NEW YORK OAO TMK expects the first half of the year to be "filled with uncertainty" due to changes in customer buying patterns for its pipe products and drilling activity, it said.
"It will only be in the second half of 2013 that we expect to see a more positive environment," the Russian steelmaker, parent of Downers Grove, Ill.-based tube and pipe maker TMK Ipsco, said as it released its fourth-quarter operating results.
Shipments from the Moscow-based companys American operations fell 3.7 percent to 255,000 tonnes in the fourth quarter compared with the previous quarter, mainly due to a declining rig count and customers opting to use inventory on hand rather than ordering new stock, the company said. However, TMK also saw tubular shipments increase 4.8 percent year on year to 1.1 million tonnes.
All pipe segments, with the exception of seamless line pipe, also notched year on year gains in the Americas division, the company said.
TMK has seen a notable shift in U.S. drill rig activity to oil from gas, with about 75 percent of rigs now employed in oil drilling. And despite a recent uptick in natural gas prices, they remain well below historical levels. Meanwhile, oil prices have remained relatively stable.
The increased oil exploration has boosted demand for TMKs premium connections, the company said.
About 73 percent of U.S. rigs are now involved in horizontal or directional drilling due to the development of U.S. shale plays, it added.
Across TMKs global operations, pipe shipments dipped 0.3 percent year on year to 4.22 million tonnes in 2012.
Welded pipe shipments logged a 7.5-percent decline to about 1.7 million tonnes last year, partly offset by a 5.3-percent gain in seamless pipe shipments to 2.5 million tonnes.
Shipments of oil country tubular goods also improved to 1.7 million tonnes, up 9.5 percent from 2011 levels.