(Adds comments from Hyundai Hysco)
By Krista Hughes
WASHINGTON, July 11 (Reuters) - The U.S. Commerce Department on Friday set duties on South Korean steel pipe used in the oil and natural gas industry, reversing itself in one of the most contentious trade disputes in years after hefty lobbying from U.S. producers and lawmakers.
The turnaround cheered domestic steel companies battling a surge in imports from foreign rivals looking to cash in on surging demand for the specialist pipes due to a boom in U.S. shale drilling.
Duties will lift pipe prices and tighten supplies, helping companies like United States Steel Corp. Its shares rose 3.2 percent to the highest close since mid-April, at $27.64.
Commerce also confirmed duties on oil country tubular goods (OCTG) from India, the Philippines, Saudi Arabia, Taiwan, Thailand, Turkey and Vietnam. Ukraine was exempted from duties under a suspension agreement.
Steel companies lodged the complaint last year after imports of pipe from the nine countries doubled, accounting for nearly two-thirds of the U.S. market, according to steel industry body American Iron and Steel Institute.
The ruling will also aid pipe specialist Tenaris subsidiary Maverick Tube Corporation, Boomerang Tube, Energex Tube, a division of JMC Steel Group, Northwest Pipe Company, Tejas Tubular Products, Russia's TMK IPSCO and France's Vallourec Star.
In its preliminary ruling in February, Commerce found all countries but South Korea had sold imports below cost, excusing the country from duties and sparking a surge of complaints.
Lawmakers and industry groups wrote to Commerce to express concern, steel industry executives complained to Congress and steelworkers staged rallies around the country. Analysts had been cautiously optimistic of a reversal, which is not uncommon at the final investigation stage.
The duties are still subject to a final decision by the U.S. International Trade Commission (ITC), where companies must prove they were injured by the flood of cheap imports.
But if they prevail, imports from Hyundai Hysco will have duties of 15.75 percent, from Nexteel 9.89 percent and all other South Korean producers will have a duty of 12.82 percent -- levels U.S. Steel CEO Mario Longhi said were "significant."
U.S. imports of South Korean OCTG were worth $818 million in 2013, more than the imports from all eight other countries combined, according to Commerce data.
Hyundai Hysco said it would appeal to the international trade court against what it saw as an unjust measure, although it did not expect Korean steel pipe exports to be hit.