Many steelmakers are bullish on the prospects
of spiral-weld line pipe, and even if the market turns most
believe they have strategies to cope.
The market should peak in 2008 and return to
previous levels by 2009, said David Delie, president and chief
executive officer of Berg Steel Pipe Corp., Panama City, Fla.
That's not bad news, he added, especially considering that 2007
was a good year.
Berg Steel Pipe already has an annual
capacity of more than 400,000 tons of longitudinally submerged
arc-welded (LSAW) pipe and plans to add about 180,000 tons of
spiral-welded capacity, Delie said.
Transmission pipelines should continue to be
built as more natural gas production shifts from traditional
fields in the Gulf of Mexico to newer reserves in the Rocky
Mountains. And while it might not happen until 2015, gas
eventually will be piped in from Alaska to the lower 48 states,
he said. "There's too much to leave sitting up there. It's just
a matter of when."
Others have questioned the economic
feasibility of any new Alaskan pipeline project.
Delie acknowledged that helically submerged
arc-welded (HSAW) pipe overcapacity is a concern. "Everybody is
adding capacity in this good time, and it's going to cycle
around again," he said. "There's going to be some fallout, and
it's going to be tough."
On the HSAW side, capacity is in line to more
than quadruple within a little more than a year if all projects
are completed as planned. North American HSAW capacity
currently stands at 425,000 tons annually, but that could surge
by 1.7 million tons by early 2009. By comparison, LSAW is
expected to maintain its current capacity of around 1.4 million
tons per year.
Berg Steel Pipe should be able to handle any
future downturn, Delie said, in part because its mills have the
ability to quickly change sizes and handle small orders and
The market for spiral-welded pipe is
expanding along with a profusion of new energy pipeline
projects, said Stephen E. Oyler, vice president of sales and
marketing at PSL-North America LLC (PSL-NA). The Lenexa,
Kan.-based company plans to invest $103 million to build a
300,000-short-ton-a-year spiral-weld mill in Mississippi
(AMM, Nov. 12). U.S. engineers historically have
preferred LSAW pipe because it has been perceived to be a
better product, but that's changing, he said. "The U.S. market
is the last in the world to have this debate. Everywhere else
in the world, HSAW is acceptable."
And if pipe demand eventually slackens,
low-cost producers like PSL-NA will survive, he said, comparing
his company to Nucor Corp., Charlotte, N.C. "When Nucor came
in, everyone said, 'You're crazy, there's too much capacity.'
They went ahead anyway because their business plan and new
technology allowed them to participate and take market
Oyler also touted PSL-NA's two-step welding
process, which he said is recognized as state-of-the-art and
will allow the company to succeed in the large-diameter pipe
The current steel and pipe markets are the
best in nearly four decades, according to Larry Lawrence, vice
president of sales at Evraz Oregon Steel Mills Inc., Portland,
Ore. "But I've also learned in that timeframe that nothing is
forever and it will pass," he said. "There will be economic
consequences down the line."
Evraz Oregon Steel Mills will continue to
thrive because it has high-quality product, strong customer
relationships and experience in the marketplace, Lawrence said.
It also boasts excellent raw materials sourcing, its own
rolling mills to convert slab to coil and plate and both
internal and external coating facilities.
The company uses a one-step welding process
to make spiral-weld pipe. Some argue that two-step is a better
technology than one-step, but Lawrence said the one-step vs.
two-step debate is a distraction. "If it meets API (American
Petroleum Institute) and customer specifications, it doesn't
matter if it's 12 steps."