Edgen Group sees ‘trough’ in steel pricing
NEW YORK Edgen Group Inc. expects steel prices have bottomed out after its earnings were crimped recently by low sales tags for its steel products.
"We really have had a very difficult market for steel prices in the last 18 months and quite frankly we were surprised this year at the continued decrease that weve seen," executive vice president and chief financial officer David Laxton told attendees Aug. 15 at Jefferies & Co. Inc.s Global Industrial and Aerospace and Defense Conference in New York. "Our (supplying) mills are not working at very high capacity," he added. "Theres not enough demand currently across those mills. As a result, theres not enough price tension."
The Baton Rouge, La.-based distributor sells plate, sections, pipe and tube, and pipe and tube components and valves. Its suppliers include U.S. Steel Corp., Tenaris SA and TMK Ipsco, according to a company presentation .
Lower prices were particularly felt in the companys oil country tubular goods (OCTG) segment, where falling tags crimped net sales by $43 million in the first half of 2013 vs. the same period a year ago, even as volumes were essentially flat, according to Laxton.
However, he said prices for steel products are now likely at a "trough," with the recent filing of a trade case against nine countries importing OCTG and an anticipated pickup in demand from large down- and upstream projects expected to buoy tags.
Edgen distributes OCTG through its Bourland & Leverich business segment.
The company recorded a $268,000 net loss in the second quarter on continued pricing pressure (amm.com, Aug. 9)