International trading house Steelcom S.A.M. is growing its
steel trading business in the United States to take advantage
of expanding pipe and tube demand amid the shale gas boom, the
companys top executive told AMM.
"The plan in the U.S.
is to focus in the niche area of the oil and pipe industry,
which is coming along quite nicely. We concluded that it could
be a nice business to be there," Victor Carballo, chief
executive officer of both Monaco-based Steelcom and parent
company Metalcorp Group, told AMM in an interview this
To capture a piece of
that growing market, the company on June 3 formed a new
subsidiary called Steelcom Pipe International LLC, which is
headquartered in Houston and will concentrate on the burgeoning
energy pipe industry, Carballo said.
While Steelcom already
has a San Antonio, Texas, office focused on the trade of
steelmaking raw materials, flats and long products in the North
American Free Trade Agreement (Nafta) region, the new Houston
subsidiary will focus specifically on tubular products for the
shale gas industry.
Staffing the new
company is a team of former Coutinho & Ferrostaal Inc. pipe
and tube traders that exited the trading house in May
(amm.com, May 7).
"The team we brought
in is very experienced, one which everyone knows and
recognizes, and they also came with a complete package of
suppliers and customer relationships. We had the financial
tools to help them," Carballo said of the hires.
The team will be led
by industry veterans Wayne Pickle and Derek Meyer, who have
enjoyed a "long lasting and successful career in this sector,"
deeper into the U.S. market comes at a time when steel traders
report challenging market conditions, particularly as softer
U.S. prices coupled with shorter domestic lead times have
buyers concerned over whether opting for imports is worth the
risk. Additionally, in recent months, several large
international trading houses, including Balli Group Plc (
amm.com, April 2) and Stemcor Holdings Ltd.
(amm.com, May 15), have faced financial
difficulties as banks grow increasingly wary about lending
Despite such issues,
Carballo claimed that providing added services to customers and
suppliers is allowing his company to keep its head above
speculate. We base our model on back-to-back (trading). We
concentrate on finding sourcing for our products and finding an
agreement with a supplier. Then, based on market conditions, we
negotiate a discount, which makes our gross margin," he
As a result, Carballo
said, his company has not lost money in any single year, even
during the recent financial crisis.
"We prefer to have
steady flows of money, even if the flows are not that big," he
As for future growth, Carballo said that Steelcom, which
counts numerous global locations, continues to look for ways to
expand, "Were not in a rush," he said. "We want to grow
steadily and we want to consolidate what we have as we have it.
For the U.S., if there is room for expansion, well be
there for that."