NEW YORK Severstal North
America Inc. is looking to move up the value chain in the
products it supplies from its Columbus, Miss., mill to pipe
makers, particularly as end-users in oil and gas ratchet
increase their requirements.
"Weve run X65 ... and
were trialing X70 as we speak," Tom Marchak, vice
president of commercial for the Dearborn, Mich.-based
steelmaker, told AMM.
The move by pipe makers toward
higher-strength flat-rolled steel is expected to continue, with
some already looking at X100-grade product.
"(Our customers) are buying
equipment now to make that strength of pipe," said Mark Pole,
Severstal Columbus ladle metallurgy furnace and caster
manager, as pipe makers, particularly in the oil and gas space,
raise their quality standards. "Theyre pushing us because
theyre being pushed by their customers," he said.
In addition to higher-strength
grades, Severstal Columbus can supply the wider coils required
to make 24-inch line pipe, for which there is burgeoning
demand. "We have two large customers ... in the Gulf Coast
region that are both in line pipe, and 24-inch is a big product
for them," Marchak said.
While pipe and tube has always
been an important market for flat-rolled producers, growing
demand due to the development of domestic shale plays has
provided a further boost. "We knew it was a growing market, but
Id like to say that we were a little bit lucky," Marchak
About 52 percent of Severstal
Columbus shipments for pipe and tube in 2012 were for the
line pipe and oil country tubular goods sectors, according to
Sabyasachi Bandyopadhyay, quality manager at the mill.
In addition to the oil and gas
market, Severstal NA supplies most sectors of the pipe and tube
industry, from structural and mechanical to irrigation
"When we first started, the
philosophy was to diversify, so when you take a look,
were probably doing business with somewhere between 15 or
16 different pipe and tube customers," Marchak said. "Its
nicewell do anywhere between 2,000 and 3,000 tons
with one customer, and some we do 15,000 to 20,000 tons per
In terms of market dynamics,
Severstal NA, a subsidiary of Moscow-based OAO Severstal, has
seen a marked divergence between volume and price this
"Volumes this year are not
disappointing, and Im not just talking about the energy
business or pipe and tube," he said. On the pricing front,
however, "were literally $80 or $100 (per ton) off last
years numbers. It makes no sense."
Growing imports could be part of
the reason for the crimped numbers. "The margins are so tight
right now with the foreign pipe coming in," Pole said.