NEW YORK Russel Metals Inc. expects the U.S. Commerce Departments preliminary decision on oil country tubular goods imports from eight countriesexcluding South Koreato put a cap on OCTG pricing.
"The dumping (decision) was going to bring (pricing) up but that didnt come through the way it was expected," president and chief executive officer Brian R. Hedges said during the companys earnings conference call Feb. 20. "Were not going to see any movement up (but) its not going to deteriorate any further, (although) we have to be cautious saying that. I think were at close to a trough, but we lost the reason for it to go up."
The Commerce Departments International Trade Administration (ITA) assessed no dumping margins on Korean OCTG producers (amm.com, Feb. 18) and "even the other (duties) were much smaller than expected," Hedges said. "Pricing (in the United States) is going to be under pressure because of it."
Conversely, OCTG demand is expected to pick up for Russel early in 2014 as a harsh winter has prevented the typical spring break-up in Canada. "Although the weather is bad for shipping steel, its probably pretty good for the break-up being a lot later than it has been the last couple of years," Hedges said.
The company is "getting some good contracts and taking some market share," he said.
Overall, the Mississauga, Ontario-based service center operator and energy products distributor still sees a competitive energy tubular distribution market, despite recent consolidation in the industry.
"Discipline is not a word Id use. Its still very competitive; obviously the offshore ownership has really, dramatically increased, with both Sooner (Inc.) and Edgen (Group Inc.) now being owned offshore, (but) the competition is still there for sure," Hedges said.
Houston-based Sooner was acquired by Japanese trading firm Marubeni-Itochu Steel Inc. in September (amm.com, Sept. 9), while Tokyos Sumitomo Corp. reached a deal to buy Baton Rouge, La.-based Edgen in October (amm.com, Oct. 1)
To take cost out of the energy tubulars business, Russel is "looking at our relationship with various mills to use a more centralized buying format," Hedges said during the conference call.