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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 we’ve 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. "There’s not enough demand currently across those mills. As a result, there’s 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 company’s 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)


Latest Pricing Trends Year Over Year

Poll

After witnessing the pace of steel plant idlings and worker layoffs during the first half of the year, what is your view of the second half of 2015? (choose one)

No matter what else happens, layoffs and shutdowns, etc., have nearly or essentially stopped for the year.
The environment will change little and the pace of layoffs will continue at a similar rate as the first half of 2015.
The environment will change little yet the pace of layoffs will begin to slow slightly to moderately.
The environment will change little yet the pace of layoffs could exceed the rate seen thus far.
The environment will improve slightly to moderately yet hiring and plant restarts will not resume this year.
The environment will improve slightly to moderately, with hiring and plant restarts commencing.
The environment will improve dramatically yet hiring and plant restarts will still be negligible in comparison.
The environment will improve dramatically yet hiring and plant restarts will only be slight to moderate.
The environment will improve dramatically, with hiring and plant restarts occurring nearly in tandem.


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