Reliance Steel & Aluminum Co. continues to seek
opportunities for growth in the energy sectorbut not in
commodity oil country tubular goods (OCTG) and line pipe,
company executives said.
"We have looked at
some opportunities in the OCTG and line pipe end of things, but
we have stayed away for a couple of years," Reliance chairman
and chief executive officer David H. Hannah said in a
conference call with analysts Feb. 20.
While the acquisitive
Los Angeles-based service center will still consider
opportunities in energy tubulars, it is concerned about
"unknowns" in the sector, including pricing, import levels and
domestic overcapacity, Hannah said.
That caution has only
been reinforced by the U.S. Commerce Departments
International Trade Administration (ITA) preliminary decision
not to impose anti-dumping duties against South Korean OCTG
amm.com, Feb. 18), Hannah suggested.
ruling, it didnt really help," he said. "And we still
have a lot of capacity being built here in North
Americaand in the U.S. in particularthat is yet to
be completed and absorbed by the market."
The company has
largely stayed away from what it considers to be commodity
energy tubulars, aside from a "small piece" of OCTG business in
western Canada that came with Reliances acquisition of
Spring, Texas-based Continental Alloys & Services Inc.
amm.com, Aug. 3, 2011), Hannah said.
Reliance would prefer
to focus on energy applications that require adding value but
bring higher margins instead of high-volume, low-margin OCTG
and line pipe, Hannah said. "Were doing a lot of cutting,
machining and boring. Were making parts, and so its
completely different from ... more commodity OCTG and line
pipe," he said.
Outside of OCTG,
Reliances energy business is "quite strong" and expected
to make further gains in 2014, senior vice president of
operations James D. Hoffman said. OCTG may get "a lot of press"
but is perhaps less important for Reliance than more
specialized energy products, such as alloy bar and bored
tubing, he said.