NEW YORK U.S. Steel Corp.
expects domestic drilling activity to pick up as natural gas
prices, buoyed by a drawdown of stocks due to a longer than
expected winter in some parts of the country, have risen to
more than $4 per million British thermal units (mmBtu).
"Given these conditions, we
would expect drilling activity to increase," chairman and chief
executive officer John P. Surma said April 30 during the
steelmakers quarterly earnings call.
As a result, Pittsburgh-based
U.S. Steels second-quarter tubular shipments are expected
to rise vs. the first quarter, although average realized prices
are projected to fall slightly as welded product shipments
rise, he said.
The company saw steady demand
for tubulars during the first quarter, even as average rig
counts fell, as "the drilling efficiency of rigs has continued
to improve," Surma said.
Imports of tubulars remained at
"historically high levels during the first two months of the
year," with oil country tubular goods (OCTG) and line pipe
imports averaging a nearly 50-percent and more than 60-percent
share of their respective markets, according to Surma.
Imports from South Korea, the
largest shipper of both products to the domestic market,
"reached record-high levels in January and are currently
running well ahead of last year," he said.
There has been much speculation
about a possible trade case against Korean producers of welded
OCTG. U.S. Steel has indicated it would be willing to file a
petition if it has a strong case (
amm.com, Oct. 31).
The steelmakers tubular
segment earned $64 million during the quarter, double the $32
million logged in the fourth quarter but 50.4 percent below the
year-earlier $129 million.
The better quarter-on-quarter
results reflected efficiency improvements and lower substrate
costs, the company said in its quarterly earnings results, with
the gains in efficiency coming particularly at its welded
"Weve had some pretty
aggressive cost reductions, particularly on our welded mills,
where were really in a bit of a fight there," Surma
U.S. Steel is planning to
upgrade its No. 4 hot mill at its tubular facility in Lorain,
amm.com, May 1), which will allow it to expand
into larger sizes and meet increased demand.
"We believe this project will
allow for increased utilization of what is already a highly
productive asset, as 5.5-inch OCTG casing is in high demand for
shale play drilling and is in alignment with our strategic
objective to increase our premium tubular product
capabilities," Surma said.
The move will also allow the
company to load its tubular finishing facility in
Fairfield, Ala., with "larger-diameter pipe to serve growing
demand in regions such as the deepwater Gulf of Mexico," as
well as "more fully utilize the new heat-treat facility (and)
finishing facilities weve put in our No. 6 line in
Lorain," he said.