NEW YORK Texas is a good fit for Tenaris SA new seamless mill, given the active shale plays in the area, market sources said, expressing little surprise at the move.
"Theyre trying to base themselves at the logistical point where they can service the Eagle Ford and the Haynesville if it starts to get more active again," one southern distributor said.
"I think its probably a natural location, and they probably will be successful with it," a second southern distributor agreed.
The Bay City mill, which will cost between $1.3 billion and $1.5 billion, will make 600,000 tonnes of seamless oil country tubular goods (OCTG) annually (amm.com, Feb. 15).
The Luxembourg-based company might have chosen Texas over Louisiana, the other location previously under consideration, in part because of the states simpler bureaucratic structure, sources said.
"Ill take Texas every time. From a bureaucratic point of view, Louisiana is not a very friendly state to build a factory," the first distributor said.
With several OCTG mills already operational in Texas and others being builtfor example, TPCO America Corp.s 500,000-tonne-per-year seamless pipe facility in nearby Corpus Christisources said the state is becoming a virtual mall for pipe buyers.
"Its like building a shopping center now. You get one anchor shop in, and youve got others following," the first distributor said.
Istanbul-based Borusan Mannesman is also considering Texas as one of two possible locations for its new welded OCTG mill (amm.com, Jan. 4).
However, sources still expressed some concern about the amount of capacity now set to come online in both welded and seamless OCTG.
"Theres a lot of new capacity, plus the imports coming in. They (Tenaris) obviously feel very optimistic about the U.S. market," the second distributor said.