PITTSBURGH U.S. Steel Corp. sees better demand ahead for almost all of its flat-rolled customers with the exception of oil country tubular goods (OCTG) producers, the companys top executive said.
The Pittsburgh-based steelmaker blamed lackluster demand from the OCTG sector on what president and chief executive officer Mario Longhi characterized as "shores."
Less-than-stellar flat-rolled demand from the OCTG sector comes even as market drivers for tubular sales are trending up, Longhi said during an earnings conference call April 30. Unusually cold weather in North America pushed up natural gas prices at the same time that crude oil tags have held at above $100 per barrelfactors that should bolster drilling activity, he said.
On the natural gas front, a "brutally cold winter" resulted in the largest cumulative natural-gas storage withdrawal on record and "massively depleted" gas inventories, Longhi said, noting that the energy industry should see an increase in directional drilling for oil and natural gas.
"Overall tubular demand is good, but prices continue to be impacted by the unfairly traded import volumes," Longhi said.
But while U.S. Steel lamented the hit to the energy tubulars market from imports, Longhi said the company continues to make progress with premium and semi-premium connections. U.S. Steel continues to develop and bring to market a suite of connections for tubular customers in what has proved to be an "extremely important and highly profitable segment," he said.
U.S. Steels tubular segment recorded operating earnings of $24 million in the first quarter, down 62.5 percent from $64 million in the same period last year as average tubular prices slipped 4.9 percent to $1,479 per ton in the same comparison, according to earnings data.
U.S. imports of OCTG in April totaled 246,864 tons, according to license data from the Commerce Departments Enforcement and Compliance division, a 7.6-percent increase from a preliminary March import figure of 229,512 tonnes.
South Korea accounts for the biggest share of those imports, Commerce data shows. Longhi criticized Korean producers of OCTG in March after the nation was not assessed preliminary anti-dumping duties in an ongoing trade case (amm.com, March 25).