NEW YORK The level of U.S. imports of oil country tubular good is unlikely to change soon despite a recent trade case filed against nine countries, senior executives of Tenaris SA said.
"We continue to see levels of imports above 50 percent. We dont believe that will change anytime soon," Tenaris North American area manager Germán Curá said in an Aug. 2 earnings call.
Inventories also remained at "a very high level" and, as such, the case is expected to have little effect on prices in the third quarter, he said.
"On the low-end (commodity welded OCTG) component, I would say that I dont think weve seen the end of (the price decline)," Curá said.
Executives from Frances Vallourec SA also recently indicated it was too early to gauge the impact of the trade case (amm.com, July 31).
If the case is successful, Luxembourg-based Tenaris said it expects little pressure on markets outside of the United States. "There is no other market like the United States. The size of the demand for the low-end (OCTG products) is higher than in any other market," Tenaris chairman and chief executive officer Paolo Rocca said.
However, Canada might see an influx of OCTG, particularly from South Korea, if the trade case is won, Curá said, citing such an outcome in 2009 after a complaint filed against Chinese OCTG producers (amm.com, Aug. 30).
Tenaris remains confident about its success in the North American market, even with the large OCTG capacity additions planned.
Rocca called an analysts estimate of 3 million tonnes in capacity additions to the U.S. OCTG market "very high," as most plants dont run at or reach maximum capacity. "Capacity will be used to a rational level," he said.
Tenaris received necessary permits to begin construction of its $1.5-billion, 600,000-tonne seamless OCTG mill in Bay City, Texas, in July and expects to begin ordering "key" equipment by October, Rocca said.
North American sales totaled $986 million in the quarter, down 22.4 percent from $1.27 billion a year earlier, due to the seasonal spring breakup in Canada and a drop in orders from northern Mexico, Tenaris said.
Tenaris overall net income totaled $429.6 million during the quarter, down 5.6 percent from $455.3 million in the same year-ago period, on sales that rose 1 percent to $2.83 billion.
Shipping volumes fell 2.5 percent year on year during the quarter to 963,000 tonnes, with those of seamless material falling 3.4 percent to 677,000 tonnes and welded product edging 0.3 percent lower to 286,000 tonnes.