HOUSTON Hyundai Hysco
Ltd. has seen a tepid start to 2013 after steadily improving
demand each year following the recession, a top executive told
AMM on the sidelines of the Offshore Technology
Conference (OTC) in Houston.
Part of the problem has been the
declining rig count, according to Sam Choi, deputy general
manager of the South Korean steelmakers pipe and tube
export team, noting that "2012 was really great. So last year,
especially around December, we expected much more progress this
year. But after the first quarter ... we realized that last
year was better than this year."
Choi noted that the rig count
has fallen some 10 to 15 percent from last year, or about 200
rigs. "(Supply for) 200 rigs for 12 months of oil country
tubular goods (OCTG) material means about 800,000 tonnes. For a
domestic supplier or overseas supplier, thats a big
tonnage (now out of the market)," he said.
At the same, supply is
"abundant," and Hyundai Hysco is concerned about further
growing domestic capacity, with a number of new mills announced
"Domestic production is about
1.5 million tonnes, and maybe two or three years later 2
million tonnes is (being added) to supply in the USA. That
means there is maybe no excess tonnage left for import
material," Choi said, adding that Hyundai Hysco was starting to
grapple with the implications this has for its market
One possibility would be a move
into semi-premium connections to differentiate the company from
competitors, he said, cautioning against the harsh stance vs.
importers by domestic producers.
"Foreign suppliers are not the
enemy. We compete with each other but we are not enemies. We
exist for customers," Choi said.
Pipe prices, while continuing to
decline, might not yet have hit bottom this year, he said.
However, "flat-rolled prices
have reached the bottom, so maybe two to three months later the
pipe and tube prices will come back again," Choi said, adding
that he sees demand picking up late in the third quarter or
early in the fourth quarter.
Choi strongly urged approval of
TransCanada Corp.s Keystone XL pipeline as a catalytic
event to boost market demand.
"Some ... event is needed to
improve this market situation," he added.