NEW YORK The U.S. pipe industry is set to benefit from growing natural gas demand, according to a top executive at Welspun Global Trade LLC.
The reshoring of manufacturing is one factor likely to increase demand.
"Theres a lot of manufacturing, due to the low energy prices, thats moving back to the U.S.," Joel Johnson, Welspun Global Trades senior vice president of sales and marketing for the Americas, told participants at the National Association of Steel Pipe Distributors (NASPD) 2013 annual convention in Las Vegas.
At the same time, gas is supplanting more expensive coal as an energy source. "Due to the low gas prices, (coal) doesnt make sense," he said.
Natural gas prices are expected to rise amid increased demand, which should once again spur exploration, Johnson said. "The (U.S. Energy Information Administration) predicts a steady rise in natural gas prices," he noted.
With 60 percent of the countrys gas and liquid pipelines at least half a century old, replacement needs should also spur demand for line pipe, according to Johnson.
Domestic mills are particularly likely to benefit. "A lot of these pipeline companies have a Buy America philosophy," he said.
However, growing competition from railroads could pose a threat to the pipe industry.
"We do see railroads increasing their share of transporting oil," Johnson said, adding that rail, while still an "expensive option," poses fewer right-of-way issues.
Environmental opposition has also slowed work on pipelines such as Calgary, Alberta-based TransCanada Corp.s Keystone XL, for which Welspun is supplying some product (amm.com, Feb. 7). "Our government gets in the way of us making pipe and you distributing pipe," Johnson said.
Welspun Tubular LLC, a division of Mumbai, India-based Welspun Corp. Ltd., is in the process of ramping up its electric-resistance welded (ERW) steel pipe mill in Little Rock, Ark. (amm.com, Nov. 21).