The US International Trade Commission has agreed with a group of US steelmakers that the local steel industry is suffering because of alleged dumping by Chinese steelmakers at heavily subsidised tubular and pipe steel in the country.

In the final phase the investigation by the ITC on whether to impose countervailing duties on Chinese tubular and pipe steel imports, the federal agency voted 6-0 to allow the US commerce department to impose duties between 10.36 per cent and 15.78 per cent on the pipes, which are used mainly by the oil and gas industries.

In a statement on its website, the ITC said it "Determined that US industry is materially injured or threatened with material injury by reason of imports of certain oil country tubular goods from China that the US Department of Commerce has determined are subsidised."

With all six commissioners ruling in favour of imposing duties, the decision would affect about $2.8 billion of tubular and pipe steel exported from China.

The US commerce department will make a final decision on imposing anti-dumping duties as high as 96 per cent early next year to offset the subsidies given by Beijing to its steel industry.

In the biggest ever anti-dumping case filed by the US against China, the US steel manufacturers alleged that Chinese producers benefit from massive government subsidies and dumping margins ranging from 40 to 90 per cent.

The increase in Chinese imports of tubular and pipe steel has hit the US steel industry, already reeling under the global recession that increases the impact on jobs in the steel and pipe manufacturing sector.

The seven steel manufacturers who filed the anti-dumping case are: US Steel Corp, Pittsburgh Pa, Maverick Tube Corp, Hickman Ark, Evraz Rocky Mountain Steel, Pueblo, Colorado, TMK IPSCO, Downers Grove Ill, V&M Star LLP, Houston Tx, V&M TCA, Houston Tx, and Wheatland Tube Corp, Beachwood, Ohio as well as the United Steelworkers union (USW).

Chinese steel imports into the US have tripled from 750,000 tonnes in 2006 to 2.2 million tonnes in 2008 and have continued to increase in the first quarter of this year.

These imports significantly undersold the US steel manufacturers, who already have a huge inventory build-up due to the declining demand in the US since buyers such as automakers, equipment manufacturers, builders and commercial construction companies have drastically reduced their orders, due to a slump in their respective industry.

China reacted strongly today with its ministry of commerce saying in a statement posted on its web site, "the Chinese side is strongly dissatisfied and firmly opposed to the ruling," and added that the demand for the pipes in question, used in oil production, declined significantly during the second half of 2008 as a result of the global financial crisis.

"Demand for oil well pipes would increase gradually as the international crude and natural gas prices are rising, and the Chinese exports of oil pipes to the US cannot be causing damage or threat to the American manufacturers," the statement said.

China has asked the US to face the objective facts, take effective measures to correct the mistake, and make a fair, just, and reasonable ruling, in a move to honor its commitments to opposing trade protectionism, the statement concluded.

The United Steelworkers Union president Leo Gerard welcomed the decision by the ITC and said in a statement, "We are fed up with China's constant cheating and false claims of US protectionism, when it is China that practices illegal state subsidisation and dumping that seeks to destroy good jobs and fair competition under WTO standards their leaders agreed to abide."

Since the beginning of this year, the Chinese government has accused the US of protectionism after the US bought a series of trade decisions against China.

On Tuesday, the US government imposed preliminary antidumping duties on imports of steel-grate products from China and slapped high tariffs on the import of cheap Chinese tyres in October.