Spiral-weld mill honchos are upbeat despite slippery energy mart

Dec 27, 2008 | 07:00 PM |

The economic sky might be falling, but that doesn't appear to be dimming the optimism of executives at new, large outside-diameter (OD) spiral-weld pipe mills in North America.

Evraz Inc. NA has already completed an expansion of large OD spiral-weld capacity at its facilities in Regina, Saskatchewan. And many new large-OD spiral-weld pipe mills are already making pipe in anticipation of production ramp ups in early 2009.

All told, the expansions could see roughly 1.8 million tons of new large OD spiral weld capacity hit North America in the coming few weeks and months. (Want to check our math? See the chart below.)

That's not peanuts. In all of 2007, the United States imported roughly 3 million tons of line pipe, according to data compiled by McKees Rocks, Pa.-based SteelFacts. Imports from much-maligned China totalled just under 500,000 tons. We're on pace to top those figures in 2008—but perhaps not by all that much.

Can anyone say "overcapacity"?

(And by the way, have you noticed that U.S. exports of line pipe are way up this year? Take a look at the charts on page 8.)

Still, many executives at the new spiral weld pipe mills argue that the expanded domestic capacity will muscle out import material. That's thanks largely to the steep costs of shipping large OD pipe on the high seas and the added price of welding together imported material, which generally comes in shorter lengths than domestically produced line pipe. Most also think that their new technology will give them an advantage over older and more established players if and when push comes to shove.....