NEW YORK SB International Inc.s recent acquisition of Northwest Pipe Co.s oil country tubular goods (OCTG) assets in Bossier City, La., and Houston was more than a year in the making, giving the company ample time to assess the strengths of the facilities, company executives told AMM.
"We started this process over a year ago and it took some time. It wasnt short and sweet," said Michael Fielding, SB Internationals vice president of strategy and planning, adding that the company had been looking at the assets for even longer than that. "Weve had our eye on Northwest Pipe for a couple of years. Weve got a strong footing on the import side of the business and this deal will complement what we have already in place with domestic product."
The ongoing anti-dumping case on OCTG imports from nine countries played some role in the decision to purchase the facilities, although it wasnt the main factor, according to president and chief executive officer Satish Gupta.
"We think there is going to be huge growth in the energy sector and this complements our supply sources from overseas and gives ease to our customers if there is any change in the trade case," Gupta said, although he noted that impact from the case had been "almost negligible" following the preliminary decisions in mid-February (amm.com, Feb. 18).
The $42.7-million acquisition through SB International affiliate Centric Pipe LLC (amm.com, April 1) is expected to significantly broaden the Dallas-based energy tubulars trading firms customer base. "It opens up a whole new segment," Fielding said. "There are some customers who only want domestic."
The company is fully confident in the two mills abilities despite some concerns about their age. "Though its true that some of the equipment is a bit on the older side, the critical components of the mills are in excellent condition and are capable of producing a range of high-quality OCTG products," Gupta said in an e-mail. "The investments Northwest Pipe made in these plants were significant and will now accrue to Centric Pipe as we build on what is already in place and begin this exciting new phase of operations."
Meanwhile, few changes are being made in terms of personnel at the two locations in order to preserve the operational knowledge. "Its pretty much the existing team that will be running the mills," Gupta said.
In terms of further improvements, SB International is planning to eventually add finishing equipment at the Bossier City site. "We are assessing that and we will have in the next few days or weeks a little bit more of an idea," Gupta said, noting that the mill is well-positioned to serve burgeoning shale demand on the East Coast as well as in the Texas area.
Overall, OCTG demand is expected to remain robust in 2014, according to Gupta. "There is going to be price pressure but demand is going to remain healthy," he said.
Combined, the Bossier City casing mill and the Houston tubing mill have a capacity of 200,000 tons, according to a company statement.
SB International has other OCTG ventures, including SB Navitas Tubular Inc., a Canadian energy tubular distribution joint venture, and SB American Tubulars LLC, a heat-treatment leasing venture with Boomerang Tube LLC, Chesterfield, Mo., according to its website.
The company also owns SB Specialty Metals LLC, a distributor of conventional and powder metal tool steels and high-speed steels formed after the acquisition in 2010 of the service center assets of then-bankrupt Crucible Materials Corp. (amm.com, Dec. 18, 2009).