HOUSTON -- The Port of Houston Authority expects to set a four-year record for steel volumes in 2012 due to rising pipe and tube imports for the regions growing oil and gas sector, according to one of its top executives.
While the ports steel volumes for 2012 were initially projected at around 4.5 million short tons, according to estimates released in 2011, year-end totals have been adjusted to 5.1 million tons, according to Ricky Kunz, the ports vice president of trade development and marketing. That figure would mark the highest steel volumes at the port since 2008, when steel tonnages reached a record 6 million tons.
We were very fortunate this year. Steel was very strong I will say, specifically in pipe for the oil and gas sector, through August. Then, we saw a bit of a falloff, Kunz told AMM during an interview in Houston earlier this month.
The year-end decline in pipe and tube imports appeared to be driven by falling natural gas prices and, as a result, decreased drilling, he said.
Consequently, there was inventory buildup and the orders fell off, Kunz said.
As one of the largest steel ports in the United States, the Port of Houston Authority sees daily shipments of steel products, such as steel coils and pipe, coming in from shippers in the Far East, South America and Europe, in particular.
What were being told by the importers and traders is that were not going to see a return that we were enjoying earlier in the year until the end of the first quarter or possibly the end of the second quarter, Kunz said. We hope its earlier than that, but thats what theyre telling us.
And while volumes might remain subdued in the near term, Kunz said he is optimistic things will return to
normal in the short term.
This is a very cyclical business and we just have to deal with those cycles. From a construction standpoint, we havent seen anything yet. (But) the Exxons, Shells, Dow Chemicals--all of them are in the process of building new facilities or upgrading facilities thats going to create a huge need for pipe, he added.
Looking forward, Kunz said he is optimistic that steel volumes will likely remain largely consistent in 2013, with the port aiming to remain as a major steel trading hub.
In the second quarter, we should return to normal. From a tonnage standpoint, Im expecting maybe 4.2 (million) to 4.3 million tons, he said. At the end of the day, weve got competition. But, because of the oil and gas sector, were always going to be a major steel port.
In recent months, the Port of Houston Authority has spent some $20 million on a new gate as it looks to tackle the issue of congestion, which Kunz said has been a major issue since trucks delivering heavy product arrive to the port through the same passage as the general public.
Other upgrades have included tearing down warehouses to provide more lay-down areas.
We need more open area to accommodate steel products. We tore certain buildings down because of the nature of the cargo have changed, he said. We needed more open area to accommodate pipe and steel. Well likely be tearing down more.