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OCTG prices should see lift from trade case ruling: MRC

Keywords: Tags  MRC Global, earnings report, Andrew R. Lane, James E. Braun, oil country tubular goods, OCTG, line pipe prices, Pipe Logix Thorsten Schier

NEW YORK — Line pipe prices continue to be challenging but oil country tubular goods (OCTG) tags should get a boost from the recent trade case ruling on imports from nine countries, according to MRC Global Inc. executives.

The OCTG ruling "raises the price floor on low-cost OCTG, so I think it will finish up the year higher than we started," chairman, president and chief executive officer Andrew R. Lane said during an earnings conference call Aug. 1. Line pipe tags also were drifting up, albeit slower, he added.

The assessment was supported by the most recent data from Tulsa, Okla.-based Pipe Logix LLC (, July 31 and Aug. 1).

Despite the slight gains, line pipe prices for the Houston-based energy tubular distributor were 12 percent lower in the second quarter than in the same period last year, executive vice president and chief financial officer James E. Braun said, and the company took more "lower-margin, direct (line) pipe orders" during the period. "This is new business with people we haven’t done work with in the past," he said.

This led to higher sales volumes in line pipe during the quarter but lower margins, according to its earnings report. MRC’s net income for the three months ended June 30 fell 10.4 percent to $39.3 million from $43.85 million a year earlier on sales that increased 18.1 percent to nearly $1.5 billion.

MRC’s line pipe sales were $288 million in the quarter, while OCTG sales totaled $143 million, Braun said.

The company reduced its employee head count by about 180 during the period and closed its corporate headquarters in Tulsa, among other cost-saving initiatives, which Lane said should lead to annual savings of about $12 million to $14 million.

MRC expects the third quarter to be the strongest of the year. "The increase in activity we saw in March and April continued throughout the second quarter and it is continuing into the third, indicative of a stronger second half of 2014," Lane said.

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