DOC Considering Plan for Domestic Sourcing of Steel and Iron Pipeline Materials

The DOC is seeking input by 7 April on the construction of pipelines using domestic steel and iron as opposed to imported materials. This information will help the agency develop a plan for the domestic sourcing of materials for the construction, retrofitting, repair and expansion of pipelines inside the United States, as directed by a 24 January presidential memorandum. The DOC, in consultation with relevant agencies, must submit a plan to the president by 23 July and is therefore conducting industry outreach to better understand:

• current pipeline construction technology and requirements;
• potential advances in pipeline technology
• the domestic and foreign supply chain for pipeline materials; and
• all other information respondents consider pertinent to the development of the domestic sourcing plan.

The term “produced in the United States” is defined as follows in the 24 January presidential memorandum:

• with regard to iron or steel products, that all manufacturing processes for such iron or steel products, from the initial melting stage through the application of coatings, occurred in the United States;
• steel or iron material or products manufactured abroad from semi-finished steel or iron from the United States are not “produced in the United States”; and
• steel or iron material or products manufactured in the United States from semi-finished steel or iron of foreign origin are not “produced in the United States.”

The impact of an eventual domestic sourcing plan on U.S. imports of steel and iron pipeline materials from mainland China is hard to assess. U.S. import statistics do show that mainland China is the largest U.S. supplier of steel, iron and articles thereof (Chapters 72 and 73) with a 20.8 percent share or US$11,000 million in 2016, with imports down by 10.3 percent from a year earlier. Mainland China is only the tenth largest U.S. supplier of iron and steel of HS Chapter 72 with a 3.0 percent share or US$633 million in 2016. On the other hand, it is by far the largest U.S. supplier of articles of iron and steel of HS Chapter 73 with a 32.9 percent share or US$10,367 million in 2016, with shipments falling by 0.4 percent from a year earlier. It is also worth noting that a range of mainland Chinese steel and iron products, including goods potentially used in the construction of pipelines, currently face substantial AD and CV duties in the United States.