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Imports eroded OCTG margins: executive

Keywords: Tags  Northwest Pipe Co., steel pipe and tube, oil country tubular gioods, OCTG, Scott Montross, steel pipe imports, price margins, Borusan Mannesmann Boru Sanayi ve Ticaret AS Baytown


NEW YORK — Northwest Pipe Co.’s margins in welded oil country tubular goods (OCTG) have been crimped by imports, but the company is not relying on the results of a recently filed trade case to ensure its viability, according to its top executive.

OCTG and line pipe prices have fallen by $230 to $250 per ton since the beginning of 2012, while hot-rolled coil, the substrate for the material, has dropped by only $85 per ton, president and chief executive officer Scott Montross told attendees Aug. 14 at Jefferies & Co. Inc.’s Global Industrial and Aerospace and Defense Conference in New York.

"You’ve got (about) a $160-, $150-per-ton margin squeeze because of the downward pressure on pricing in that market," Montross said.

He cautioned, however, that the Vancouver, Wash.-based pipe and tube manufacturer is not relying on the results of a trade case against nine countries making OCTG for its viability in that market since foreign producers have begun building plants in the domestic market due to the robust demand outlook from the oil and gas market.

"There is not only going to be ongoing attention from imports, even if the trade case works out, but there is going to be attention from foreign countries building plants in this country," Montross said, citing Istanbul, Turkey-based Borusan Mannesmann Boru Sanayi ve Ticaret AS’ plan to construct a $148-million OCTG mill in Baytown, Texas (amm.com, June 5).

Instead, Montross said Northwest Pipe is focusing on driving down its costs with lean manufacturing initiatives and leveraging its substantial raw material buy.


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