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Tenaris’ N. American sales strong in 2012

Keywords: Tags  Tenaris, steel tube, earnings report, Paolo Rocca, Germán Curá, South Korean imports, trade case, shale plays Samuel Frizell

NEW YORK — Tenaris SA will continue to capitalize on the North American energy boom after a strong 2012, despite competition from low-priced South Korean imports, executives said during a Feb. 22 earnings call.

"Our position in North America has strengthened substantially through the year," Tenaris chairman and chief executive officer Paolo Rocca told investors, citing as a driver the company’s leading position in Gulf of Mexico deepwater drilling and U.S. shale plays.

Tenaris’ North American tube sales rose 22 percent over 2011 to $4.95 billion in 2012, an increase the company said was driven by greater liquids-drilling activity and recovery in the Gulf of Mexico. The increase in North American sales, paired with an 11-percent increase in South American sales, accounted for most of the company’s $861.5-million increase in sales in 2012 over 2011.

The Luxembourg-based steel tube and pipe manufacturer described its $1.3-billion to $1.5-billion investment in a new seamless pipe mill in Bay City, Texas, scheduled to begin production in 2016, as part of its plan to expand further in North American markets (, Feb. 15).

"The new mill in Bay City reflects our confidence in the development of North America as a new frontier for the entire energy industry," Rocca said.

But the company has seen cheap imports, particularly tube from South Korea, threaten its domestic market share.

"No doubt there is increasing pressure for share of imports into the United States," Rocca said. "The share of imports (has) reached close to 55 percent of the overall market, and some of the players, like Korea, have really been very, very aggressive in recent months. This has put pressure on the low end of the market."

Rocca referenced discussion among U.S. oil country tubular goods (OCTG) market participants who see themselves on the defensive and favor duties against Korea (, Jan. 16), saying a trade case would be justified.

Although Korean imports continue to affect the market, increasing demand will relieve some pressure by the end of the year, North American area manager Germán Curá said during the conference call. Tenaris also said that its business had not been as impacted by imports of more complex products, for which it sees higher margins.

Tenaris posted 2012 net income of nearly $1.7 billion, up 27.6 percent from $1.33 billion the previous year, on an 8.6-percent increase in sales to more than $10.83 billion. But fourth-quarter net income fell 10.5 percent to $357.7 million from $399.6 million in the same period a year earlier on sales that inched up 0.3 percent to nearly $2.76 billion.

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