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Tenaris confident of favorable final OCTG ruling

Keywords: Tags  Tenaris, Germán Curá, Paolo Rocca, earnings report, OCTG, oil country tubular goods, anti-dumping, Thorsten Schier


NEW YORK — Tenaris SA remains confident that domestic oil country tubular goods (OCTG) producers will get a more-favorable anti-dumping ruling on imports from South Korea when the Commerce Department’s International Trade Administration (ITA) makes its final decision in early July.

"The department made clear that they didn’t take into full consideration some relevant aspects and some data that they will take into consideration for the final determination," Tenaris chairman and chief executive officer Paolo Rocca said during a conference call to discuss the Luxembourg-based pipe and tube maker’s fourth-quarterfinancial results. This has made Tenaris "very confident" of a more-favorable final ruling, he added.

Based on its preliminary briefing, Commerce does not believe it has "used the complete data in terms of sales and cost on the Korean exporting companies," said Tenaris’ North American area manager, Germán Curá, putting this down to time constraints.

Also buoying the company’s hopes of a more-favorable ruling are "a lot of cases in the past where the full consideration of data has led to final determinations that are substantially higher than the preliminary ruling," Rocca said.

In the meantime, the preliminary ruling is expected to affect Tenaris’ revenue, particularly in the welded OCTG segment, this year.

"In the first semester of this year we can anticipate some continuing imports from Korea ... of less-differentiated product," Rocca said, adding that this "stock build-up will also have some impact in the second half of the year."

Even the positive impact of significant dumping margins assessed for the other eight countries in the trade case, particularly those with largely seamless OCTG production, likely will not be felt immediately, he said. "There has been an inventory buildup in the last few months and some of this will go on in the first and second quarters of this year. We will not see a positive effect until we get the final determination."

Overall, Tenaris expects 2014 results will be largely in line with those in 2013, with a real pickup expected in 2015. "I really think that the dynamics of demand and supply (in 2015) should drive the margin of the industry in the United States to a slightly higher (level)," Rocca said.

In the near term, recent high natural gas prices are not expected to spur drilling significantly, but continuing reshoring of manufacturing is expected to lead to improved demand in the longer term and move the price higher.

"Frankly, the view we have is that the gas price is perhaps associated with one of the worst winters we’ve had and continue to have. It is the view of customers that when this is over we’ll more than likely go back to the (price) levels we’ve seen in the past so many months," Curá said, adding that "mid-term-wise the existing (price) level is not sustainable and it has to increase" as "the reindustrialization process (in the United States) continues to go on."


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