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Vallourec sees OCTG ruling lifting prices

Keywords: Tags  Vallourec, quarterly earnings, Philippe Crouzet, oil country tubular goods, OCTG, OCTG prices, OCTG trade case, Thorsten Schier


NEW YORK — Vallourec SA expects its second-half oil country tubular goods (OCTG) prices to be buoyed by the United States’ recent anti-dumping ruling against product from South Korea and other countries.

"Vallourec was one of the petitioners, so we definitely think that it’s good news to be closer to what we consider fair trade," chairman Philippe Crouzet said during a July 30 earnings call in response to an analyst’s question about whether the decisions had in the end been a "nonevent."

The rulings would likely firm up welded OCTG prices "by the value of the dumping amount," and even though Vallourec only makes seamless OCTG in the United States, it would lead to more positive market sentiment, Crouzet said. "This is supporting the price increase(s) that we are pushing to our customers in the second half of the year."

The Paris-based pipe and tube maker continued to see a less favorable mix in the United States in the second quarter due to increased use of semipremium connections in oil drilling vs. premium connections in gas, but this shift is stabilizing and in some cases reversing, it said.

"We see some customers that were expecting to switch from premium to semipremium staying on premium connections," Crouzet said.

Vallourec expects the return of strong domestic gas drilling in 2016 as the reshoring of manufacturing takes hold.

"We should expect a structural change of the market with U.S. re-industrialization and strong continuation of gas drilling starting (in) early 2016," Crouzet said, agreeing with an analyst assessment that U.S. gas drilling is currently in a "trough."

In the meantime, the company will benefit from what is likely to be increased oil drilling through "the volume impact, (not) the mix," and from an investment in a premium threading line (amm.com, March 13) that is slated for start-up in "early to mid next year," Crouzet said.

Vallourec recorded net income of €88 million ($118.2 million) in the second quarter, up 41.9 percent from €62 million a year earlier, on sales that rose 3.3 percent to €1.42 billion ($1.9 billion), according to its earnings results.


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