February 2020 Volume 2

WASHINGTON UPDATE

Fluid End Block Coalition First Hearing at International Trade Commission

On December 19th the Fluid End Block (FEB) coalition of American producers filed trade claims against foreign producers of forged steel fluid end blocks. In its press release the FEB Coalition wrote: Today, the FEB Fair Trade Coalition, whose members include the Forging Industry Association (FIA), Ellwood Group, and Finkl Steel, filed petitions asking the U.S. International Trade Commission (ITC) and the U.S. Commerce Department to investigate claims that forged steel fluid end blocks (FEBs) from China, Germany, India, and Italy are being illegally subsidized and that FEB imports from Germany, India, and Italy are being illegally dumped into the U.S. market. According to the petitions, the alleged margins of dumping range from 12.82 percent to 77.24 percent. As a result of these unfair trade practices, FEB imports from these countries have surged by more than 600 percent since 2016 and are harmingAmericanmanufacturers andworkers. Fluid end blocks are typically used in the manufacture or service of hydraulic pumps for drilling or shale fracturing in the oil and gas industry. The pump's "fluid end" produces the pumping process, whereas the "power end" converts the rotation of the drive shaft to the reciprocating motion of the pistons. "The Forging Industry Association supports enforcement of the U.S. trade laws to combat illegal dumping and subsidization that harms American forgers," said James Warren, President & CEO of the Forging Industry Association (FIA), a trade association that is a member of the petitioning coalition. Mr. Warren further explained that "American FEB producers such as Ellwood Group and Finkl Steel have world class forging technology and production efficiency, and they have been instrumental in supporting America's energy independence. But the ability of American FEB manufacturers to compete is being undercut by subsidized and dumped imports.

This trade action is necessary to ensure that American FEB manufacturers can compete on a level playing field." FEB Coalition Held January 9th at International Trade Commission (ITC) Representatives of the FEB Coalition attended and participated in the January 9th hearing along with their counsel Cassidy Levy Kent LLP. FIA President & CEO JimWarren attended the hearing as an audience member to support FIA members and witness the hearing first-hand. Representatives from Finkl Steel and Ellwood did a superb job with their opening statements and technical explanations answering ITC commissioners’ questions. FEB Coalition counsel skillfully managed the hearing and was prepared with data to field all questions. The opposition to the petition present made points about changing market dynamics but time and again fell short of answering commissioners’ technical and market-based questions, especially relating to the 600% increase of imported fluid end blocks between the period of interest (POI) of 2016 and 2018. Next Steps Post-conference briefs to further answer commissioners’ questions were due the week following the hearing. The ITC preliminary vote on the FEB Coalition’s petition is expected on January 31st. An important hearing will follow in the summer. What follows is an ITC fact sheet on the FEB Coalition Petition, which is included here to further update our members and the industry with known facts.

FIA MAGAZINE | FEBRUARY 2020 31