HOUSTON New domestic
energy tubular capacity may squeeze U.S. producers
margins, but theres no consensus as to whether a trade
petition is the answer to overcapacity in the sector.
Tigran Atayan, president of the
tubular products group at Chicago-based Evraz Inc. North
America, is in favor of trade action against imports. "It
should happen," he said following a panel discussion at
AMMs 6th annual Steel Tube and Pipe Conference
in Houston. "When will it happen? I hope soon."
But others suggested that new
domestic capacity might be the biggest issue facing the pipe
and tube sector.
Dolty Cheramie, president of
Houston-based line pipe distributor Pipe Exchange Inc.,
illustrated his thoughts on the matter by showing a slide of a
train wreck. "I dont know what else you can think," he
Millions of tons of new energy
tubulars capacity may be added to the U.S. marketplace in
coming years as a host of mills have announced expansion plans
or new projects (
amm.com, Feb. 1).
Atayan conceded that pipe and
tube producers could see margins squeezed even for premium
products. "Will it happen in two years? Most probably not," he
said. "Will it happen in five years? Most probably yes."
That long-term probability
underlies the steel industrys responsibility to continue
to innovate to bolster prices, he added.
Atayan also questioned how many
of the announced new projects would actually be built and come
to market on time. "It is one thing to announce capital
investments; it is another to deliver that facility on time,"
he said, adding that he expects to see competition become more
As new producers come online,
they will jockey for market share and drive down prices,
according to Lynn Lupori-Gray, managing consultant at
Mississauga, Ontario-based consulting firm Hatch Ltd. But new
companies likely will look to displace imports before fighting
among themselves for market share, she said.
Lupori-Gray also questioned what
relief a trade case might provide. "As weve seen in other
products, material will find its way into the United States
through other channels," she said. "You close one door and
another one opens. Imports are a key part of this market, and
they are not going to go away."
Cheramie agreed. "People
dont buy import because they cant get (material)
domestically; they buy (imports) because a lot of times
its the same product and they can get it cheaper," he
Trade petitions also have a
bleak track record, Cheramie pointed out. "Every time we stop
someone, someone else comes and fills the void. So it makes no
difference who you stop. There is going to be a void that is
going to be filled by another importer."
OCTG imports totaled about 3.65
million tons last year, according to data from the Commerce
Departments Import Administration. South Koreas
share reached more than 840,000 tonnes in the first 11 months
of 2012, a 31-percent increase from the same period a year
earlier, feeding long-standing speculation that a trade
petition may be filed against Korea and perhaps other nations