NEW YORK Luxembourg-based
pipe and tube maker Tenaris SA is working with U.S. steelmakers
to determine the best way to cope with a wave of imports that
has dragged down prices, the companys top North American
executive said during the companys first-quarter earnings
"From a trade perspective, we
have indicated that we are working with the rest of the
industry. We are naturally looking at (South) Koreabut
not only Korea, other imports as well. We believe we might come
to a final conclusion in the coming months," North American
area manager Germán Curá said in response to an
analysts question about the potential for an anti-dumping
suit being filed against Korean producers of oil country
tubular goods (OCTG).
Imports have crimped domestic
prices, particularly for lower-end energy tubulars. "We
continue to see some pricing pressure on the low-end part of
our market," Curá said. "This is particularly emphasized
given the level of imports that we continue to see,
particularly coming from South Korea, the majority of which we
all know is carbon low-end stuff."
The import glut is the result of
global overcapacity for lower-end products, chairman and chief
executive officer Paolo Rocca said. In contrast, the market for
premium products is expected to grow 8 percent annually and
could see some tightness once drilling activity in the domestic
market picks up again.
"Demand and supply in premium
will be tight over the medium term," he said. However, 2013 "is
not really the year where we will feel the pressure on these
products, because (U.S.) gas drilling is not going at a very
Eventually, however, shale
exploration is expected to increase due to greater consumption,
improvements in infrastructure and consequently drillers
margins, and the return of U.S. manufacturing.
"We perceive that the gas price
in North America and the energy independence towards which the
U.S. could reach in a relatively short period of time is a
strong driver for increasing consumption of gas, and this is
setting conditions for a relevant increase (of pipe demand) in
the coming years," Rocca said. He pointed to direct-reduced
iron (DRI) facilities announced by Charlotte, N.C.-based Nucor
amm.com, April 19) and Linz, Austria-based
Voestalpine Group (
amm.com, March 13) as drivers of consumption.
As a result, Tenaris believes
that its $1.5-billion investment in a new
600,000-tonne-per-year seamless OCTG facility in Bay City,
Texas, is "fully justified," Rocca said in response to an
analysts question (
amm.com, Feb. 15).
In the short term, however, the
pipe and tube maker sees uncertainty in the North American
market as the company tries to determine how higher natural gas
prices will affect drilling activity. "Its not easy to
make a forecast as to how fast rig counts and wells drilled
will recover," Rocca said. "It will happen in 2014, but it is
not easy to forecast when it will start."