CHICAGO — China’s WSP Holdings Ltd. might have thrown in the towel on its Houston division, but Japan’s Nippon Steel & Sumitomo Metal Corp. (NSSMC) has high hopes for the facilities—and the potential they offer in the high-end oil country tubular goods (OCTG) market in the United States.
NSSMC confirmed that it has acquired WSP Houston OCTG Inc. for $43 million through its Southern Tube LLC subsidiary. The company said it plans to make additional capital investments in the facilities after the acquisition closes and have a "full-fledged" commercial operation on the site by 2015, the company said.
NSSMC aims to tap into the U.S. energy sector’s strong OCTG demand, especially the high-end products needed to withstand harsh drilling environments, it said. Shale drilling, for example, requires OCTG and connections capable of withstanding more intense pressures and more corrosive environments than that used in traditional shallow or vertical drilling.
"NSSMC intends to utilize its accumulated customer assets, technology and product capability and accelerate its global strategy by fully entering the U.S. market," it said.
As part of that strategy, the Houston heat-treatment and threading operations will be supplied by material from NSSMC Wakayama Steel Works in Japan and Vallourec & Sumitomo Tubos do Brasil Ltda (VSB), NSSMC said.
Construction on VSB, a $1.6-billion joint venture between France’s Vallourec SA and Japan’s Sumitomo Metal Industries Ltd., began in 2008. The mill is expected to have an eventual annual production capacity of 1 million tonnes of steel and 600,000 tonnes of tubes. The VSB pipe mill was inaugurated in September 2011 (amm.com, Feb. 22).
Finishing product made outside the United States at the Houston facility is similar to the strategy once envisioned by WSP, which previously said it could restore its presence in the United States by selling product made in Thailand and finished in Houston into the U.S. market after a dumping petition was successfully filed against energy tubulars from China (amm.com, June 15, 2011).