7 20.3 27.1 26.2 20.0 18.7 10.8

Share of total shipments:

Internal consumption 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Home market 57.7 47.7 44.1 44.0 54.5 48.5 51.1

Exports to--

The United States 17.0 16.7 18.1 23.7 15.4 14.8 13.2

European Union *** *** *** *** *** *** ***

Russia *** *** *** *** *** *** ***

All other markets *** *** *** *** *** *** ***

All export

markets 42.3 52.3 55.9 56.0 45.5 51.5 48.9

Source: Compiled from data submitted in response to Commission questionnaires.

VII-8
Table VII-3c

Unfinished drill collars: Chinese production capacity, production, shipments, and inventories, 

2007-09, January-June 2009, January-June 2010, and projected 2010-11

* * * * * * *

Table VII-3d

Finished drill collars: Chinese production capacity, production, shipments, and inventories, 2007-

09, January-June 2009, January-June 2010, and projected 2010-11

* * * * * * *

U.S. IMPORTERS’ INVENTORIES OF DRILL PIPE AND DRILL COLLARS

Data collected in these investigations on U.S. importers’ end-of-period inventories of finished

drill pipe, unfinished drill pipe, and finished drill collars are presented in tables VII-4a, VII-4b, and VII4d respectively. There are believed to only relatively small quantities of U.S. imports of unfinished drill

collars. Accordingly, table VII-4c is not presented. No U.S. importers reported holding inventories of

unfinished drill pipe from China in December 2009, or in June 2010.35 Five U.S. importers reported

holding inventories of finished drill pipe from China in December 2009, and seven in June 2010.36 Six

U.S. importers reported holding inventories of finished drill collars from China in December 2009 and six

in June 2010.

Table VII-4a

Unfinished drill pipe: U.S. importers’ end-of-period inventories of imports, 2007-09, January-June

2009, and January-June 2010

* * * * * * *

Table VII-4b

Finished drill pipe: U.S. importers’ end-of-period inventories of imports, 2007-09, January-June

2009, and January-June 2010

* * * * * * *

Table VII-4d

Finished drill collars: U.S. importers’ end-of-period inventories of imports, 2007-09, January-June

2009, and January-June 2010

* * * * * * *

 35 Two importers reported inventories in December 2009 and June 2010 of unfinished drill pipe from nonsubject

sources, four importers reported inventories of finished drill pipe from nonsubject sources, and one importer reported

inventories of finished drill collars from nonsubject sources.

 36 *** attributed the increase in inventories in January-June 2010 relative to January-June 2009 to anticipated

demand resulting from higher oil prices and the U.S. objective of obtaining self-sufficiency, as well as the perfecting

of fracking technology. *** U.S. importers’ questionnaire response. *** pointed to recent announcements by oil

companies predicting the doubling of rig capacity in 2011. *** U.S. importers’ questionnaire response. 

VII-9
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 June 30, 2010. Table VII-5 presents these data.

Table VII-5

Drill pipe and drill collars: U.S. importers’ current orders of imports, July 2010-June 2011

* * * * * * *

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.”37 Subsequently, the European Union imposed definitive

antidumping duties ranging from 17 to 39 percent.38

Argentina 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.39 However, Argentine sources indicate that the scope of the investigations

is limited to casing and tubing.40 41

 37 Official Journal of the European Union, Commission Regulation (EC) No. 289/2009, L 94/48, April 8, 2009.

 38 Official Journal of the European Union, Commission Regulation (EC) No. 926/2009, L 262/19, October 6,

2009.

 39 “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.

 40 Informe semestral sobre las medidas antidumping, correspondiente al periofo comprendido entre el 1 de enero

de 2010 y el 30 junio 2010, Informe Semestral OMC - 1o

 Semestre 2010, found at

http://www.comercio.gov.ar/web/index.php?pag=107&btn=161&PHPSESSID=12c4231b521ecfbdcc415509e6d144

a4, retrieved on January 21, 2011.

 41 In addition, Russia reportedly concluded its own antidumping duty investigation on steel pipe from China in

October 2009. The investigation found that Chinese market share in Russia 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. “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. No Chinese producer or exporter reported, nor can Staff find evidence of a final

action covering drill pipe from China.

VII-10
INFORMATION ON NONSUBJECT COUNTRIES

Supply Considerations

Seamless tube is produced throughout the world, as noted previously in table VII-1. Between

2005 and 2007,42 global production of all seamless tubular products increased by 30 percent to 32.4

million short tons. China’s growth in the production of seamless tube has outpaced that of all other global

producers. As indicated by WSA data, China’s share of world seamless tubular production increased

from about 50 percent in 2005 to 62 percent in 2007. In addition, China seamless production rose by 3

percent during 2008-09. By contrast, U.S. production of seamless tubular products decreased by almost

55 percent in 2009 (table VII-1).

*** 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-6).

Table VII-6

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-7, worldwide drilling fell by almost 31 percent between 2008 and

2009, but recovered by over 30 percent year-on-year in 2010, led primarily by growth in drilling in the

United States. *** 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.43 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.44

Industry sources expect domestic shale gas developments to energize drill pipe demand in North

America. Companies such as VAM-Drilling, Sumitomo Corp, and several energy companies have

invested aggressively in shale gas activities in anticipation of strong demand growth in exploration in

North America and in other parts of the world.45 In addition, leading energy companies including Exxon,

ConocoPhillips, and Chevron have also committed to natural-gas exploration activity.46 MBR, however,

cautions that while shale gas play activities remain strong and North America’s rig count high, the

prolonged weakness in natural gas prices still persist and may extend into 2011.47

 42 As indicated previously, 2007 is chosen as a benchmark year because many countries failed to report to the

WSA for its annual reports published in subsequent years.

 43 ***.

 44 ***.

 45 “VAM Drilling and the Vallourec Group Are Investing to Be Closer to Clients,” VAM Newsletter No. 8, June

2010. Energy companies that have been aggressively involved in shale gas activities reportedly include Exxon,

Chevron, Devon Energy, Total, and Hess. 

 46 Angel Gonzalez and Russell Gold, “Exxon Stays Firm on Natural Gas Bet,” Wall Street Journal, November 10,

2010.

 47 MBR-Seamless, November 19, 2010, pp. 1-5.

VII-11
Table VII-7

Operating rigs: Global and regional annual averages, 2006–10

Region

2006 2007 2008 2009 2010

Quantity (number of rigs)

Latin America 324 355 384 356 385

Europe 77 78 98 84 105

Africa 58 66 65 62 79

Middle East 238 265 280 252 267

Far East 228 241 252 243 282

Canada 470 343 379 221 398

United States 1,648 1,768 1,878 1,086 1,711

 Total 3,043 3,116 3,336 2,304 3,227

Note.–Baker Hughes data do not include operations in China. However, Respondents provided documentation that

places the number of rigs in China at *** in December 2010, and estimate the current rig count to be *** . Respondents’

posthearing brief, exh. 25. While Petitioners estimated that the rig count in 2010 to be *** and *** in 2011. Petitioners’

posthearing brief, exh. 1.

Source: Baker Hughes, Inc., Worldwide Rig Count, January 2011.

Overall worldwide drilling activity is expected to be strong as several leading energy companies,

encouraged by the rising crude prices, plan to spend almost half a trillion dollars to explore oil and natural

gas in 2011, according to Barclays Capital, an investment bank.48

Leading Nonsubject Countries

The leading producers and exporters of drill pipe and drill collars are Austria, France, Germany,

Mexico, and Japan. Table VII-8 summarizes the primary suppliers while table VII-9 presents rig count as

a measure of demand.

 48 Russell Gold, “Oil Industry Cranks Up Spending,” Wall Street Journal, December 29, 2010.

VII-12
Table VII-8

Drill pipe and drill collars: Producers of drill pipe (API-5DP) in certain nonsubject countries

Country/Company Location

Tube capacity 

(short tons)

1

Related API

products Key products

Austria

Schoeller Bleckmann 

Oilfield Technology 

GmbH Ternitz NA 7-1

Drill collar, drill stem

sub

Voestalpine Tubulars 

Kinberg

Aumehl *** tons2 5DP, 5CT, 5L Drill pipe

France 

Drillstar Industries Lons NA 5CT, 7-1

Drill collar, drill stem

sub

Lainé Méchanique Lescar NA 7-1 Drill stem sub

Serco S.A. Lons NA 7-1 Drill stem sub

VAM Drilling-France Aulnoye 1 million tons3 5DP, 5CT

Green tube, drill pipe,

tool joints

VAM Drilling France 

S.A.S.

Cosne-surLoire

NA

7-1

Drill collar, drill stem

sub, heavy-weight

drill pipe

Germany

Baker Hughes Inteq 

GmbH Celle NA 7-1

Drill collar, drill stem

sub

Bentec GmbH

Bad

Bentheim NA 5CT, 7-1 Drill stem sub

Benteler Staht/Rohr 

GmbH Dinlaken *** tons4 5DP, 5CT, 5L Green tube, drill pipe

ESW - Röhrenwerke 

GmbH Eschweiler *** tons4 5DP, 5CT, 5L Drill pipe

Itag L&R GmbH Celle NA 5CT, 7-1

Drill collar, drill stem

sub, heavy-weight

drill pipe

Itag Valves and Oil 

Field Celle NA 7-1 Drill stem sub 

Perforator GmbH Wakenried NA 5DP, 7-1 Drill pipe, tool joint

Smith Services 

(Schlumberger) Celle NA 7-1 Drill stem sub

TPS-Technitube 

Rohrenwerke GmbH Nerdlen NA 5DP, 5CT, 5L Drill pipe

V&M Deutschlan GmbH

Muelheim

an der Ruhr *** tons4 5DP, 5CT, 5L Drill pipe

Table continued on next page.

VII-13
Table VII-8--Continued

Drill pipe and drill collars: Producers of drill pipe (API-5D) in certain nonsubject countries

Country/Company Location

Tube capacity 

(short tons)

1

Related API

products Key products

Japan

 Arai Iron Works Co., 

 Ltd. Edogawa NA

5CT, 5DP, 5L,

7-1

Drill pipe, tool joint,

drill collar, drill stem

sub

 JFE Steel Corp. Handa City *** tons5 5DP, 5CT, 5L Drill pipe

 Nippon Steel Corp. Tokyo *** tons6 5DP, 5CT, 5L, Drill pipe

 Petromaterials Corp. Wakayama NA

5DP, 5CT, 5L,

7-1 

Green tube, drill pipe,

tool joint, drill collar,

drill stem sub,

heavy-weight drill

pipe

 Sumitomo Metal 

 Industries Ltd. Wakayama *** tons6 5DP, 5CT, 5L Drill pipe

 Tenaris/ NKK Kawasaki *** tons6 5DP,5CT, 5L Green tube, drill pipe

 Tenaris/Arai Iron Works

 Co. Egodawa NA 5DP Drill pipe, tool joint

Mexico

 NOV Grant Prideco Veracruz NA 5DP, 7-1

Drill pipe, tool joint,

drill collar, drill stem

sub

 Tenaris Tamsa Veracruz *** tons7 5DP, 5CT, 5L Green tube, drill pipe 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: 5DP is for drill pipe; 5L for line pipe; 5CT for casing and tubing; and 7-1 for related

equipment including tool joint, heavy-weight drill pipe, and drill collar.

Note.–NA: Not available.

Source: Except as shown in footnotes, all data are from the API Composite List, 2010, found at

http://compositlist.api.org/companylist.asp/, retrieved November 10, 2010.

VII-14
Table VII-9

Operating rigs: Baker Hughes International Rig Count for selected countries, 2004-10

Country

Rig counts

Highest (date) Lowest (date) December 2010

Austria 3 (12/09) 0 (8/09) 3

France 2 (3/08) 0 (10/10) 0

Germany 12 (11/08) 2 (12/04) 7

Mexico 130 (9/09) 112 (8/04) 80

Japan 6 (6/08) 1 (3/10) 1

Canada 715 (2/06) 72 (5/09) 398

United States 2,014 (9/08) 895 (6/09) 1,711

 Note.–Highest and lowest rig counts are for the last 7 years. Data for China and Korea are not available. 

Sources: Baker Hughes International Rig Count, January 2011, Rig counts of the United States and Canada

found at

http://files.shareholder.com/downloads/BHI/1129108159x0x434016/41C6DF78-9182-46F5-81E8-9FEC9CE23C95/

Worldwide_Dec_10.pdf, retrieved January 12, 2011. 

Rig counts for other countries found at http://investor.shareholder.com/bhi/rig_counts/rc_index.cfm; retrieved

January 12, 2011.

Austria

Voest-Alpine Tubulars (“VAT”) is the leading seamless OCTG manufacturer in Austria. At the

end of 2009, Voest-Alpine employed 22,000 workers in its 28 subsidiaries, of which approximately *** 

are employed at VAT.49

VAT is a joint venture between the NOV Grant Prideco Company and the Austria-based

Voestalpine Group. NOV has a 50.01 percent investment in the joint venture which is located in

Kindberg, Austria. VAT owns a tubular mill with an annual capacity of approximately 420,000 short tons

and is the primary supplier of green tubes for NOV’s U.S. production.50 VAT manufactures drill pipe and

line pipe with outside diameters up to 7 inches.51 U.S.-based NOV Grant Prideco is one of the world’s

largest manufacturers of drill pipe and related products.52 According to an industry source, VAT is a

 49 Eurofound, “Voestalpine Austria: A Comprehensive Approach,” October 29, 2009, found at

http://www.eurofound.europa.eu/areas/populationandsociety/cases/at003.htm, retrieved October 18, 2020.

Eurofound or the European Foundation for the Improvement of Living and Working Conditions is an EU agency set

up by the European Council in 1975, and email from ***, January 31, 2011.

 50 In addition to producing green tubes, VAT also produces seamless tubular products for the OCTG market and

other tubular products for the automotive, petrochemical, construction, mining, tunneling, and transportation

industries.

 51 Voestalpine’s website, found at http://www.vatubulars.com, retrieved May 4, 2009; and staff telephone

interview with ***, May 1, 2009. 

 52 National Oil Well Varco Inc, Form 10-K, February 26, 2010, found at 

http://www.faqs.org/sec-filings/100226/NATIONAL-OILWELL-VARCO-INC_10-K, retrieved November 23, 2010.

Voestalpine’s website, found at http://www.vatubulars.com, retrieved May 4, 2009. 

VII-15
high-quality producer focused on the upper end of the market and its production lines are equipped with

modern automatic manufacturing facilities.53 

Currently, as with many other countries in the EU, Austria must rely on imports for its energy

needs and Austria’s domestic drill pipe market is limited since the country has few active rotary rigs.

However, some experts believe that, in the future, increasing drilling for shale gas reserve from Austria’s 

Mikulov plays will help make Austria self-sufficient in natural gas.54

France

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 in that year.55

Currently, VAM Drilling-France (VAM) is the only drill pipe producer in France. VAM Drilling

is part of the oil and gas division of Vallourec & Mannesmann Tubes, a subsidiary of the Vallourec

Group. VAM is a global seamless producer supported by annual production of 2.5 million short tons of

steel pipe worldwide. This global network includes 15 production facilities for seamless OCTG

production in many countries, including the United States.56 

VAM claims to be one of the world’s largest fully integrated manufacturers of a wide range of

seamless tubular products including drill pipe, tool joint, line pipe, and casing and tubing.57 In the United

States, VAM Drilling-United States receives green tubes for processing from VAM’s mills in France,

Germany, and Brazil. 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.58

Similar to Austria, France currently has no significant oil or natural gas resources and thus no

domestic drilling activities (table VII-9). However, shale gas drilling is being explored in France. 

Recently, Hess Corporation, a U.S. oil company, and its partner, Paris-based Toreador Resources Corp.,

announced plans to start drilling in the Paris Basin region for shale oil.59 In addition, Total, a French

energy company, has acquired lands in southern France for shale gas exploration. The National

Petroleum Council expects that France will increase the exploration of its shale gas reserve in its national

drive for energy self-efficiency in the future.60

 53 Staff telephone interview with ***, May 1, 2009. 

 54 Don Stowers, “Europe May Be Setting for Next Shale Revolution,” Editorial, Oil & Gas Financial Journal,

November 2010, found at

http://www.pennenergy.com/index/petroleum/display/8859256614/articles/oil-gas-financial-journal/volume-7/issue11/features/europe-may-be-setting-for-next-shale.html, retrieved November 2010.

 55 ***. 

 56 The Simdex Steel Tube Manufacturers Worldwide Guide, Simdex Publishing, 2009. Houston-base VAM

Drilling USA is an affiliate of the Vallourec Group (France).

 57 VAM Drilling Catalogue, p. 2. 

 58 VAM Drilling Catalogue, p. 2.

 59 Paula Dittrick, “Hess Plans to Add Another Rig to Bakken Play,” Oil and Gas Journal, November 1, 2010,

found at 

http://www.ogj.com/index/article-tools-template/_printArticle/articles/oil-gas-journal/drilling-production-2/2010/11/

hess-plans_to_add.html, retrieved November 18, 2010. The Paris Basin region is mainly for oil.

 60 Don Stowers,“Europe May Be Setting for Next Shale Revolution,” Editorial, Oil & Gas Financial Journal,

November 2010, found at

http://www.pennenergy.com/index/petroleum/display/8859256614/articles/oil-gas-financial-journal/volume-7/issue11/features/europe-may-be-setting-for-next-shale.html, retrieved November 2010.

VII-16
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 in that year.61 There are five known producers of

drill pipe in Germany: Benteler Stahl/Rohr GmbH, ESW-Röhrenwerke GmbH, Perforator GmbH, TPSTechnitube Rohrenwerke, and VAM Deutschland GmbH (“VMD”).62 They 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.63

Similar to many EU countries, although Germany must currently rely on imports for its energy

needs, increasing the search for shale gas deposits in Germany’s Posidonia play could reduce dependence

on imported supplies, according to the National Petroleum Council.64

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 is only 16 percent energy self-sufficient.65 As of December

2010, Japan had only 1 active rotary rig (table VII-9). As such, Japan exports almost all of its drill pipe

production and Japanese companies have invested extensively in the search for deposits, including shale

gas, in many countries.66 According to ***, Japan produced *** of seamless OCTG in 2007, ranking

fourth, behind China, the United States, and Russia.67 Japan has six manufacturers of drill pipe, including

Arai Iron Works, 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.68

 61 ***.

 62 VMD is affiliated with seamless pipe producers VAM Star (United States), VAM Brazil (Brazil), VAM France

(France), and VA Tubes. These companies are wholly-owned by Vallourec (France).

 63 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.

 64 Don Stowers,“Europe May Be Setting for Next Shale Revolution,” Editorial, Oil & Gas Financial Journal,

November 2010, found at

http://www.pennenergy.com/index/petroleum/display/8859256614/articles/oil-gas-financial-journal/volume-7/issue11/features/europe-may-be-setting-for-next-shale.html, retrieved November 2010.

 65 Energy Information Administration, Country Energy Profile-Japan, September 2010, found at

http://www.eia.doe.gov/emeu/cabs/Japan/Background.html, retrieved November 19, 2010.

 66 Reuters, “Japan’s Osaka Gas Could Invest in Shale Gas Project,” found at 

http://af.reuters.com/articlePrint?articleId=AFTOE6AG05X20101118, retrieved November 29, 2010. 

 67 ***. 

 68 ***.

VII-17
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 in

that year.69

Tubos de Acero de Mexico (“TAMSA”) is wholly owned by Tenaris and located in Veracruz. It 

has an annual production capacity of approximately 875,000 short tons of finished products, which

include seamless pipe (excluding OCTG), OCTG casing, drill pipe, fittings, mechanical tubing, and

automotive components.70 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.71 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 2011.72 Also in Veracruz, a U.S. company, NOV Grant Prideco, has a

facility producing drill pipe and accessories as indicated in table VII-8.

According to the U.S. Department of Energy, Mexico is a major non-OPEC oil producer, and

state-owned Petroleos Mexicanos (Pemex) is one of the world’s largest oil companies. However with the

recent decline in oil production, Pemex is evaluating shale gas exploration in the northern state of

Coahuila to reduce its natural gas imports from the United States.73

 69 ***. 

 70 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.

 71 Tenaris, Annual Report 2008, p. 9; Tenaris press release, “Tenaris To Expand Production Capacity,” September

2, 2008.

 72 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.

 73 Energy Information Administration, Country Energy Profile-Mexico, June 2010, found at

http://www.eia.doe.gov/emeu/cabs/Mexico/Background.html; retrieved November 19, 2010; See also Nacha Cattan,

“Pemex Considers Shale Gas Exploration Line, Crude Imports,” MarketNews, found at 

http://imarketnews.com/node/18523, retrieved November 19, 2010.

VII-18
APPENDIX A

FEDERAL REGISTER NOTICES

A-1

54912 Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Notices 

1For purposes of these investigations, the 

Department of Commerce has defined the subject 

International Trade Commission on 

August 5, 2010, under section 337 of the 

Tariff Act of 1930, as amended, 19 

U.S.C. 1337, on behalf of Invacare 

Corporation of Elyria, Ohio. The 

complaint alleges violations of section 

337 based upon the importation into the 

United States, the sale for importation, 

and the sale within the United States 

after importation of certain adjustableheight beds and components thereof by 

reason of infringement of certain claims 

of U.S. Patent No. 6,983,495 (‘‘the ’495 

patent’’); U.S. Patent No. 6,997,082 (‘‘the 

’082 patent’’); U.S. Patent No. 7,302,716 

(‘‘the ’716 patent’’); and U.S. Patent No. 

7,441,289 (‘‘the ’289 patent’’). The 

complaint further alleges that an 

industry in the United States exists as 

required by subsection (a)(2) of section 

337. 

The complainant requests that the 

Commission institute an investigation 

and, after the investigation, issue an 

exclusion order and a cease and desist 

order. 

ADDRESSES: The complaint, except for 

any confidential information contained 

therein, is available for inspection 

during official business hours (8:45 a.m. 

to 5:15 p.m.) in the Office of the 

Secretary, U.S. International Trade 

Commission, 500 E Street, SW., Room 

112, Washington, DC 20436, telephone 

202–205–2000. Hearing impaired 

individuals are advised that information 

on this matter can be obtained by 

contacting the Commission’s TDD 

terminal at 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 at http:// 

www.usitc.gov. The public record for 

this investigation may be viewed on the 

Commission’s electronic docket (EDIS) 

at http://edis.usitc.gov. 

FOR FURTHER INFORMATION CONTACT: 

Jeffrey T. Hsu, Esq., Office of Unfair 

Import Investigations, U.S. International 

Trade Commission, telephone (202) 

205–2579. 

Authority: The authority for institution of 

this investigation is contained in section 337 

of the Tariff Act of 1930, as amended, and 

in section 210.10 of the Commission’s Rules 

of Practice and Procedure, 19 CFR 210.10 

(2010). 

Scope of Investigation: Having 

considered the complaint, the U.S. 

International Trade Commission, on 

September 1, 2010, ordered that— 

(1) Pursuant to subsection (b) of 

section 337 of the Tariff Act of 1930, as 

amended, an investigation be instituted 

to determine whether there is a 

violation of subsection (a)(1)(B) of 

section 337 in the importation into the 

United States, the sale for importation, 

or the sale within the United States after 

importation of certain adjustable-height 

beds and components thereof that 

infringe one or more of claims 1–8, 12– 

14, 26, and 27 of the ’495 patent; claims 

1, 2, 5, 10–12, 14, and 18–23 of the ’082 

patent; claims 1–3, 5, 6, 8, 10, 11, 13, 

14, and 18 of the ’716 patent; and claims 

8 and 9 of the ’289 patent, and whether 

an industry in the United States exists 

as required by subsection (a)(2) of 

section 337; 

(2) Pursuant to Commission Rule 

210.50(b)(1), 19 CFR 210.50(b)(1), the 

presiding administrative law judge shall 

take evidence or other information and 

hear arguments from the parties and 

other interested persons with respect to 

the public interest in this investigation, 

as appropriate, and provide the 

Commission with findings of fact on 

this issue; (3) For the purpose of the 

investigation so instituted, the following 

are hereby named as parties upon which 

this notice of investigation shall be 

served: 

(a) The complainant is: 

Invacare Corporation, One Invacare 

Way, Elyria, OH 44035. 

(b) The respondents are the following 

entities alleged to be in violation of 

section 337, and are the parties upon 

which the complaint is to be served: 

Medical Depot, Inc., d/b/a Drive 

Medical Design and Manufacturing, 

99 Seaview Boulevard, Port 

Washington, NY 11050. 

Shanghai Shunlong Physical Therapy 

Equipment Co., Ltd., No. 259 Jiugan 

Road, Songjiang District, Shanghai, 

China 201601. 

(c) The Commission investigative 

attorney, party to this investigation, is 

Jeffrey T. Hsu, Esq., Esq., Office of 

Unfair Import Investigations, U.S. 

International Trade Commission, 500 E 

Street, SW., Suite 401, Washington, DC 

20436; and 

(4) For the investigation so instituted, 

the Honorable Paul J. Luckern, Chief 

Administrative Law Judge, U.S. 

International Trade Commission, shall 

designate the presiding Administrative 

Law Judge. 

Responses to the complaint and the 

notice of investigation must be 

submitted by the named respondents in 

accordance with section 210.13 of the 

Commission’s Rules of Practice and 

Procedure, 19 CFR 210.13. Pursuant to 

19 CFR 201.16(d)–(e) and 210.13(a), 

such responses will be considered by 

the Commission if received not later 

than 20 days after the date of service by 

the Commission of the complaint and 

the notice of investigation. Extensions of 

time for submitting responses to the 

complaint and the notice of 

investigation will not be granted unless 

good cause therefor is shown. 

Failure of a respondent to file a timely 

response to each allegation in the 

complaint and in this notice may be 

deemed to constitute a waiver of the 

right to appear and contest the 

allegations of the complaint and this 

notice, and to authorize the 

administrative law judge and the 

Commission, without further notice to 

the respondent, to find the facts to be as 

alleged in the complaint and this notice 

and to enter an initial determination 

and a final determination containing 

such findings, and may result in the 

issuance of an exclusion order or a cease 

and desist order or both directed against 

the respondent. 

Issued: September 2, 2010. 

By order of the Commission. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. 2010–22402 Filed 9–8–10; 8:45 am] 

BILLING CODE 7020–02–P

INTERNATIONAL TRADE 

COMMISSION 

[Investigations Nos. 701–TA–474 (Final) and 

731–TA–1176 (Final)] 

Drill Pipe and Drill Collars From China 

AGENCY: United States International 

Trade Commission. 

ACTION: Scheduling of the final phase of 

countervailing duty and antidumping 

investigations. 

SUMMARY: The Commission hereby gives 

notice of the scheduling of the final 

phase of countervailing duty 

investigation No. 701–TA–474 (Final) 

under section 705(b) of the Tariff Act of 

1930 (19 U.S.C. 1671d(b)) (the Act) and 

the final phase of antidumping 

investigation No. 731–TA–1176 (Final) 

under section 735(b) of the Act (19 

U.S.C. 1673d(b)) to determine whether 

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 

subsidized and less-than-fair-value 

imports from China of drill pipe and 

drill collars, primarily provided for in 

subheadings 7304.22, 7304.23, and 

8431.43 of the Harmonized Tariff 

Schedule of the United States.1

mstockstill on DSKH9S0YB1PROD with NOTICES

Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Notices 54913 

merchandise as 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. 

Commerce’s 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. 

For further information concerning 

the conduct of this phase of the 

investigations, hearing procedures, 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 C (19 CFR part 207). 

DATES: Effective Date: August 18, 2010. 

FOR FURTHER INFORMATION CONTACT: 

Nathanael Comly (202–205–3174) or 

Douglas Corkran (202–205–3057), Office 

of Investigations, U.S. International 

Trade Commission, 500 E Street, SW., 

Washington, DC 20436. Hearingimpaired 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. The final phase of these 

investigations is being scheduled as a 

result of affirmative preliminary 

determinations by the Department of 

Commerce that certain benefits which 

constitute subsidies within the meaning 

of section 703 of the Act (19 U.S.C. 

1671b) are being provided to 

manufacturers, producers, or exporters 

in China of drill pipe and drill collars, 

and that such products are being sold in 

the United States at less than fair value 

within the meaning of section 733 of the 

Act (19 U.S.C. 1673b). The 

investigations were requested in 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, including 

industrial users of the subject 

merchandise and, if the merchandise is 

sold at the retail level, representative 

consumer organizations, wishing to 

participate in the final phase of these 

investigations as parties must file an 

entry of appearance with the Secretary 

to the Commission, as provided in 

section 201.11 of the Commission’s 

rules, no later than 21 days prior to the 

hearing date specified in this notice. A 

party that filed a notice of appearance 

during the preliminary phase of the 

investigations need not file an 

additional notice of appearance during 

this final phase. The Secretary will 

maintain a public service list containing 

the names and addresses of all persons, 

or their representatives, who are parties 

to the investigations. 

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 the 

final phase of these investigations 

available to authorized applicants under 

the APO issued in the investigations, 

provided that the application is made 

no later than 21 days prior to the 

hearing date specified in this notice. 

Authorized applicants must represent 

interested parties, as defined by 19 

U.S.C. 1677(9), who are parties to the 

investigations. A party granted access to 

BPI in the preliminary phase of the 

investigations need not reapply for such 

access. A separate service list will be 

maintained by the Secretary for those 

parties authorized to receive BPI under 

the APO. 

Staff report. The prehearing staff 

report in the final phase of these 

investigations will be placed in the 

nonpublic record on December 8, 2010, 

and a public version will be issued 

thereafter, pursuant to section 207.22 of 

the Commission’s rules. 

Hearing. The Commission will hold a 

hearing in connection with the final 

phase of these investigations beginning 

at 9:30 a.m. on January 5, 2011, at the 

U.S. International Trade Commission 

Building. Requests to appear at the 

hearing should be filed in writing with 

the Secretary to the Commission on or 

before December 21, 2010. A nonparty 

who has testimony that may aid the 

Commission’s deliberations may request 

permission to present a short statement 

at the hearing. All parties and 

nonparties desiring to appear at the 

hearing and make oral presentations 

should attend a prehearing conference 

to be held at 9:30 a.m. on December 27, 

2010, at the U.S. International Trade 

Commission Building. Oral testimony 

and written materials to be submitted at 

the public hearing are governed by 

sections 201.6(b)(2), 201.13(f), and 

207.24 of the Commission’s rules. 

Parties must submit any request to 

present a portion of their hearing 

testimony in camera no later than 7 

business days prior to the date of the 

hearing. 

Written submissions. Each party who 

is an interested party shall submit a 

prehearing brief to the Commission. 

Prehearing briefs must conform with the 

provisions of section 207.23 of the 

Commission’s rules; the deadline for 

filing is December 15, 2010. Parties may 

also file written testimony in connection 

with their presentation at the hearing, as 

provided in section 207.24 of the 

Commission’s rules, and posthearing 

briefs, which must conform with the 

provisions of section 207.25 of the 

Commission’s rules. The deadline for 

filing posthearing briefs is January 12, 

2011; witness testimony must be filed 

no later than three days before the 

hearing. In addition, any person who 

has not entered an appearance as a party 

to the investigations may submit a 

written statement of information 

pertinent to the subject of the 

investigations, including statements of 

support or opposition to the petition, on 

or before January 11, 2011. On January 

31, 2011, the Commission will make 

available to parties all information on 

which they have not had an opportunity 

to comment. Parties may submit final 

comments on this information on or 

before February 2, 2011, but such final 

comments must not contain new factual 

information and must otherwise comply 

with section 207.30 of the Commission’s 

rules. All written submissions must 

conform with the provisions of section 

201.8 of the Commission’s rules; any 

submissions that contain BPI must also 

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). 

Additional written submissions to the 

Commission, including requests 

pursuant to section 201.12 of the 

Commission’s rules, shall not be 

accepted unless good cause is shown for 

accepting such submissions, or unless 

mstockstill on DSKH9S0YB1PROD with NOTICES

54914 Federal Register / Vol. 75, No. 174 / Thursday, September 9, 2010 / Notices 

the submission is pursuant to a specific 

request by a Commissioner or 

Commission staff. 

In accordance with sections 201.16(c) 

and 207.3 of the Commission’s 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 207.21 of the 

Commission’s rules. 

Issued: September 2, 2010. 

By order of the Commission. 

Marilyn R. Abbott, 

Secretary to the Commission. 

[FR Doc. 2010–22401 Filed 9–8–10; 8:45 am] 

BILLING CODE 7020–02–P 

DEPARTMENT OF JUSTICE 

Antitrust Division 

Notice Pursuant to the National 

Cooperative Research and Production 

Act of 1993—Robotics Technology 

Consortium, Inc. 

Notice is hereby given that, on July 

26, 2010, pursuant to Section 6(a) of the 

National Cooperative Research and 

Production Act of 1993, 15 U.S.C. 4301 

et seq. (‘‘the Act’’), Robotics Technology 

Consortium (‘‘RTC’’) has filed written 

notifications simultaneously with the 

Attorney General and the Federal Trade 

Commission disclosing changes in its 

membership. The notifications were 

filed for the purpose of extending the 

Act’s provisions limiting the recovery of 

antitrust plaintiffs to actual damages 

under specified circumstances. 

Specifically, 3M Company, St. Paul, 

MN; AEB, Inc., Windsor, CT; Action 

Engineering, LLC, Morrison, CO; Alliant 

Techsystems, Inc., Beltsville, MD; 

American Android Corp., Princeton, NJ; 

American GNC Corporation, Simi 

Valley, CA; Association for Unmanned 

Vehicle Systems International (AUVSI), 

Arlington, VA; BEN Technologies Corp., 

Cambridge, MA; Caterpillar Inc., Peoria, 

IL; Charles River Analytics, Inc., 

Cambridge, MA; Coherent Logix, 

Incorporated, Amstin, TX; Dataspeed 

Inc., Troy, MI; Delta Tau Data Systems, 

Inc., Chatsworth, CA; Dragonfly 

Pictures, Inc., Essington, PA; Edge 

Robotics Inc., Pittsburgh, PA; Energetics 

Technology Center, Inc., La Plata, MD; 

Expertise Applications Inc., San Diego, 

CA; 101–Integrated Consultants, Inc., 

San Diego, CA; Integration Innovation 

Inc., Huntsville, AL; Intraduce Transit, 

LLC, Birmingham, AL; Kraft 

TeleRobotics, Inc., Overland Park, KS; 

L–3 Services Inc., Burlington, MA; 

Lawrence Technological University, 

Southfield, MI; Michigan State 

University, East Lansing, MI; Michigan 

Technological University, Houghton, 

MI; MIT Lincoln Laboratory, Lexington, 

MA; Mountain Top Technologies, Inc., 

Johnstown, PA; Neya Systems, LLC, 

Seven Fields, PA; NIITEK, Inc., Dulles, 

VA; Oakland University, Rochester, MI; 

Oceaneering Space Systems, Houston, 

TX; Omnitech Robotics International 

LLC, Easton, MD; Pegasus Global 

Strategic Solutions, Reston, VA; Pelican 

Mapping, Fairfax, VA; Polygon 

Company, Walkerton, IN; RoPro Design 

Inc., Beaver, PA; San Diego State 

University Research Foundation, San 

Diego, CA; Sensable Technologies, 

Woburn, MA; Springfield Electric 

Supply Company, Inc., Springfield, IL; 

Square One Systems Design, Inc., 

Jackson, WY; Stealth Composites, LLC, 

Salt Lake City, UT; Teledyne Scientific 

& Imaging, LLC, Durham, NC; The 

George Washington University, 

Washington, DC; The University of 

Texas at Arlington, Arlington, TX; 

University of Detroit Mercy, Detroit, MI; 

University of Southern California, 

Marina del Rey, CA; Van Doren Designs, 

LLC, Southbury, CT; Virtus Advanced 

Sensors, Pittsburgh, PA; Wayne State 

University-College of Engineering, 

Detroit, MI; William Travis Lontz, 

Auburn, AL; and Workhorse 

Technologies, LLC, Pittsburgh, PA, have 

been added as parties to this venture. 

Also, Artisan Robotics, Tucson, AZ; 

Burnham Consulting Inc., Chesterfield, 

MO; Esys Integration Corporation, 

Auburn Hills, MI; JADI, Inc., Troy, MI; 

Mobile Robots Inc., Amherst, NH; 

Oceana Sensor Technologies, Inc., 

Virginia Beach, VA; Old Dominion 

University, Norfolk, VA; Prioria 

Robotics, Inc., Gainesville, FL; Rababy & 

Associates, LLC, Spotsylvania, VA; 

Robotex Incorporated, Palo Alto, CA; 

Robot Worx, Marion, OH; RPU 

Technology, Inc., Needham, MA; 

Scientific Systems Company, Inc., 

Woburn, MA; Secure Axxess Solutions, 

LLC, Nashua, NH; Sense Technologies, 

LLC, Boerne, TX; Technical Products 

Inc., Ayer, MA; The Charles Stark 

Draper Laboratory, Cambridge, MA; The 

University of Texas at Austin, Austin, 

TX; and Virginia Tech, Blacksburg, VA, 

have withdrawn as parties to this 

venture. In addition, Kuchera Defense 

Systems has changed its name to API 

Defense, Inc., Windber, PA, and The 

Droid Works, Inc. has changed its name 

to CyPhy Works, Inc., Framingham, MA. 

No other changes have been made in 

either the membership or planned 

activity of this group research additional 

written membership. 

On October 15, pursuant to Section 

the group research project. Membership 

in project remains open, and RTC 

intends to file notifications disclosing 

all changes. In 2009, RTC filed its 

original notification 6(a) of the Act. The 

Department of Justice published a notice 

in the Federal Register pursuant to 

Section 6(b) of the Act on November 30, 

2009 (74 FR 62599). 

Patricia A. Brink, 

Deputy Director of Operations, Antitrust 

Division. 

[FR Doc. 2010–22215 Filed 9–8–10; 8:45 am] 

BILLING CODE 4410–11–M 

DEPARTMENT OF JUSTICE 

Antitrust Division 

Notice Pursuant to the National 

Cooperative Research and Production 

Act of 1993—LiMo Foundation 

Notice is hereby given that, on July 1, 

2010, pursuant to section 6(a) of the 

National Cooperative Research and 

Production Act of 1993, 15 U.S.C. 4301 

et seq. (‘‘the Act’’), LiMo Foundation 

(‘‘LiMo’’) filed written notifications 

simultaneously with the Attorney 

General and the Federal Trade 

Commission disclosing changes in its 

membership. The notifications were 

filed for the purpose of extending the 

Act’s provisions limiting the recovery of 

antitrust plaintiffs to actual damages 

under specified circumstances. 

Specifically, SRS Labs, Santa Ana, CA; 

Smart Communications, Inc., Makati 

City, Republic of the Philippines; NTT 

Data MSE Corporation, Yokohama, 

Japan; STEricsson AB, Lund, Sweden, 

have been added as parties to this 

venture. Specifically, Broadcom 

Corporation, Irvine, CA; OpenPlug, 

Sophia Antipolis, France; Packetvideo, 

San Diego, CA; STEricsson AT Holding 

AG, Milan, Italy; STEricsson Holding 

AG, Lund, Sweden, have withdrawn as 

parties to this venture. 

No other changes have been made in 

either the membership or planned 

activity of this group research project. 

Membership in this group research 

project remains open, and LiMo intends 

to file additional written notifications 

disclosing all changes in membership. 

On March 1, 2007, LiMo filed its 

original notification pursuant to section 

6(a) of the Act. The Department of 

Justice published a notice in the Federal

mstockstill on DSKH9S0YB1PROD with NOTICES

1966 Federal Register / Vol. 76, No. 7 / Tuesday, January 11, 2011 / Notices 

1See Drill Pipe From the People’s Republic of 

China: Preliminary Determination of Sales at Less 

Than Fair Value and Affirmative Determination of 

Critical Circumstances, and Postponement of Final 

Determination, 75 FR 51004 (August 18, 2010); and 

Drill Pipe From the People’s Republic of China: 

Notice of Correction to the Preliminary 

Determination of Sales at Less Than Fair Value and 

Affirmative Determination of Critical 

Circumstances, and Postponement of Final 

Determination, 75 FR 51014 (August 18, 2010) 

(collectively, ‘‘Preliminary Determination’’). 

2We conducted verifications of the DP-Master 

Group and Yida, which produced the merchandise 

under investigation and sold it to the United States, 

and Baoshan, which produced the merchandise 

under investigation. See Memo to the File, from 

Toni Dach and Jerry Huang, International Trade 

Compliance Analysts, ‘‘Verification of the Sales and 

Factors of Production Response of DP-Master 

Manufacturing Co., Ltd. and Jiangyin Liangda Drill 

Pipe Co., Ltd. in the Antidumping Duty 

Investigation of Drill Pipe from the People’s 

Republic of China,’’ dated October 26, 2010 (‘‘DPMaster Verification Report’’); Memo to the File, 

through Scot T. Fullerton, Program Manager, from 

Matthew Renkey, Senior International Trade 

Compliance Analyst, and Susan Pulongbarit, 

International Trade Compliance Analyst, 

‘‘Verification of the Sales and Factors Response of 

the Yida Group in the Antidumping Investigation 

of Drill Pipe from the People’s Republic of China,’’ 

dated October 27, 2010 (‘‘Yida Verification Report’’); 

Memo to the File, through Scot T. Fullerton, 

Program Manager, from Susan Pulongbarit, 

International Trade Compliance Analyst, and 

Matthew Renkey, Senior International Trade 

Compliance Analyst, ‘‘Verification of the Sales and 

Factors of Production Response of Baoshan Iron & 

Steel Co., Ltd. in the Investigation of Drill Pipe from 

the People’s Republic of China,’’ dated October 27, 

2010 (‘‘Baoshan Verification Report’’). Additionally, 

for Baoshan’s sales, we conducted verification of 

Baoshan’s North American affiliate, Baosteel 

America, Inc., which handled all of Baoshan’s POI 

sales. See Memo to the File, through Scot T. 

Fullerton, Program Manager, from Susan 

Pulongbarit, International Trade Compliance 

Analyst, and Matthew Renkey, Senior International 

Trade Compliance Analyst, ‘‘Verification of the CEP 

Sales Response of Baoshan Iron & Steel Inc. in the 

Investigation of Drill Pipe from the People’s 

Republic of China,’’ dated October 27, 2010 

(‘‘Baoshan CEP Verification Report’’). 

3See Memorandum to the File dated November 

16, 2010. 

4The petitioners are 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 (hereinafter referred to as 

‘‘Petitioners’’). 

5See Memorandum to the File dated December 3, 

2010. 

6See Memorandum to the File dated December 

14, 2010. 

7See Letters to Baoshan, the DP-Master Group, 

and Yida dated December 14, 2010. 

8See the DP–Master Group’s September 9, 2010, 

response to the Department’s 8th supplemental 

questionnaire (‘‘8th Supplemental Response’’). 

9See I&D Memo at Comment 7. 

DEPARTMENT OF COMMERCE 

International Trade Administration 

[A–570–965] 

Drill Pipe From the People’s Republic 

of China: Final Determination of Sales 

at Less Than Fair Value and Critical 

Circumstances 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

DATES: Effective Date: January 11, 2011. 

SUMMARY: On August 18, 2010, the 

Department of Commerce (the 

‘‘Department’’) published in the Federal 

Register the Preliminary Determination 

of sales at less-than-fair-value (‘‘LTFV’’) 

and critical circumstances, in part, in 

the antidumping investigation of drill 

pipe from the People’s Republic of 

China (‘‘PRC’’).1 The period of 

investigation (‘‘POI’’) is April 1, 2009, 

through September 30, 2009. Based on 

our analysis of the comments received, 

we have made changes to the margin 

calculation for DP-Master 

Manufacturing Co., Ltd. and Jiangyin 

Liangda Drill Pipe Co., Ltd. (collectively 

‘‘the DP-Master Group’’), Baoshan Iron & 

Steel Co., Ltd. (‘‘Baoshan’’), and Shanxi 

Yida Special Steel Imp. & Exp. Co., Ltd. 

(‘‘Yida’’). We continue to find that drill 

pipe from the PRC is being, or is likely 

to be, sold in the United States at LTFV 

as provided in section 735 of the Tariff 

Act of 1930, as amended (‘‘the Act’’). The 

estimated margins of sales at LTFV are 

shown in the ‘‘Final Determination 

Margins’’ section of this notice. 

FOR FURTHER INFORMATION CONTACT: Toni 

Dach, Susan Pulongbarit, or Matthew 

Renkey, AD/CVD Operations, Office 9, 

Import Administration, International 

Trade Administration, U.S. Department 

of Commerce, 14th Street and 

Constitution Avenue, NW., Washington 

DC 20230; telephone: (202) 482–1655, 

(202) 482–4031, or (202) 482–2312, 

respectively. 

SUPPLEMENTARY INFORMATION: 

Background 

The Department conducted sales and 

factors of production (‘‘FOP’’) 

verifications for the DP-Master Group 

and Yida, and an FOP verification for 

Baoshan, from September 20 through 

October 1, 2010, and sales verification 

for Baoshan on October 13 and 14, 

2010.2 See the ‘‘Verification’’ section 

below for additional information. 

On November 16, 2010, the 

Department placed labor wage rate data 

on the record and invited parties to 

comment on the Department’s labor 

wage rate methodology.3

Between November 5, 2010 and 

November 12, 2010, we received case 

and rebuttal briefs from Petitioners,4 the 

government of the PRC (‘‘GOC’’), the DPMaster Group, Baoshan, and Yida. 

On December 3, 2010, the Department 

placed additional surrogate value (‘‘SV’’) 

information on the record and invited 

parties to comment on the Department’s 

selection of an SV for tool joints,5 and 

received comments on this data from 

the DP-Master Group and Petitioners 

between December 8 and 10, 2010. On 

December 14, 2010, the Department 

placed additional SV information on the 

record regarding galvanizing and zinc 

values,6 and received comments on this 

data from Baoshan on December 20, 

2010. Also on December 14, 2010, the 

Department requested additional 

shipment data from Baoshan, the DPMaster Group, and Yida,7 and received 

their responses on December 17, 2010. 

Analysis of Comments Received 

All issues raised in the case and 

rebuttal briefs by parties to this 

investigation are addressed in the ‘‘Drill 

Pipe from the People’s Republic of 

China: Issues and Decision 

Memorandum for the Final 

Determination’’ (‘‘I&D Memo’’), dated 

concurrently with this notice and which 

is hereby adopted by this notice. A list 

of the issues which parties raised, and 

to which we respond in the I&D Memo, 

are attached to this notice as Appendix 

I. The I&D Memo is a public document 

and is on file in the Central Records 

Unit, Room 7046, and is accessible on 

the World Wide Web at http://trade.gov/ 

ia/index.asp. The paper copy and 

electronic version of the memorandum 

are identical in content. 

Changes Since the Preliminary 

Determination 

Based on our analysis of information 

on the record of this investigation, we 

have made changes to the DP–Master 

Group’s, Baoshan’s, and Yida’s margin 

calculations for the final determination. 

The DP–Master Group 

• Subsequent to the Preliminary 

Determination, at the Department’s 

request, the DP–Master Group provided 

a revised FOP database, including data 

from the six-month period immediately 

prior to the POI. Because this database 

more accurately reflects the FOPs 

consumed by the DP–Master Group in 

producing the merchandise under 

investigation than the database on the 

record prior to the Preliminary 

Determination, we have determined that 

it is appropriate to use FOP data from 

the period October 1, 2008, to 

September 30, 2009, in calculating the 

DP–Master Group’s margin for the final 

determination.8

• We have changed the SV for green 

tubes used in the DP–Master Group’s 

margin calculation.9


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Federal Register / Vol. 76, No. 7 / Tuesday, January 11, 2011 / Notices 1967 

10See I&D Memo at Comment 6. 

11See 8th Supplemental Response; see also Final 

Analysis Memo for the DP–Master Group, issued 

concurrently with this notice. 

12See DP–Master Verification Report at 2, 6–8, 

and 10–11. 

13See I&D Memo at the ‘‘Changes from 

Verification’’ section, part A. 

14See I&D Memo at Comment 12. 

15See I&D Memo at Comment 5B. 

16See I&D Memo at Comment 13. 

17 See I&D Memo at Comment 11. 

18See I&D Memo at the ‘‘Changes from 

Verification’’ section, part B. 

19See I&D Memo at the ‘‘Changes from 

Verification’’ section, part C. 

20See Yida Verification Report. 

21See Final Analysis Memorandum for Yida, 

issued concurrently with this notice; see also I&D 

Memo at Comment 15. 

22See I&D Memo at Comment 2. 

23See DP–Master Verification Report, Yida 

Verification Report, Baoshan Verification Report, 

and Baoshan CEP Verification Report. 

• We have changed the SV for tool 

joints used in the DP–Master Group’s 

margin calculation.10

• We have disallowed a by-product 

offset for brown aluminum oxide in the 

DP–Master Group’s internal plastic 

coating process.11

• Based on our findings at 

verification,12 we are applying partial 

adverse facts available (‘‘AFA’’) to the 

DP–Master Group’s phosphate treatment 

toller’s consumption of direct materials 

in its production of the merchandise 

under investigation.13

Baoshan 

• We have used Baoshan’s inputs to 

its intermediate inputs consumed in the 

production of the merchandise under 

investigation, instead of valuing 

Baoshan’s intermediate inputs.14

• We have determined that it is more 

appropriate to use only the Jindal Saw, 

Ltd. (‘‘Jindal Saw’’) financial statement 

as the basis for Baoshan’s surrogate 

financial ratios rather than the average 

of the Jindal Saw and Tata Steel Limited 

financial statements.15

• We have not granted Baoshan a byproduct offset for its production of 

pulverized ash, because it did not 

receive income for the by-product given 

free of charge to unaffiliated parties.16

• To calculate the SV of iron ore, we 

have included Baoshan’s purchases of 

iron ore pellets from its affiliated 

supplier based on our determination 

that the affiliate’s prices are reflective of 

unaffiliated market economy (‘‘ME’’) 

prices. Including these purchases will 

increase Baoshan’s ME purchases to 

above the 33% threshold. Accordingly, 

we have weight-averaged Baoshan’s ME 

purchase prices to value all of its iron 

ore purchases.17

• At verification, we found that 

certain of Baoshan’s indirect selling 

expenses (‘‘ISEs’’) were not included in 

its ISEs ratio. We have corrected this for 

the final determination.18

• At verification, we found that 

Baoshan did not report credit expenses 

for the payments it received from its 

U.S. customer. We have included these 

credit expenses in Baoshan’s margin for 

the final determination.19

Yida 

• At verification, we found that Yida 

consumed rubber pads in its production 

of the merchandise under 

investigation.20 Therefore, we are 

including rubber pads as an FOP in 

calculating Yida’s final margin.21

Scope of 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. Included are finished 

drill pipe and drill collars 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. Also included 

are unfinished drill collars (including 

all drill collar green tubes) and 

unfinished drill pipe (including drill 

pipe green tubes, which are tubes 

meeting the following description: 

seamless tubes with an outer diameter 

of less than or equal to 65⁄8 inches 

(168.28 millimeters), containing 

between 0.16 and 0.75 percent 

molybdenum, and containing between 

0.75 and 1.45 percent chromium). 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. 

While HTSUS subheadings are 

provided for convenience and customs 

purposes, the written description of the 

scope of the investigation is dispositive. 

Scope Comments 

In the Preliminary Determination, the 

Department indicated that it would 

solicit additional comments from parties 

regarding the specifications of drill pipe 

green tube. Between September 13 and 

23, 2010, Petitioners and the DP–Master 

Group placed additional information on 

the record of this investigation regarding 

the characteristics of drill pipe green 

tube. Additionally, Petitioners and the 

DP–Master Group commented on the 

scope of the investigation in their case 

briefs. Based on analysis of this 

information and argument, the 

Department has modified the scope of 

the investigation to define drill pipe 

green tubes which were previously 

described as ‘‘green tubes suitable for 

drill pipe.’’ 22

Verification 

As provided in section 782(i) of the 

Act, we conducted verification of the 

information submitted by the DP– 

Master Group, Baoshan, and Yida for 

use in our final determination.23 We 

used standard verification procedures, 

including examination of relevant 

accounting and production records, as 

well as original source documents 

provided by the respondents. 

Use of Facts Available 

Section 776(a) of the Act provides that 

if, necessary information is not available 

on the record, or an interested party: (A) 

Withholds information that has been 

requested by the Department; (B) fails to 

provide such information in a timely 

manner or in the form or manner 

requested, subject to subsections 

782(c)(1) and (e) of the Act; (C) 

significantly impedes a determination 

under the antidumping statute; or (D) 

provides such information but the 

information cannot be verified, the 

Department shall, subject to subsection 

782(d) of the Act, use facts otherwise 

available in reaching the applicable 

determination. 

Section 782(c)(1) of the Act provides 

that if an interested party ‘‘promptly 

after receiving a request from {the 

Department} for information, notifies 

{the Department} that such party is 

unable to submit the information in the 

requested form and manner, together 

with a full explanation and suggested 

alternative form in which such party is 

able to submit the information,’’ the 

Department may modify its information 

request requirements to avoid imposing 

an unreasonable burden on that party. 


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24See Letter from Baoshan, to Secretary of 

Commerce, Regarding Drill Pipe from the People’s 

Republic of China/Supplemental Sections C and D 

Questionnaire Responses, dated September 14, 

2010. 

25 Global Trade Atlas (‘‘GTA’’). 

26See I&D Memo at Comment 12. 

27See Sections 776(a)(2)(C) and (D) and 776(b) of 

the Act; see also Certain Circular Welded Carbon 

Quality Steel Line Pipe from the People’s Republic 

of China: Final Determination of Sales at Less Than 

Fair Value, 74 FR 14514, 14516 (March 31, 2009). 

28See I&D Memo at the ‘‘Changes from 

Verification’’ section, part A. 

29See Preliminary Determination, 75 FR at 51006. 

30As noted in the ‘‘Separate Rates’’ section below, 

these include Shanxi Fenglei Drilling Tools Co., 

Ltd.; Jiangsu Shuguang Huayang Drilling Tool, Co. 

Ltd.; and Jiangyin Long-Bright Drill Pipe 

Manufacturing Co., Ltd. 

31See Preliminary Determination, 75 FR at 51011. 

Section 782(d) of the Act provides 

that, if the Department determines that 

a response to a request for information 

does not comply with the request, the 

Department will inform the person 

submitting the response of the nature of 

the deficiency and shall, to the extent 

practicable, provide that person the 

opportunity to remedy or explain the 

deficiency. If that person submits 

further information that continues to be 

unsatisfactory, or this information is not 

submitted within the applicable time 

limits, the Department may, subject to 

section 782(e), disregard all or part of 

the original and subsequent responses, 

as appropriate. 

In reaching a determination under 

section 735 of the Act, section 782(e) of 

the Act states that the Department shall 

not decline to consider information 

deemed ‘‘deficient’’ under section 782(d) 

if: (1) The information is submitted by 

the established deadline; (2) the 

information can be verified; (3) the 

information is not so incomplete that it 

cannot serve as a reliable basis for 

reaching the applicable determination; 

(4) the interested party has 

demonstrated that it acted to the best of 

its ability; and (5) the information can 

be used without undue difficulties. 

Furthermore, section 776(b) of the Act 

states that if the administering authority 

finds that an interested party has not 

acted to the best of its ability to comply 

with a request for information, the 

administering authority may, in 

reaching its determination, use an 

inference that is adverse to that party. 

The adverse inference may be based 

upon: (1) The petition, (2) a final 

determination in the investigation under 

this title, (3) any previous review under 

section 751 of the Act or determination 

under section 753 of the Act, or (4) any 

other information placed on the record. 

Baoshan 

Following the Preliminary 

Determination, Baoshan provided 

additional information to the 

Department concerning which of its 

FOPs were consumed to produce 

intermediate products.24 Based on this 

additional information, the Department 

has decided to value the FOPs Baoshan 

consumed in producing intermediate 

inputs in this final determination. 

However, because Baoshan provided an 

insufficient description of certain inputs 

to electricity, namely ‘‘power coal’’ and 

‘‘light oil,’’ the Department has 

determined that, pursuant to section 

776(a)(B), it is appropriate to use facts 

available to value these inputs. Thus, for 

power coal, the Department has 

averaged publicly-available, 

contemporaneous, India-wide GTA 25

values for anthracite coal, bituminous 

coal, and steam coal. We note that, 

although Baoshan requested that the 

Department use 2007 Tata Energy 

Research Institute’s Energy Data 

Directory & Yearbook (‘‘TERI Data’’) to 

value this input, Baoshan provided 

neither the source data or the useful 

heat value of power coal necessary to 

use TERI Data in valuing this input. 

Additionally, for light oil, the 

Department has valued this input using 

the publicly-available, 

contemporaneous, and India-wide GTA 

value for ‘‘heavy oil’’ because it is also 

used in the electricity production 

process and no information concerning 

the value of ‘‘light oil’’ was placed on the 

record of this investigation.26

The DP-Master Group 

As noted above, based on findings at 

verification, the Department is applying 

partial AFA to the FOPs reported by the 

D-Master Group’s phosphate treatment 

toller. Specifically, the DP-Master 

Group’s unaffiliated phosphate 

treatment toller’s consumption of FOPs 

could not be verified by the Department 

and, pursuant to section 776(a)(2)(B) 

and (D) of the Act, we have determined 

that the application of facts available is 

appropriate. Further, we find that the 

application of partial AFA is also 

appropriate because the DP-Master 

Group failed to act to the best of its 

ability in responding to the 

Department’s requests for information 

and significantly impeded the 

Department’s proceeding.27

Accordingly, we have used the 

maximum monthly reported 

consumption for each material input in 

calculating the total consumption of 

inputs by the DP-Master Group’s 

phosphate treatment toller.28

Surrogate Country 

In the Preliminary Determination, we 

stated that we selected India as an 

appropriate surrogate country to use in 

this investigation because: (1) Pursuant 

to section 773(c)(4) of the Act, we 

determined that it is a significant 

producer of comparable merchandise 

and it is at a similar level of economic 

development to the PRC; and (2) we 

have reliable data from India on the 

record of this investigation that we can 

use to value the FOPs.29 For the final 

determination, we received no 

comments and made no changes to our 

findings with respect to the selection of 

a surrogate country. 

Critical Circumstances 

In the Preliminary Determination, the 

Department determined that, in 

accordance with section 733(e)(1) of the 

Act, critical circumstances existed with 

respect to the DP-Master Group, the 

separate rate respondents,30 and the 

PRC-wide entity.31

For the final determination, we 

collected additional shipment data from 

each of the three respondents being 

individually investigated. We collected 

four months of additional shipment data 

(two months for the base period and two 

months for the comparison period). 

Based on this additional data we 

continue to find that critical 

circumstances do not exist for Yida and 

Baoshan. 

With respect to the DP-Master Group, 

we find that the additional data no 

longer supports a finding of critical 

circumstances. Specifically, we no 

longer find that there has been an 

increase in imports greater than 15 

percent when comparing the base 

period to the comparison period. See 

Memorandum to The File, from 

Matthew Renkey, Senior Analyst, 

through Paul Walker, Acting Program 

Manager, regarding ‘‘Investigation of 

Drill Pipe from the People’s Republic of 

China: Final Determination Critical 

Circumstances Analysis,’’ dated 

concurrently with this notice (‘‘Final 

Critical Circumstances Memo’’). 

Consistent with our Preliminary 

Determination, the Department relied 

upon import data from the three 

individually investigated companies in 

determining whether there have been 

massive imports for the separate rate 

respondents. See Preliminary 

Determination, 75 FR at 51013. Based 

on the analysis of the additional data 

submitted for each of the three 

individually investigated companies, we 

no longer find that critical 

circumstances exist for the separate rate 

respondents. See Final Critical 

Circumstances Memo, Attachment 1. 

Specifically, we no longer find that 


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32See Final Determination of Sales at Less Than 

Fair Value: Sparklers from the People’s Republic of 

China, 56 FR 20588 (May 6, 1991), as amplified by 

Notice of Final Determination of Sales at Less Than 

Fair Value: Silicon Carbide from the People’s 

Republic of China, 59 FR 22585 (May 2, 1994), and 

19 CFR 351.107(d). 

33See also Statement of Administrative Action 

accompanying the URAA, H.R. Rep. No. 103–316, 

vol. 1, at 870 (1994) (‘‘SAA’’). 

34See, e.g., Synthetic Indigo From the People’s 

Republic of China; Notice of Final Determination of 

Sales at Less Than Fair Value, 65 FR 25706, 25707 

(May 3, 2000). 

35See SAA at 870. 

36See Tapered Roller Bearings and Parts Thereof, 

Finished and Unfinished, From Japan, and Tapered 

Roller Bearings, Four Inches or Less in Outside 

Diameter, and Components Thereof, From Japan; 

Preliminary Results of Antidumping Duty 

Administrative Reviews and Partial Termination of 

Administrative Reviews, 61 FR 57391, 57392 

(November 6, 1996), unchanged in Tapered Roller 

Bearings and Parts Thereof, Finished and 

Unfinished, From Japan, and Tapered Roller 

Bearings, Four Inches or Less in Outside Diameter, 

and Components Thereof, From Japan; Final 

Results of Antidumping Duty Administrative 

Reviews and Termination in Part, 62 FR 11825 

(March 13, 1997). 

37See Certain Steel Grating from the People’s 

Republic of China: Final Determination of Sales at 

Less than Fair Value, 75 FR 32366 (June 8, 2010) 

and accompanying Issues and Decision 

Memorandum at Comment 2. 

38See I&D Memo at Comment 4. 

39See Drill Pipe from the People’s Republic of 

China: Initiation of Antidumping Duty 

Investigation, 75 FR 4531 (January 28, 2010) 

(‘‘Initiation Notice’’). 

40See Memorandum to the File, through Paul 

Walker, Acting Program Manager, from Toni Dach, 

Case Analyst, ‘‘Investigation of Drill Pipe from the 

People’s Republic of China: DP-Master Group,’’ 

dated concurrently with this notice. 

there has been an increase in imports 

greater than 15 percent when comparing 

the base period to the comparison 

period, which is based on a weightedaverage of data for the three 

individually investigated companies. 

Finally, consistent with our 

Preliminary Determination, and as 

described below, the PRC-wide entity 

continues to receive AFA. See 

Preliminary Determination, 75 FR at 

51013. Thus, as AFA, we find that the 

critical circumstances exist for the PRCwide entity. 

Separate Rates 

In proceedings involving non-marketeconomy (‘‘NME’’) countries, the 

Department begins with a rebuttable 

presumption that all companies within 

the country are subject to government 

control and, thus, should be assigned a 

single antidumping duty deposit rate. It 

is the Department’s policy to assign all 

exporters of merchandise subject to an 

investigation in an NME country this 

single rate unless an exporter can 

demonstrate that it is sufficiently 

independent so as to be entitled to a 

separate rate.32 In the Preliminary 

Determination, we found that Shanxi 

Fenglei Drilling Tools Co., Ltd.; Jiangsu 

Shuguang Huayang Drilling Tool, Co. 

Ltd.; and Jiangyin Long-Bright Drill Pipe 

Manufacturing Co., Ltd., demonstrated 

their eligibility for, and were hence 

assigned, separate-rate status. No party 

has commented on the eligibility of 

these companies for separate rate status. 

Consequently, for the final 

determination, we continue to find that 

the evidence placed on the record of 

this investigation by these companies 

demonstrates both a de jure and de facto 

absence of government control with 

respect to their exports of the 

merchandise under investigation. Thus, 

we continue to find that the separate 

rate respondents are eligible for 

separate-rate status. 

PRC-Wide Entity 

In the Preliminary Determination, we 

treated PRC exporters/producers that 

did not respond to the Department’s 

request for information as part of the 

PRC-wide entity because they did not 

demonstrate that they operate free of 

government control. No additional 

information has been placed on the 

record with respect to these entities 

after the Preliminary Determination. 

The PRC-wide entity has not provided 

the Department with the requested 

information; therefore, pursuant to 

section 776(a)(2)(A) of the Act, the 

Department continues to find that the 

use of facts available is appropriate to 

determine the PRC-wide rate. Section 

776(b) of the Act provides that, in 

selecting from among the facts 

otherwise available, the Department 

may employ an adverse inference if an 

interested party fails to cooperate by not 

acting to the best of its ability to comply 

with requests for information.33 We find 

that, because the PRC-wide entity did 

not respond to our request for 

information, it has failed to cooperate to 

the best of its ability and that, in 

selecting from among the facts 

otherwise available, an adverse 

inference is appropriate for the PRCwide entity. Because we begin with the 

presumption that all companies within 

an NME country are subject to 

government control, and because only 

the companies listed under the ‘‘Final 

Determination Margins’’ section below 

have overcome that presumption, we are 

applying a single antidumping rate, i.e., 

the PRC-wide rate, to all other exporters 

of the merchandise under consideration 

from the PRC. Such companies did not 

demonstrate entitlement to a separate 

rate.34 The PRC-wide rate applies to all 

entries of the merchandise under 

consideration, except for those 

companies which have received a 

separate rate. 

Corroboration 

Section 776(c) of the Act provides 

that, when the Department relies on 

secondary information rather than on 

information obtained in the course of an 

investigation as facts available, it must, 

to the extent practicable, corroborate 

that information from independent 

sources reasonably at its disposal. 

Secondary information is described as 

‘‘information derived from the petition 

that gave rise to the investigation or 

review, the final determination 

concerning merchandise subject to this 

investigation, or any previous review 

under section 751 concerning the 

merchandise subject to this 

investigation.’’ 35 To ‘‘corroborate’’ 

means simply that the Department will 

satisfy itself that the secondary 

information to be used has probative 

value. Independent sources used to 

corroborate may include, for example, 

published price lists, official import 

statistics and customs data, and 

information obtained from interested 

parties during the particular 

investigation. To corroborate secondary 

information, the Department will, to the 

extent practicable, examine the 

reliability and relevance of the 

information used.36

The AFA rate that the Department 

used is from the petition; however, we 

have updated the labor wage rate used 

to calculate the petition rates. The 

Department’s practice is not to 

recalculate dumping margins provided 

in petitions, but rather to corroborate 

the applicable petition rate when 

applying that rate as AFA.37 In this case, 

however, the surrogate wage rate used 

in the petition was based upon the 

Department’s methodology under 19 

CFR 351.408(c)(3) that the United States 

Court of Appeals for the Federal Circuit 

(‘‘CAFC’’) found unlawful in Dorbest 

Ltd. v. United States, 604 F.3d 1363 

(Fed. Cir. 2010).38 In light of the CAFC’s 

decision, the Department has adjusted 

the petition rate using the updated SV 

for labor used in this final 

determination. 

Petitioners’ methodology for 

calculating the United States price and 

normal value in the petition is 

discussed in the Initiation Notice.39 To 

corroborate the AFA margin that we 

have selected, we compared this margin 

to the margins we found for the DPMaster Group. We found that the margin 

of 429.95 percent has probative value 

because it is in the range of the modelspecific margins that we found for the 

DP-Master Group.40 Accordingly, we 


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1970 Federal Register / Vol. 76, No. 7 / Tuesday, January 11, 2011 / Notices 

41See Drill Pipe from the People’s Republic of 

China: Final Affirmative Countervailing Duty 

Determination, dated concurrently with this notice. 

42See, e.g., Notice of Final Determination of Sales 

at Less Than Fair Value: Carbazole Violet Pigment 

23 From India, 69 FR 67306, 67307 (November 17, 

2004). 

43This treatment of the separate rate respondents 

is consistent with Certain Magnesia Carbon Bricks 

From the People’s Republic of China: Final 

Affirmative Countervailing Duty Determination, 75 

FR 45472 (August 2, 2010) and Certain Seamless 

Carbon and Alloy Steel Standard, Line, and 

Pressure Pipe from the People’s Republic of China: 

Final Determination of Sales at Less Than Fair 

Value and Critical Circumstances, in Part, 75 FR 

57449 (September 21, 2010). 

find that the rate of 429.95 percent has 

probative value and is, therefore, 

corroborated within the meaning of 

section 776(c) of the Act. 

Final Determination Margins 

We determine that the following 

percentage weighted-average margins 

exist for the following entities for the 

POI: 

Exporter Producer Weighted-average 

margin 

The DP-Master Group .......................................................... The DP-Master Group .......................................................... 69.32 

Baoshan Iron & Steel Co., Ltd ............................................. Baoshan Iron & Steel Co., Ltd ............................................. de minimis 

Shanxi Yida Special Steel Imp. & Exp. Co., Ltd .................. Shanxi Yida Special Steel Group Co., Ltd ........................... de minimis 

Shanxi Fenglei Drilling Tools Co., Ltd .................................. Shanxi Fenglei Drilling Tools Co., Ltd ................................. 69.32 

Jiangsu Shuguang Huayang Drilling Tool, Co. Ltd .............. Jiangsu Shuguang Huayang Drilling Tool, Co. Ltd .............. 69.32

Jiangyin Long-Bright Drill Pipe Manufacturing Co., Ltd ....... Jiangyin Long-Bright Drill Pipe Manufacturing Co., Ltd ....... 69.32

PRC-wide Entity .................................................................... ............................................................................................... 429.95 

Disclosure 

We will disclose the calculations 

performed within five days of the date 

of publication of this notice to parties in 

this proceeding in accordance with 19 

CFR 351.224(b). 

Continuation of Suspension of 

Liquidation 

Pursuant to section 735(c)(1)(B) of the 

Act, we will instruct U.S. Customs and 

Border Protection (‘‘CBP’’) to continue to 

suspend liquidation of all entries of the 

merchandise under consideration from 

the PRC entered, or withdrawn from 

warehouse, for consumption on or after 

August 18, 2010, with respect to the DPMaster Group and the separate rate 

respondents. With regard to the DPMaster Group and the separate rate 

respondents, we will instruct CBP to 

terminate suspension and to release any 

bond or other security, and refund any 

cash deposit made, to secure the 

payment of estimated antidumping 

duties with respect to entries of the 

merchandise entered, or withdrawn 

from warehouse, for consumption on or 

after May 20, 2010 (i.e., 90 days prior to 

the date of publication of the 

Preliminary Determination in the 

Federal Register), but before August 18, 

2010 (the date of publication of the 

Preliminary Determination). CBP shall 

continue to require a cash deposit or the 

posting of a bond equal to the estimated 

amount by which the normal value 

exceeds the U.S. price as shown above. 

These instructions suspending 

liquidation will remain in effect until 

further notice. 

With respect to the PRC-wide entity, 

pursuant to section 735(c)(1)(B) of the 

Act, and consistent with our finding of 

critical circumstances, pursuant to 

section 733(e)(2) of the Act, we will 

instruct CBP to continue to suspend 

liquidation of all entries of the 

merchandise under consideration from 

the PRC entered, or withdrawn from 

warehouse, for consumption on or after 

May 20, 2010, which is 90 days prior to 

the date on which the suspension of 

liquidation was first ordered, i.e., 90 

days prior to the date of publication of 

the Preliminary Determination in the 

Federal Register. CBP shall continue to 

require a cash deposit or the posting of 

a bond equal to the estimated amount by 

which the normal value exceeds the 

U.S. price as shown above. These 

instructions suspending liquidation will 

remain in effect until further notice. 

Additionally, the Department 

determined in its final determination for 

the companion countervailing duty 

(‘‘CVD’’) investigation that the DP-Master 

Group’s merchandise benefited from 

export subsidies.41 Therefore, we will 

instruct CBP to require a cash deposit or 

posting of a bond equal to the weightedaverage amount by which normal value 

exceeds U.S. price for the DP-Master 

Group, as indicated above, minus the 

amount determined to constitute an 

export subsidy.42

With respect to the separate rate 

respondents, we note that the rate 

applied in this proceeding as a separate 

rate is the calculated rate received by 

the DP-Master Group. As noted above, 

in the companion CVD investigation, 

the Department found that the DPMaster Group’s merchandise benefited 

from export subsidies during the POI 

and, consequently, all other exporters 

were found to have benefited from 

export subsidies based upon the DPMaster Group’s results. Therefore, for 

the separate rate respondents we will 

instruct CBP to require a cash deposit or 

posting of a bond equal to the weightedaverage amount by which normal value 

exceeds U.S. price for the DP-Master 

Group, as indicated above, minus the 

amount determined to constitute an 

export subsidy.43

With respect to Baoshan and Yida, 

because their rates were found to be de 

minimis, the Department will not 

instruct CBP to require an antidumping 

cash deposit or the posting of a bond. 

With respect to the PRC-wide entity, 

as AFA, we applied to highest rate from 

the petition that we were able to 

corroborate. See the ‘‘Corroboration’’ 

section above. We note that, although in 

the companion CVD investigation the 

Department found that all-other 

exporters were found to have benefited 

from export subsidies, because we have 

applied AFA to the PRC-wide entity, we 

will not instruct CBP to deduct any 

export subsidy from the PRC-wide 

entity’s cash deposit rate. 

ITC Notification 

In accordance with section 735(d) of 

the Act, we have notified the 

International Trade Commission (‘‘ITC’’) 

of our final determination of sales at 

LTFV. Because our final LTFV 

determination is affirmative, in 

accordance with section 735(b)(2) of the 

Act, within 45 days the ITC will 

determine whether the domestic 

industry in the United States is 

materially injured, or threatened with 

material injury, by reason of imports or 

sales (or the likelihood of sales) for 

importation of the merchandise under 

consideration. If the ITC determines that 

material injury or threat of material 

injury does not exist, the proceeding 

will be terminated and all securities 

posted will be refunded or canceled. If 

the ITC determines that such injury 

does exist, the Department will issue an 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 7 / Tuesday, January 11, 2011 / Notices 1971 

1A public version of these documents and all 

public documents are available on the public file 

located in the Department’s Central Records Unit 

(CRU), Room 7046 of the main Commerce building.

antidumping duty order directing CBP 

to assess antidumping duties on all 

imports of the subject merchandise 

entered, or withdrawn from warehouse, 

for consumption on or after the effective 

date of the suspension of liquidation. 

Notification Regarding APO 

This notice also serves as a reminder 

to the parties subject to administrative 

protective order (‘‘APO’’) of their 

responsibility concerning the 

disposition of proprietary information 

disclosed under APO in accordance 

with 19 CFR 351.305. Timely 

notification of return or destruction of 

APO materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and the terms of an APO is a 

sanctionable violation. 

This determination and notice is 

issued and published in accordance 

with sections 735(d) and 777(i)(1) of the 

Act. 

Dated: January 3, 2011. 

Ronald K. Lorentzen, 

Deputy Assistant Secretary for Import 

Administration. 

Appendix I 

General Issues 

Comment 1: Double Remedy 

Comment 2: Scope of the Investigation 

Comment 3: Whether the Department Should 

Correct the Preliminary Determination 

A. Whether the Department Correctly 

Calculated the Surrogate Value for Green 

Tubes 

B. Whether the Department Correctly 

Calculated Sealer (‘‘SEALRES’’) 

C. Whether the Department Overlooked 

Surrogate Values on the Record for Tool 

Joints 

Comment 4: Labor Rate 

Comment 5: Selection of Surrogate Financial 

Ratios 

A. The DP–Master Group 

B. Baoshan 

Company-Specific Issues 

The DP–Master Group 

Comment 6: Selection of a Surrogate Value 

for Tool Joints 

Comment 7: Selection of a Surrogate Value 

for Green Tubes 

Comment 8: Selection of a Surrogate Value 

for Alloy Steel Bars for Tool Joints 

Comment 9: Critical Circumstances 

Baoshan 

Comment 10: Date of Sale 

Comment 11: Market Economy Purchases of 

Iron Ore Pellet Made through Affiliated 

Companies 

Comment 12: Self-Produced Inputs 

Comment 13: By-Product Offset for 

Pulverized Fuel Ash 

Comment 14: Valuation of Baoshan’s Copper 

Plating Tolling Factors of Production 

Yida 

Comment 15: Yida’s Reporting of Rubber 

Pads as a Packing Material 

Comment 16: Yida’s Unreported Overhead 

Materials Discovered at Verification 

Changes From Verification 

A. DP–Master Group’s Phosphate Treatment 

Tolling Factors of Production 

B. Baoshan’s Indirect Selling Expenses 

C. Baoshan’s Credit Expenses 

[FR Doc. 2011–390 Filed 1–10–11; 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: Final Affirmative 

Countervailing Duty Determination, 

Final Affirmative Critical 

Circumstances Determination 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: The Department of Commerce 

(the Department) determines that 

countervailable subsidies are being 

provided to producers and exporters of 

drill pipe from the People’s Republic of 

China (the PRC). For information on the 

estimated subsidy rates, see the 

‘‘Suspension of Liquidation’’ section of 

this notice. 

DATES: Effective Date: January 11, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Kristen Johnson or Eric B. Greynolds, 

AD/CVD Operations, Office 3, Import 

Administration, U.S. Department of 

Commerce, Room 4014, 14th Street and 

Constitution Avenue, NW., Washington, 

DC 20230; telephone: (202) 482–4793 

and (202) 482–6071, respectively. 

SUPPLEMENTARY INFORMATION: 

Background 

This investigation covers 40 

programs. The respondent in this 

investigation is the DP Master Group, 

which consists of the following 

companies: DP Master Manufacturing 

Co., Ltd. (DP Master), Jiangyin Sanliang 

Petroleum Machinery Co., Ltd. (SPM), 

Jiangyin Liangda Drill Pipe Co., Ltd. 

(Liangda), Jiangyin Sanliang Steel Pipe 

Trading Co., Ltd. (SSP), and Jiangyin 

Chuangxin Oil Pipe Fittings Co., Ltd. 

(Chuangxin) (collectively, the DP Master 

Group). Xigang Seamless Steel Tube Co., 

Ltd. (Xigang) and Wuxi Seamless Pipe 

Co., Ltd. (WSP) were also selected 

mandatory respondents; however, both 

companies reported to the Department 

that they did not export subject 

merchandise to the United States during 

the period of investigation (POI). The 

petitioners in this investigation are 

VAM Drilling USA, Inc., Texas Steel 

Conversion, Inc., Rotary Drilling Tools, 

TMK IPSCO, and United Steel, Paper 

and Forestry, Rubber, Manufacturing, 

Energy, Allied Industrial and Service 

Workers International Union, AFL–CIO. 

Period of Investigation 

The POI for which we are measuring 

subsidies is January 1, 2009, through 

December 31, 2009, which corresponds 

to the PRC’s most recently completed 

fiscal year at the time we initiated this 

investigation. See 19 CFR 351.204(b)(2). 

Case History 

The following events have occurred 

since the Department signed the 

Preliminary Determination on June 7, 

2010. See Drill Pipe From the People’s 

Republic of China: Preliminary 

Affirmative Countervailing Duty 

Determination, 75 FR 33245 (June 11, 

2010) (Preliminary Determination). On 

June 18, 2010, we issued second 

supplemental questionnaires to the DP 

Master Group and the Government of 

the People’s Republic of China (GOC).1

On June 21, 2010, the Department 

published in the Federal Register the 

notice to align this final countervailing 

duty (CVD) determination with the final 

antidumping duty determination. See 

Drill Pipe From the People’s Republic of 

China: Alignment of Final 

Countervailing Duty Determination with 

Final Antidumping Duty Determination, 

75 FR 34974 (June 21, 2010). 

On June 30, 2010, the DP Master 

Group made a factual submission 

regarding technical specifications of 

casing, tubing, and drill pipe. We 

received the DP Master Group’s second 

supplemental questionnaire response on 

July 7, 2010, and the GOC’s second 

supplemental questionnaire response on 

July 9, 2010. On July 7, 8, and 12, 2010, 

we received requests to hold a hearing 

from the DP Master Group, petitioners, 

and the GOC, respectively. 

On July 8, 2010, petitioners submitted 

a critical circumstances allegation. On 

July 12, 2010, we issued to the DP 

Master Group a third supplemental 

questionnaire and received the 

company’s response on July 21, 2010. 

On July 13, 2010, petitioners submitted 

U.S. Census Data in support of its 

critical circumstances allegation. 

On August 2, 2010, we issued a third 

supplemental questionnaire to the GOC 

and received the government’s response 

on August 16, 2010. On August 3, 2010, 


kgrant on DSKGBLS3C1PROD with BILLS
Federal Register / Vol. 76, No. 7 / Tuesday, January 11, 2011 / Notices 1971 

1A public version of these documents and all 

public documents are available on the public file 

located in the Department’s Central Records Unit 

(CRU), Room 7046 of the main Commerce building. 

antidumping duty order directing CBP 

to assess antidumping duties on all 

imports of the subject merchandise 

entered, or withdrawn from warehouse, 

for consumption on or after the effective 

date of the suspension of liquidation. 

Notification Regarding APO 

This notice also serves as a reminder 

to the parties subject to administrative 

protective order (‘‘APO’’) of their 

responsibility concerning the 

disposition of proprietary information 

disclosed under APO in accordance 

with 19 CFR 351.305. Timely 

notification of return or destruction of 

APO materials or conversion to judicial 

protective order is hereby requested. 

Failure to comply with the regulations 

and the terms of an APO is a 

sanctionable violation. 

This determination and notice is 

issued and published in accordance 

with sections 735(d) and 777(i)(1) of the 

Act. 

Dated: January 3, 2011. 

Ronald K. Lorentzen, 

Deputy Assistant Secretary for Import 

Administration. 

Appendix I 

General Issues 

Comment 1: Double Remedy 

Comment 2: Scope of the Investigation 

Comment 3: Whether the Department Should 

Correct the Preliminary Determination 

A. Whether the Department Correctly 

Calculated the Surrogate Value for Green 

Tubes 

B. Whether the Department Correctly 

Calculated Sealer (‘‘SEALRES’’) 

C. Whether the Department Overlooked 

Surrogate Values on the Record for Tool 

Joints 

Comment 4: Labor Rate 

Comment 5: Selection of Surrogate Financial 

Ratios 

A. The DP–Master Group 

B. Baoshan 

Company-Specific Issues 

The DP–Master Group 

Comment 6: Selection of a Surrogate Value 

for Tool Joints 

Comment 7: Selection of a Surrogate Value 

for Green Tubes 

Comment 8: Selection of a Surrogate Value 

for Alloy Steel Bars for Tool Joints 

Comment 9: Critical Circumstances 

Baoshan 

Comment 10: Date of Sale 

Comment 11: Market Economy Purchases of 

Iron Ore Pellet Made through Affiliated 

Companies 

Comment 12: Self-Produced Inputs 

Comment 13: By-Product Offset for 

Pulverized Fuel Ash 

Comment 14: Valuation of Baoshan’s Copper 

Plating Tolling Factors of Production 

Yida 

Comment 15: Yida’s Reporting of Rubber 

Pads as a Packing Material 

Comment 16: Yida’s Unreported Overhead 

Materials Discovered at Verification 

Changes From Verification 

A. DP–Master Group’s Phosphate Treatment 

Tolling Factors of Production 

B. Baoshan’s Indirect Selling Expenses 

C. Baoshan’s Credit Expenses 

[FR Doc. 2011–390 Filed 1–10–11; 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: Final Affirmative 

Countervailing Duty Determination, 

Final Affirmative Critical 

Circumstances Determination 

AGENCY: Import Administration, 

International Trade Administration, 

Department of Commerce. 

SUMMARY: The Department of Commerce 

(the Department) determines that 

countervailable subsidies are being 

provided to producers and exporters of 

drill pipe from the People’s Republic of 

China (the PRC). For information on the 

estimated subsidy rates, see the 

‘‘Suspension of Liquidation’’ section of 

this notice. 

DATES: Effective Date: January 11, 2011. 

FOR FURTHER INFORMATION CONTACT: 

Kristen Johnson or Eric B. Greynolds, 

AD/CVD Operations, Office 3, Import 

Administration, U.S. Department of 

Commerce, Room 4014, 14th Street and 

Constitution Avenue, NW., Washington, 

DC 20230; telephone: (202) 482–4793 

and (202) 482–6071, respectively. 

SUPPLEMENTARY INFORMATION: 

Background 

This investigation covers 40 

programs. The respondent in this 

investigation is the DP Master Group, 

which consists of the following 

companies: DP Master Manufacturing 

Co., Ltd. (DP Master), Jiangyin Sanliang 

Petroleum Machinery Co., Ltd. (SPM), 

Jiangyin Liangda Drill Pipe Co., Ltd. 

(Liangda), Jiangyin Sanliang Steel Pipe 

Trading Co., Ltd. (SSP), and Jiangyin 

Chuangxin Oil Pipe Fittings Co., Ltd. 

(Chuangxin) (collectively, the DP Master 

Group). Xigang Seamless Steel Tube Co., 

Ltd. (Xigang) and Wuxi Seamless Pipe 

Co., Ltd. (WSP) were also selected 

mandatory respondents; however, both 

companies reported to the Department 

that they did not export subject 

merchandise to the United States during 

the period of investigation (POI). The 

petitioners in this investigation are 

VAM Drilling USA, Inc., Texas Steel 

Conversion, Inc., Rotary Drilling Tools, 

TMK IPSCO, and United Steel, Paper 

and Forestry, Rubber, Manufacturing, 

Energy, Allied Industrial and Service 

Workers International Union, AFL–CIO. 

Period of Investigation 

The POI for which we are measuring 

subsidies is January 1, 2009, through 

December 31, 2009, which corresponds 

to the PRC’s most recently completed 

fiscal year at the time we initiated this 

investigation. See 19 CFR 351.204(b)(2). 

Case History 

The following events have occurred 

since the Department signed the 

Preliminary Determination on June 7, 

2010. See Drill Pipe From the People’s 

Republic of China: Preliminary 

Affirmative Countervailing Duty 

Determination, 75 FR 33245 (June 11, 

2010) (Preliminary Determination). On 

June 18, 2010, we issued second 

supplemental questionnaires to the DP 

Master Group and the Government of 

the People’s Republic of China (GOC).1

On June 21, 2010, the Department 

published in the Federal Register the 

notice to align this final countervailing 

duty (CVD) determination with the final 

antidumping duty determination. See 

Drill Pipe From the People’s Republic of 

China: Alignment of Final 

Countervailing Duty Determination with 

Final Antidumping Duty Determination, 

75 FR 34974 (June 21, 2010). 

On June 30, 2010, the DP Master 

Group made a factual submission 

regarding technical specifications of 

casing, tubing, and drill pipe. We 

received the DP Master Group’s second 

supplemental questionnaire response on 

July 7, 2010, and the GOC’s second 

supplemental questionnaire response on 

July 9, 2010. On July 7, 8, and 12, 2010, 

we received requests to hold a hearing 

from the DP Master Group, petitioners, 

and the GOC, respectively. 

On July 8, 2010, petitioners submitted 

a critical circumstances allegation. On 

July 12, 2010, we issued to the DP 

Master Group a third supplemental 

questionnaire and received the 

company’s response on July 21, 2010. 

On July 13, 2010, petitioners submitted 

U.S. Census Data in support of its 

critical circumstances allegation. 

On August 2, 2010, we issued a third 

supplemental questionnaire to the GOC 

and received the government’s response 

on August 16, 2010. On August 3, 2010, 


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2See Memorandum to the File from Kristen 

Johnson, Trade Analyst, Operations Office 3, 

‘‘Examination of Entry Documentation,’’ (August 19, 

2010). 

3See Memorandum to Melissa Skinner, Director, 

AD/CVD Operations, Office 3, from Eric B. 

Greynolds, Program Manager, AD/CVD Operations, 

Office 3 and Kristen Johnson, Trade Analyst, AD/ 

CVD Operations, Office 3, regarding ‘‘Verification of 

Information Submitted by the Government of the 

People’s Republic of China,’’ (October 18, 2010) 

(GOC Verification Report) and Memorandum to 

Melissa Skinner, Director, AD/CVD Operations, 

Office 3, from Eric B. Greynolds, Program Manager, 

AD/CVD Operations, Office 3 and Kristen Johnson, 

Trade Analyst, AD/CVD Operations, Office 3, 

regarding ‘‘Verification of Information Submitted by 

the DP Master Group,’’ (DP Master Group 

Verification Report) (October 21, 2010). 

4See Memorandum to Ronald K. Lorentzen, 

Deputy Assistant Secretary for Import 

Administration, from Susan H. Kuhbach, Acting 

Deputy Assistant Secretary for Antidumping and 

Countervailing Duty Operations, regarding ‘‘PostPreliminary Determination Memorandum,’’ 

(October 26, 2010) at 1–4. 

5Id. at 4–7. 

6See Memorandum to the File through Melissa 

Skinner, Director, AD/CVD Operations, Office 3, 

from Kristen Johnson, Trade Analyst, AD/CVD 

Operations, Office 3, regarding ‘‘Meeting with 

Counsel for the DP Master Group,’’ (November 29, 

2010). 

7See Memorandum to the File through Melissa 

Skinner, Director, AD/CVD Operations, Office 3, 

from Kristen Johnson, Trade Analyst, AD/CVD 

Operations, Office 3, regarding ‘‘Meeting with 

Counsel for Petitioners,’’ (December 6, 2010). 

we issued to the GOC the verification 

outline for meetings scheduled in 

Jiangyin City, Jiangsu Province. On 

August 9, 2010, the Department made a 

preliminary affirmative determination of 

critical circumstances. See Drill Pipe 

from the People’s Republic of China: 

Notice of Preliminary Affirmative 

Determination of Critical 

Circumstances, 75 FR 49891 (August 16, 

2010) (Preliminary Critical 

Circumstances Determination). 

On August 6, 2010, we issued the 

verification outline to the DP Master 

Group. On August 17, 2010, petitioners 

submitted to the Department preverification comments. On August 19, 

2010, we placed on the record of this 

investigation our analysis of entry 

documentation obtained from U.S. 

Customs and Border Protection (CBP) 

for the products that Xigang and WSP 

exported to the United States during the 

POI.2 Based on our analysis of the entry 

packages, we found that the 

documentation supports the claims of 

non-shipment of subject merchandise to 

the United States during the POI by 

Xigang and WSP and, therefore, we did 

not issue verification outlines to or 

conduct verification of either company. 

On August 20, 2010, we issued a 

fourth supplemental questionnaire to 

both the GOC and DP Master Group. We 

received responses from the GOC and 

the DP Master Group on September 2, 

2010. 

On September 3, 2010, petitioners 

submitted additional factual 

information regarding green tubes used 

for drill pipe and certain finished casing 

and tubing products. On September 6, 

2010, the DP Master Group submitted 

factual information related to income 

tax information, green tube benchmark, 

and bank loan benchmark. 

Subsequently, on September 14, 2010, 

the DP Master Group filed rebuttal 

comments to petitioners’ September 3, 

2010, factual submission. 

We conducted verification of the 

questionnaire responses submitted by 

the GOC on September 10, 2010, and by 

the DP Master Group from September 13 

through 15, 2010, in Jiangyin City, 

Jiangsu Province. 

On September 13, 2010, petitioners 

submitted comments regarding the 

inclusion of green tubes used in 

producing drill pipe within the scope of 

the investigation. On September 23, 

2010, the DP Master Group submitted 

rebuttal comments in regard to 

petitioners’’ scope comments. See 

‘‘Scope Comments’’ section below for 

additional information. 

On October 13, 2010, the DP Master 

Group requested an extension of time 

for the filing of new factual information 

and submitted on the record 

information regarding the Department’s 

scope determination of green tubes in 

this investigation. On October 18 and 

21, 2010, we released the verification 

reports for the meetings we held with 

the GOC and the DP Master Group, 

respectively.3 On October 26, 2010, we 

issued a post-preliminary determination 

memorandum and preliminarily found 

that the following programs provided 

countervailable export subsidies to the 

DP Master Group during the POI: 

Technology to Improve Trade Research 

and Development and Outstanding 

Growth Private Enterprise and Small 

and Medium-sized Enterprises in 

Jiangyin Fund.4 Additionally, we 

preliminarily determined that none of 

the DP Master Group companies 

acquired land-use rights for less than 

adequate remuneration (LTAR) based on 

being located within a special, 

economic, or development zone or area 

during the period December 11, 2001, 

through December 31, 2009.5

Interested parties submitted the case 

and rebuttal briefs on November 3, 

2010, and November 10, 2010, 

respectively. In their respective case 

briefs, the GOC, DP Master Group, and 

petitioners withdrew their requests for a 

hearing and, therefore, a public hearing 

was not held in this investigation. On 

November 29, 2010, Department 

officials met with counsel for the DP 

Master Group, who gave a verbal 

presentation of case/rebuttal brief 

arguments regarding the following 

issues: construction of green tube 

benchmark, calculation of the benefit 

under the Two Free/Three Half Tax 

Exemption program, and a grant 

received by Chuangxin.6 On December 

6, 2010, Department officials met with 

petitioners’ counsel, who gave a verbal 

presentation of case/rebuttal brief 

arguments regarding the following 

issues: use of tier-one or tier-two 

benchmark for the provision of green 

tubes for LTAR program, bestowal of 

benefit under the Two Free/Three Half 

Tax program, and sales denominator to 

use in the calculations for the provision 

of inputs for LTAR programs.7

Scope of 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. Included are finished 

drill pipe and drill collars 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. Also included 

are unfinished drill collars (including 

all drill collar green tubes) and 

unfinished drill pipe (including drill 

pipe green tubes, which are tubes 

meeting the following description: 

seamless tubes with an outer diameter 

of less than or equal to 6V inches (168.28 

millimeters), containing between 0.16 

and 0.75 percent molybdenum, and 

containing between 0.75 and 1.45 

percent chromium). 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 (AD) 

or CVD 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. 


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8See companion antidumping duty final 

determination and accompanying issues and 

decision memorandum at comment 2, issued 

concurrently with this notice. 

While HTSUS subheadings are 

provided for convenience and customs 

purposes, the written description of the 

scope of the investigation is dispositive. 

Scope Comments 

In the preliminary determination of 

the concurrent AD investigation, the 

Department indicated that it would 

solicit additional comments from parties 

regarding the specifications of drill pipe 

green tube. See Drill Pipe From the 

People’s Republic of China: Preliminary 

Determination of Sales at Less Than 

Fair Value and Affirmative 

Determination of Critical 

Circumstances, and Postponement of 

Final Determination, 75 FR 51004, 

51005–06 (August 18, 2010); and Drill 

Pipe From the People’s Republic of 

China: Notice of Correction to the 

Preliminary Determination of Sales at 

Less Than Fair Value and Affirmative 

Determination of Critical 

Circumstances, and Postponement of 

Final Determination, 75 FR 51014 

(August 18, 2010). Between September 

13 and 23, 2010, petitioners and the DP 

Master Group placed additional 

information on the record of the AD and 

CVD investigations regarding the 

characteristics of drill pipe green tube. 

Additionally, petitioners and the DP 

Master Group commented on the scope 

of the investigation in their case briefs 

submitted on the record of the AD 

investigation. Based on analysis of that 

information and arguments, the 

Department has modified the scope of 

the AD and CVD investigations to define 

drill pipe green tubes which were 

previously described as ‘‘green tubes 

suitable for drill pipe.’’ 8

Injury Test 

Because the PRC is a ‘‘Subsidies 

Agreement Country’’ within the meaning 

of section 701(b) of the Tariff Act of 

1930, as amended (the Act), the 

International Trade Commission (the 

ITC) is required to determine whether 

imports of the subject merchandise from 

the PRC materially injure, or threaten 

material injury to, a U.S. industry. On 

March 8, 2010, the ITC published its 

preliminary determination finding that 

there is a reasonable indication that an 

industry in the United States is 

threatened with material injury by 

reason of imports of drill pipe and drill 

collars from the PRC that are alleged to 

be sold in the United States at less than 

fair value and subsidized by the GOC. 

See Drill Pipe and Drill Collars From 

China, Investigation Nos. 701–TA–474 

and 731–TA–1176 (Preliminary), 75 FR 

10501 (March 8, 2010). 

Critical Circumstances 

In the Preliminary Critical 

Circumstances Determination, the 

Department concluded that critical 

circumstances exist with respect to 

imports of drill pipe from the PRC from 

the DP Master Group, in accordance 

with section 703(e)(1) of the Act. We 

also preliminarily determined, based on 

the shipment experience of the DP 

Master Group, that critical 

circumstances exist as well for imports 

of drill pipe from the PRC from ‘‘all 

other’’ exporters, in accordance with 

section 703(e)(1) of the Act. Our 

analysis of the results of verification and 

the comments submitted by interested 

parties have not lead us to change our 

preliminary affirmative finding of 

critical circumstances for the DP Master 

Group and ‘‘all other’’ exporters. 

Therefore, in accordance with section 

705(a)(2) of the Act, we continue to find 

that critical circumstances exist with 

respect to imports of subject 

merchandise from the PRC from the DP 

Master Group and ‘‘all other’’ exporters. 

Analysis of Comments Received 

All issues raised in the case and 

rebuttal briefs by parties to this 

investigation are addressed in the 

Memorandum from Christian Marsh, 

Deputy Assistant Secretary for 

Antidumping and Countervailing Duty 

Operations, to Ronald K. Lorentzen, 

Deputy Assistant Secretary for Import 

Administration, entitled ‘‘Issues and 

Decision Memorandum for the Final 

Determination in the Countervailing 

Duty Investigation of Drill Pipe from the 

People’s Republic of China,’’ (January 3, 

2011) (Decision Memorandum), which 

is hereby adopted by this notice. 

Attached to this notice as an Appendix 

is a list of the issues that parties raised 

and to which we have responded in the 

Decision Memorandum. Parties can find 

a complete discussion of all issues 

raised in this investigation and the 

corresponding recommendations in this 

public memorandum, which is on file in 

the Department’s Central Records Unit, 

room 7046 of the main Department of 

Commerce building. In addition, a 

complete version of the Decision 

Memorandum can be accessed directly 

on the Internet at http://trade.gov/ia. 

The paper copy and electronic version 

of the Decision Memorandum are 

identical in content. 

Suspension of Liquidation 

In accordance with section 

705(c)(1)(B)(i)(I) of the Act, we have 

calculated an individual rate for the DP 

Master Group. Section 705(c)(5)(A) of 

the Act states that for companies not 

investigated, we will determine an all 

others rate by weighting the individual 

company subsidy rate of each of the 

companies investigated by each 

company’s exports of the subject 

merchandise to the United States. The 

all others rate may not include zero and 

de minimis net subsidy rates, or any 

rates based solely on the facts available. 

Because we have calculated a rate for 

only the DP Master Group, the rate for 

the DP Master Group is the all others 

rate. 

We determine the total estimated net 

countervailable subsidy rates to be: 

Producer/Exporter 

Net subsidy 

Ad Valorem 

rate 

(percent) 

DP Master Manufacturing Co., Ltd. (DP Master), Jiangyin Sanliang Petroleum Machinery Co., Ltd. (SPM); Jiangyin Liangda 

Drill Pipe Co., Ltd. (Liangda); Jiangyin Sanliang Steel Pipe Trading Co., Ltd. (SSP), and Jiangyin Chuangxin Oil Pipe Fittings Co., Ltd. (Chuangxin) (collectively, DP Master Group) ...................................................................................................... 18.18 

All Others ......................................................................................................................................................................................... 18.18 

As a result of our Preliminary 

Determination and pursuant to section 

703(d) of the Act, we instructed CBP to 

suspend liquidation of all entries of 

subject merchandise from the PRC 

which were entered or withdrawn from 

warehouse, for consumption on or after 

June 11, 2010, the date of the 

publication of the Preliminary 

Determination in the Federal Register. 

Subsequently, as a result of our 

Preliminary Critical Circumstances 


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Determination, we instructed CBP to 

suspend liquidation of all entries of 

subject merchandise from the PRC 

which were entered or withdrawn from 

warehouse, for consumption on or after 

March 13, 2010, which is 90 days prior 

to the date of publication in the Federal 

Register of the Preliminary 

Determination. In accordance with 

section 703(d) of the Act, we later 

issued instructions to CBP to 

discontinue the suspension of 

liquidation for CVD purposes for subject 

merchandise entered, or withdrawn 

from warehouse, on or after October 9, 

2010, but to continue the suspension of 

liquidation of all entries from June 11, 

2010, through October 8, 2010. 

We will issue a CVD order and 

reinstate the suspension of liquidation 

under section 706(a) of the Act if the 

ITC issues a final affirmative injury 

determination, and will require a cash 

deposit of estimated CVDs for such 

entries of merchandise in the amounts 

indicated above. If the ITC determines 

that material injury, or threat of material 

injury, does not exist, this proceeding 

will be terminated and all estimated 

duties deposited or securities posted as 

a result of the suspension of liquidation 

will be refunded or canceled. 

ITC Notification 

In accordance with section 705(d) of 

the Act, we will notify the ITC of our 

determination. In addition, we are 

making available to the ITC all nonprivileged and non-proprietary 

information related to this investigation. 

We will allow the ITC access to all 

privileged and business proprietary 

information in our files, provided the 

ITC confirms that it will not disclose 

such information, either publicly or 

under an administrative protective order 

(APO), without the written consent of 

the Assistant Secretary for Import 

Administration. 

Return or Destruction of Proprietary 

Information 

In the event that the ITC issues a final 

negative injury determination, this 

notice will serve as the only reminder 

to parties subject to an APO of their 

responsibility concerning the 

destruction of proprietary information 

disclosed under APO in accordance 

with 19 CFR 351.305(a)(3). Timely 

written notification of the return/ 

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 which is subject to 

sanction. 

This determination is published 

pursuant to sections 705(d) and 777(i) of 

the Act. 

Dated: January 3, 2011. 

Ronald K. Lorentzen, 

Deputy Assistant Secretary for Import 

Administration. 

Appendix 

List of Comments and Issues in the Decision 

Memorandum 

Comment 1: Application of CVD Law to the 

PRC 

Comment 2: Whether Application of the CVD 

Law to Chinese Imports Violates the 

Administrative Procedure Act 

Comment 3: Double Counting/Double 

Remedy 

Comment 4: Cutoff Date for Identifying 

Subsidies 

Comment 5: Critical Circumstances 

Comment 6: Attribute Benefits From Tied 

Subsidies Only to the Products That 

Benefit 

Comment 7: Apply 2009 Short-Term Interest 

Rate Benchmark and Adjust Benefit 

Calculation Based on China’s Inflation Rate 

Comment 8: Preferential Loans to the Drill 

Pipe Industry 

Comment 9: Construction of the Green Tube 

Benchmark 

Comment 10: Ministerial Error In the Green 

Tube Benefit Calculation 

Comment 11: The Department Should 

Account For the Premium Quality of Steel 

Rounds 

Comment 12: Timing of Receipt of the 

Benefit Under the Two Free, Three Half 

Tax Exemption for Foreign Invested 

Enterprises 

Comment 13: Tying and Attribution Issues 

Regarding the Grant Received Under the 

Outstanding Growth Private Enterprise and 

Small and Medium-sized Enterprises 

Development in Jiangyin Fund 

[FR Doc. 2011–392 Filed 1–10–11; 8:45 am] 

BILLING CODE 3510–DS–P 


kgrant on DSKGBLS3C1PROD with BILLS
 
APPENDIX B

HEARING WITNESSES

B-1
B-2
CALENDAR OF PUBLIC HEARING

Those listed below appeared as witnesses at the United States International Trade

Commission’s hearing:

Subject: Drill Pipe and Drill Collars from China

Inv. Nos.: 701-TA-474 and 731-TA-1176 (Final)

Date and Time: January 5, 2011 - 9:30 a.m.

Sessions were held in connection with these investigations in the Main Hearing Room (room

101), 500 E Street, S.W., Washington, D.C.

CONGRESSIONAL APPEARANCES:

The Honorable Peter J. Visclosky, U.S. Representative, 1st District, Indiana

The Honorable Gene Green, U.S. Representative, 29th District, Texas

The Honorable Jason Altmire, U.S. Representative, 4th District, Pennsylvania

OPENING REMARKS:

Petitioners (Roger B. Schagrin, Schagrin Associates)

Respondents (Irene H. Chen, Chen Law Group)

In Support of the Imposition of

 Antidumping and Countervailing Duty Orders:

Schagrin Associates

Washington, D.C.

on behalf of

VAM Drilling USA

Texas Steel Conversion, Inc.

Rotary Drilling Tools

TMK IPSCO

The United Steelworkers

B-3
In Support of the Imposition of

 Antidumping and Countervailing Duty Orders (continued):

Thomas M. Conway, Vice President, The United

Steel Paper and Forestry, Rubber, Manufacturing,

Energy, Allied Industrial and Service Workers

International Union

Bertrand de Rotalier, Sales and Marketing Director,

VAM Drilling

Doug Fields, President, VAM Drilling USA

Kevin Parks, Vice President of Sales, VAM

Drilling USA

J. Steve Williamson, Strategic Developments

Director, VAM Drilling USA

Jim Brand, Product Manager, Texas Steel Conversion,

Inc.

Kathy Rutledge, Vice President of Marketing and

Business Development, Sunbelt Steel LLC

Sealy Morris, President, Rotary Drilling Tools

L. Scott Barnes, Vice President and Chief

Commercial Officer, TMK IPSCO

Dr. Robert E. Scott, Senior International Economist,

Economic Policy Institute

Roger B. Schagrin )

) – OF COUNSEL

John W. Bohn )

B-4
In Support of the Imposition of

 Antidumping and Countervailing Duty Orders (continued):

Skadden, Arps, Slate, Meagher & Flom LLP

Washington, D.C.

on behalf of

United States Steel Corporation

Scott M. Dorn, General Manager – Tubular Marketing,

U.S. Steel Tubular Products, United States

Steel Corporation

William M. Buono, Manager – Market Analysis and

Strategy, U.S. Steel Tubular Products, United

States Steel Corporation

Stephen P. Vaughn ) – OF COUNSEL

In Opposition to the Imposition of

 Antidumping and Countervailing Duty Orders:

Lehnardt & Lehnardt

Liberty, MO

 and

Chen Law Group

Washington, D.C.

 and

Davis & Leiman, P.C.

Washington, D.C.

 and

Hogan Lovells USA LLC

Washington, D.C.

on behalf of

Downhole Pipe & Equipment, L.P.

Command Energy, Ltd.

B-5
In Opposition of the Imposition of

 Antidumping and Countervailing Duty Orders (continued):

Charlie Garvey, Chief Executive Officer, Command

Energy Services, Ltd.

Jim Mostoway, Vice President of Product Control,

Command Energy Services, Ltd.

David Lesco, General Manager, Downhole Pipe

& Equipment, L.P.

Patrick Murphy, Director of Sales & Marketing,

DP-Master Manufacturing Co., Ltd.

Kitty Wu, Import & Export Manager, DP-Master

Manufacturing Co., Ltd.

Bruce Malashevich, President, Economic Consulting

Services, LLC

Alexander Cook, Economist, Economic Consulting

Services, LLC

Mark B. Lehnardt )

 Irene H. Chen )

) – OF COUNSEL

Mark D. Davis )

Lewis E. Leibowitz )

REBUTTAL/CLOSING REMARKS:

Petitioners (Roger B. Schagrin, Schagrin Associates)

Respondents (Lewis E. Leibowitz, Hogan Lovells USA LLC)

B-6
APPENDIX C

SUMMARY DATA

C-1

CONTENTS

Page

Appendix C: Summary data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-1

C-1: Unfinished drill pipe and unfinished drill collars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-4

C-2: Finished drill pipe and finished drill collars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-6

C-3: Drill pipe and drill collars consolidated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C-8

C-4: Finished drill pipe and finished drill collars (excluding NOV Grand Prideco) . . . . . . . . . . C-10

C-5: Drill pipe and drill collars consolidated (excluding NOV Grand Prideco) . . . . . . . . . . . . . C-10

C-3
Table C-1

Drill pipe and drill collars unfinished: Summary data concerning the U.S. market, 2007-09, January-June 2009, and January-June 2010

(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-June Jan.-June

Item 2007 2008 2009 2009 2010 2007-09 2007-08 2008-09 2009-10

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 . . . . . *** *** *** *** *** *** *** *** ***

 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.

 (2) Not applicable.

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-1

Drill pipe and drill collars unfinished: Summary data concerning the U.S. market, January-June 

2009, July-December 2009, and January-June 2010

(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-June July-December January-June JJ-JD JD-JJ

Item 2009 2009 2010 2009 2009-10

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 . . . . . *** *** *** *** ***

 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.

 (2) Not applicable.

 (3) 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 value and shares are 

calculated from unrounded figures.

Source: Compiled from data submitted in response to Commission questionnaires.

C-5
Table C-2

Drill pipe and drill collars finished: Summary data concerning the U.S. market, 2007-09, January-June 2009, and January-June 2010

(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-June Jan.-June

Item 2007 2008 2009 2009 2010 2007-09 2007-08 2008-09 2009-10

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 . . . . . . . . 343,585 358,873 369,389 184,701 184,669 7.5 4.4 2.9 -0.0

 Production quantity . . . . . . . . . . . . . 266,343 248,454 138,155 78,347 61,668 -48.1 -6.7 -44.4 -21.3

 Capacity utilization (1) . . . . . . . . . . 77.5 69.2 37.4 42.4 33.4 -40.1 -8.3 -31.8 -9.0

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . . . 197,609 148,327 91,363 44,699 42,622 -53.8 -24.9 -38.4 -4.6

 Value . . . . . . . . . . . . . . . . . . . . . . 952,061 789,665 528,414 268,822 204,746 -44.5 -17.1 -33.1 -23.8

 Unit value . . . . . . . . . . . . . . . . . . . $4,818 $5,324 $5,784 $6,014 $4,804 20.0 10.5 8.6 -20.1

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . . . 63,903 90,017 56,034 27,296 26,679 -12.3 40.9 -37.8 -2.3

 Value . . . . . . . . . . . . . . . . . . . . . . 361,935 540,375 347,012 172,724 143,829 -4.1 49.3 -35.8 -16.7

 Unit value . . . . . . . . . . . . . . . . . . . $5,664 $6,003 $6,193 $6,328 $5,391 9.3 6.0 3.2 -14.8

 Ending inventory quantity . . . . . . . . 26,223 36,614 40,040 47,963 35,330 52.7 39.6 9.4 -26.3

 Inventories/total shipments (1) . . . . 10.0 15.4 27.2 33.3 25.5 17.1 5.3 11.8 -7.8

 Production workers . . . . . . . . . . . . . 1,650 1,768 1,204 1,323 1,080 -27.1 7.2 -31.9 -18.3

 Hours worked (1,000s) . . . . . . . . . . 4,329 4,520 3,098 1,739 1,330 -28.4 4.4 -31.5 -23.5

 Wages paid ($1,000s) . . . . . . . . . . 73,277 81,623 52,773 28,828 23,467 -28.0 11.4 -35.3 -18.6

 Hourly wages . . . . . . . . . . . . . . . . . $16.93 $18.06 $17.04 $16.58 $17.64 0.6 6.7 -5.7 6.4

 Productivity (tons/1,000 hours) . . . . 61.3 54.3 44.4 44.8 46.1 -27.5 -11.4 -18.2 2.9

 Unit labor costs . . . . . . . . . . . . . . . . $276.18 $332.40 $383.44 $370.14 $382.84 38.8 20.4 15.4 3.4

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . . . 261,487 235,445 146,871 71,534 67,273 -43.8 -10.0 -37.6 -6.0

 Value . . . . . . . . . . . . . . . . . . . . . . 1,305,652 1,304,244 869,533 436,629 338,131 -33.4 -0.1 -33.3 -22.6

 Unit value . . . . . . . . . . . . . . . . . . . $4,993 $5,539 $5,920 $6,104 $5,026 18.6 10.9 6.9 -17.7

 Cost of goods sold (COGS) . . . . . . 812,219 822,349 610,660 315,022 233,981 -24.8 1.2 -25.7 -25.7

 Gross profit or (loss) . . . . . . . . . . . . 493,433 481,895 258,872 121,607 104,150 -47.5 -2.3 -46.3 -14.4

 SG&A expenses . . . . . . . . . . . . . . . 44,008 62,762 57,088 27,467 28,922 29.7 42.6 -9.0 5.3

 Operating income or (loss) (2). . . . 449,425 419,133 201,784 94,140 75,229 -55.1 -6.7 -51.9 -20.1

 Capital expenditures . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . . . $3,106 $3,493 $4,158 $4,404 $3,478 33.9 12.4 19.0 -21.0

 Unit SG&A expenses . . . . . . . . . . . $168 $267 $389 $384 $430 131.0 58.4 45.8 12.0

 Unit operating income or (loss) (2). $1,719 $1,780 $1,374 $1,316 $1,118 -20.1 3.6 -22.8 -15.0

 COGS/sales (1) . . . . . . . . . . . . . . . 62.2 63.1 70.2 72.1 69.2 8.0 0.8 7.2 -3.0

 Operating income or (loss)/

 sales (1) (2). . . . . . . . . . . . . . . . . . 34.4 32.1 23.2 21.6 22.2 -11.2 -2.3 -8.9 0.7

 (1) "Reported data" are in percent and "period changes" are in percentage points.

 (2) See part VI of this report regarding acquisition - related expenses not reflected in this table.

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-6
Table C-2

Drill pipe and drill collars finished: Summary data concerning the U.S. market, January-June 

2009, July-December 2009, and January-June 2010

(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-June July-December January-June JJ-JD JD-JJ

Item 2009 2009 2010 2009 2009-10

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 . . . . . . . . 184,701 184,688 184,669 -0.0 -0.0

 Production quantity . . . . . . . . . . . . . 78,347 59,808 61,668 -23.7 3.1

 Capacity utilization (1) . . . . . . . . . . . 42.4 32.4 33.4 -10.0 1.0

 U.S. shipments:

 Quantity . . . . . . . . . . . . . . . . . . . . . 44,699 46,664 42,622 4.4 -8.7

 Value . . . . . . . . . . . . . . . . . . . . . . . 268,822 259,592 204,746 -3.4 -21.1

 Unit value . . . . . . . . . . . . . . . . . . . $6,014 $5,563 $4,804 -7.5 -13.6

 Export shipments:

 Quantity . . . . . . . . . . . . . . . . . . . . . 27,296 28,738 26,679 5.3 -7.2

 Value . . . . . . . . . . . . . . . . . . . . . . . 172,724 174,288 143,829 0.9 -17.5

 Unit value . . . . . . . . . . . . . . . . . . . $6,328 $6,065 $5,391 -4.2 -11.1

 Ending inventory quantity . . . . . . . . 47,963 40,040 35,330 -16.5 -11.8

 Inventories/total shipments (1) . . . . 33.3 26.6 25.5 -6.8 -1.1

 Production workers . . . . . . . . . . . . . 1,323 (2) 1,080 (2) (2)

 Hours worked (1,000s) . . . . . . . . . . 1,739 1,359 1,330 -21.9 -2.1

 Wages paid ($1,000s) . . . . . . . . . . . 28,828 23,945 23,467 -16.9 -2.0

 Hourly wages . . . . . . . . . . . . . . . . . . $16.58 $17.62 $17.64 6.3 0.1

 Productivity (tons/1,000 hours) . . . . 44.8 44.0 46.1 -1.8 4.8

 Unit labor costs . . . . . . . . . . . . . . . . $370.14 $400.78 $382.84 8.3 -4.5

 Net sales:

 Quantity . . . . . . . . . . . . . . . . . . . . . 71,534 75,337 67,273 5.3 -10.7

 Value . . . . . . . . . . . . . . . . . . . . . . . 436,629 432,904 338,131 -0.9 -21.9

 Unit value . . . . . . . . . . . . . . . . . . . $6,104 $5,746 $5,026 -5.9 -12.5

 Cost of goods sold (COGS) . . . . . . 315,022 295,638 233,981 -6.2 -20.9

 Gross profit or (loss) . . . . . . . . . . . . 121,607 137,265 104,150 12.9 -24.1

 SG&A expenses . . . . . . . . . . . . . . . 27,467 29,621 28,922 7.8 -2.4

 Operating income or (loss) (3). . . . 94,140 107,644 75,229 14.3 -30.1

 Capital expenditures . . . . . . . . . . . . *** *** *** *** ***

 Unit COGS . . . . . . . . . . . . . . . . . . . $4,404 $3,924 $3,478 -10.9 -11.4

 Unit SG&A expenses . . . . . . . . . . . $384 $393 $430 2.4 9.3

 Unit operating income or (loss) (3). $1,316 $1,429 $1,118 8.6 -21.7

 COGS/sales (1) . . . . . . . . . . . . . . . . 72.1 68.3 69.2 -3.9 0.9

 Operating income or (loss)/

 sales (1) (3). . . . . . . . . . . . . . . . . . 21.6 24.9 22.2 3.3 -2.6

 (1) "Reported data" are in percent and "period changes" are in percentage points.

 (2) Not available.

 (3) See part VI of this report regarding acquisition - related expenses not reflected in this table.

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 value and shares are 

calculated from unrounded figures.

Source: Compiled from data submitted in response to Commission questionnaires.

C-7
Table C-3

Drill pipe and drill collars consolidated: Summary data concerning the U.S. market, 2007-09, January-June 2009, and January-June 2010

(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-June Jan.-June

Item 2007 2008 2009 2009 2010 2007-09 2007-08 2008-09 2009-10

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) . . . . . . . . . *** *** *** *** *** *** *** *** ***

 SG&A expenses . . . . . . . . . . . . . *** *** *** *** *** *** *** *** ***

 Operating income or (loss) (1). . *** *** *** *** *** *** *** *** ***

 Capital expenditures . . . . . . . . . *** *** *** *** *** *** *** *** ***

 (1) See part VI of this report regarding acquisition - related expenses not reflected in this table.

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-8
Table C-3

Drill pipe and drill collars consolidated: Summary data concerning the U.S. market, January-June 

2009, July-December 2009, and January-June 2010

(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-June July-December January-June JJ-JD JD-JJ

Item 2009 2009 2010 2009 2009-10

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) . . . . . . . . *** *** *** *** ***

 SG&A expenses . . . . . . . . . . . *** *** *** *** ***

 Operating income or (loss) (2) *** *** *** *** ***

 Capital expenditures . . . . . . . . *** *** *** *** ***

 (1) Not available.

 (2) See part VI of this report regarding acquisition - related expenses not reflected in this table.

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 value and shares are 

calculated from unrounded figures.

Note.--***

Source: Compiled from data submitted in response to Commission questionnaires.

C-9
Table C-4

Drill pipe and drill collars finished (excluding NOV Grant Prideco): Summary data concerning the

U.S. market, 2007-09, January-June 2009, and January-June 20

* * * * * * *

Table C-5

Drill pipe and drill collars consolidated (excluding NOV Grant Prideco): Summary data concerning

the U.S. market, 2007-09, January-June 2009, and January-June 2010

* * * * * * *

C-10 
APPENDIX D

DATA ON PREMIUM PIPE

D-1

CONTENTS

Page

Appendix D: Data on premium drill pipe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-1

D-1: Premium drill pipe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-3

D-2: Finished drill pipe (excluding premium) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . D-3

Table D-1

Premium drill pipe: Summary data concerning the U.S. market, 2007-09, January-June 2009, and

January-June 2010

* * * * * * *

Table D-2

Finished drill pipe (excluding premium): Summary data concerning the U.S. market, 2007-09,

January-June 2009, and January-June 2010

* * * * * * *

D-3 
 
APPENDIX E

SUPPLEMENTAL LIKE PRODUCT INFORMATION

E-1

This section is confidential in its entirety. 

E-3
 
APPENDIX F

COMPARISON OF FINISHED AND UNFINISHED DRILL PIPE

F-1

This section is confidential in its entirety. 

F-3
 
APPENDIX G

ADDITIONAL PRICING DATA FOR DRILL PIPE AND DRILL COLLARS

G-1

Table G-1

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of U.S. and Chinese

products 1, by quarters, and by selling primarily to end users or distributors, January 2007-June

2010

******

Table G-2

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of U.S. and Chinese

products 2, by quarters, and by selling primarily to end users or distributors, January 2007-June

2010

******

Table G-3

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of U.S. and Chinese

products 3, by quarters, and by selling primarily to end users or distributors, January 2007-June

2010

******

Table G-4

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of U.S. and Chinese

products 4, by quarters, and by selling primarily to end users or distributors, January 2007-June

2010

******

Table G-5

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of U.S. and Chinese

products 5, by quarters, and by selling primarily to end users or distributors, January 2007-June

2010

******

Table G-6

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of U.S. and Chinese

products 6, by quarters, and by selling primarily to end users or distributors, January 2007-June

2010

******

Table G-7

Drill pipe: Weighted-average f.o.b. prices and quantities reported by the purchasers of domestic

and imported product 1 and margins of underselling/(overselling), by quarters, January 2007-June

2010

******

G-3
Table G-8

Drill pipe: Instances of underselling/overselling and the range and average of margins for product

1 reported by purchasers, January 2007-June 2010

******

Table G-9

Drill pipe: Weighted-average f.o.b. prices and quantities by individual purchasers for those firms

that purchased both domestic and imported product 1 and margins of underselling/(overselling),

by quarters, January 2007-June 2010

******

G-4
APPENDIX H

NONSUBJECT COUNTRY PRICE DATA

H-1

One importer (***) reported price data for nonsubject country Dubai for products 1, 2, and 3; one

importer (***) reported price data for nonsubject country Austria for product 4; one importer (***)

reported price data for nonsubject source “Europe” for product 5; one importer (***) reported price data

for nonsubject country France for products 3 and 5; and one importer (***) reported pricing data for

nonsubject country Singapore for product 2. In comparing nonsubject country pricing data with U.S.

producer pricing data, prices for product imported from nonsubject countries were lower than prices for

U.S.-produced product in 20 instances and higher in 20 instances. In comparing nonsubject country

pricing data with China country pricing data, prices for product imported from nonsubject countries were

lower than prices for product imported from China in 12 instances and higher in 19 instances. Price and

quantity data for nonsubject countries are in tables H-1 to H-3 and in shown in figure H-1 with U.S. and

subject sources.

Table H-1

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of nonsubject imported

products 1-2,1

 by quarters, January 2007-June 2010

******

Table H-2

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of nonsubject imported

products 3 and 4,1 by quarters, January 2007-June 2010

* * * * * *

Table H-3

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of nonsubject imported

product 5,1 by quarters, January 2007-June 2010

* * * * * *

Figure H-1

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of domestic and imported

product 1, by quarters, January 2007-June 2010

******

Figure H-2

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of domestic and imported

product 2, by quarters, January 2007-June 2010

******

Figure H-3

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of domestic and imported

product 3, by quarters, January 2007-June 2010

******

Figure H-4

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of domestic and imported

product 4, by quarters, January 2007-June 2010

******

H-3
Figure H-5

Drill pipe and drill collars: Weighted-average f.o.b. prices and quantities of domestic and imported

product 5, by quarters, January 2007-June 2010

******

H-4
APPENDIX I

CAPITAL AND INVESTMENT

I-1
I-2
Unfinished Drill Pipe – Actual Negative Effects

Responses of companies reporting unfinished drill pipe financial results: 

Timken ***.

TMK ***. 

U.S. Steel ***.

Responses of companies not reporting unfinished drill pipe financial results: 

Charles Machine ***.

Drill Pipe International ***.

NOV Grant Prideco ***.

RDT ***.

Smith ***.

Sunbelt ***.

Superior ***.

TSC ***.

VAM ***.

Unfinished Drill Pipe – Anticipated Negative Effects

Responses of companies reporting unfinished drill pipe financial results: 

Timken ***

TMK ***.

U.S. Steel ***.

Responses of companies not reporting unfinished drill pipe financial results: 

Charles Machine ***.

Drill Pipe International ***.

NOV Grant Prideco ***.

RDT ***.

Smith ***.

Sunbelt ***.

Superior ***.

TSC ***.

VAM ***.

Finished Drill Pipe – Actual Negative Effects

Responses of companies reporting finished drill pipe financial results: 

Charles Machine ***.

Drill Pipe International ***.

NOV Grant Prideco ***.

RDT ***

Smith ***.

I-3
Superior ***. 

TSC ***.

VAM ***.

Responses of companies not reporting finished drill pipe financial results: 

Sunbelt ***.

Timken ***. 

TMK ***.

U.S. Steel ***. 

Finished Drill Pipe – Anticipated Negative Effects

Responses of companies reporting finished drill pipe financial results: 

Charles Machine ***.

Drill Pipe International ***. 

NOV Grant Prideco ***.

RDT ***.

Smith ***.

Superior ***.

TSC ***.

VAM ***.

Responses of companies not reporting finished drill pipe financial results: 

Sunbelt ***.

Timken ***.

TMK ***.

U.S. Steel ***.

Unfinished Drill Collars – Actual Negative Effects

Responses of companies reporting unfinished drill collar financial results: 

Sunbelt ***.

Timken ***.

Responses of companies not reporting unfinished drill collar financial results: 

Charles Machine ***.

Drill Pipe International ***.

NOV Grant Prideco ***.

RDT ***.

Smith ***.

Superior ***.

TSC ***.

TMK ***.

U.S. Steel ***.

I-4
VAM ***. 

Unfinished Drill Collars – Anticipated Negative Effects

Responses of companies reporting unfinished drill collar financial results: 

Sunbelt ***.

Timken ***.

Responses of companies not reporting unfinished drill collar financial results: 

Charles Machine ***.

Drill Pipe International ***.

NOV Grant Prideco ***.

Reamco ***.

RDT ***.

Smith ***.

Superior ***.

TSC ***.

TMK ***.

U.S. Steel ***.

VAM ***.

Finished Drill Collars – Actual Negative Effects

Responses of companies reporting finished drill collar financial results: 

NOV Grant Prideco ***.

RDT ***.

Smith ***.

VAM ***. 

Responses of companies not reporting finished drill collar financial results: 

Charles Machine ***.

Drill Pipe International ***.

Sunbelt ***.

Superior ***.

TSC ***.

Timken ***. 

TMK ***.

U.S. Steel ***.

Finished Drill Collars – Anticipated Negative Effects

Responses of companies reporting finished drill collar financial results: 

NOV Grant Prideco ***.

RDT ***.

I-5
Smith ***.

VAM ***.

Responses of companies not reporting finished drill collar financial results:

Charles Machine ***.

Drill Pipe International ***.

Sunbelt ***.

Superior ***.

TSC ***.

Timken ***.

TMK ***.

U.S. Steel ***.

I-6