New Threat from China: Shoddy Steel Imports

First it was food, then toys...Now, new concerns over Chinese imports have hit a pillar of the U.S. infrastructure.

By Jim Ostroff, Associate Editor, The Kiplinger Letter

September 7, 2007

Steel imports from China that fall apart easily are making U.S. manufacturers and constructions firms more than a little nervous. Reports of failures during initial fabrication and questions about certification documents will mean closer scrutiny. The American and Canadian institutes of steel construction have already advised member companies to be vigilant and report any problems.

The biggest concern is hollow structural sections widely used in construction of skyscrapers, bridges, pipelines, office, commercial and school buildings. This high-strength steel is also commonly used in power lifts, cranes, farm equipment, furniture and car trailer hitches.

Chinese high-strength steel tubes and pipes are also a potential problem. They’re used extensively in power plants and in large industrial boilers, and must withstand enormous pressures and hellish heat around the clock for weeks or months on end. This kind of steel also is used extensively in scaffolding that's erected on building exteriors during construction or renovation, as well as for interior work.

Inferior high-strength steel could cause catastrophic failures of buildings, pipelines or in power plants' boiler tubing. This is a large worry for structural engineers who will be working overtime as states embark on what amounts to a crash program to shore up bridges, following the collapse of the Minnesota span over the Mississippi River. China is already seeing problems. A Chinese power plant exploded recently when high-strength steel tubing blew out, says Roger Schagrin, general counsel for the Committee on Pipe and Tube Imports, which represents U.S. manufacturers of these products.

Dan Malone, construction manager for Garneau Manufacturing, based in Morinville, Alberta, Canada, an energy service company that works with many imports, said tests on a lot of 80 tons of Chinese steel tube products found "the welds failed horribly." Malone said there was no question that if the steel had been fabricated into a finished product and installed it would have failed and "would have killed somebody."

It's unlikely that existing buildings or bridges are in imminent danger of collapse. U.S. metals fabricators periodically test imported steels to assure they met specs for strength, hardness and durability. Construction firms generally do likewise. It is possible that some of the substandard Chinese high-strength steel did slip through, so expect construction companies to recheck with their suppliers to determine whether any of the steel they used was purchased from Chinese mills. If so, U.S. contractors, building owners and power plant operators will bring in structural engineers to test the steel. If any structurally deficient steel is found, companies will shore up pillars, girders and trusses or replace boiler pipes entirely.

Imports of specialized structural pipe and tubing steel from China are soaring, up from almost nothing two years ago to 102,000 metric tons in the first six months of this year, according to American Iron and Steel Institute data. China now provides about 25% of U.S. supplies of this high-strength steel, making it the second-largest source behind Canada. U.S. steel mills supply about 16%.

U.S. and Canadian manufacturers and steel wholesaler service centers started testing hollow structural steel and other high-strength Chinese steels a few months ago when suspicions arose over mass-produced documents certifying that the tubular products met strength standards of the ASTM International, a private group that sets standards for industrial and consumer goods. This reflects on the nature of Chinese companies hell-bent on jumping on the country's industrial boom bandwagon. "Most of China's 800-plus steelmakers are small fabricators who have no idea what quality is about, so there is a risk that some guy with a welding torch buys some hot-rolled coil steel and just welds it together," says Charles Bradford, president of Bradford Research, a metals consulting firm

Imports of high-strength steel products from China are likely to plummet as result of concerns. This will benefit Canadian suppliers and some U.S. steel specialty firms such as Atlas Tube, Columbia Structural Tubing, Ex-L-Tube, Ipsco, Longhorn Tube, Novamerican Steel and others.

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