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Large-diameter steel pipe a bright spot in down industry: Evraz North America

Increase font size  Decrease font size Date:2015-10-15   Views:437
Even as global oil prices plumb new depths, the large-diameter pipe sector remains a bright spot for the steel industry in an otherwise down North American market.

Evraz North America CEO Conrad Winkler, speaking with Platts this week during the World Steel Association's 49th annual meeting in Chicago, said 2015 demand from the sector is likely to yield significant year-on-year growth for his company.

"We think 2015 comes in 70-100% bigger than 2014 for large-diameter pipe," Winkler said.

This growth comes as OCTG business is off about 50-60% this year, as companies work through inventory overhangs and weak demand, he said.

Unlike OCTG, which is tied more closely to oil prices and depends heavily on new drilling projects for growth, large-diameter pipe used in transporting oil and gas is faring fairly well, he said.

Most projects in the sector are based on 10-20 year investments by major energy companies, "so one or two years of down oil prices doesn't change their market fundamentals," Winkler said.

Evraz NA has completed some $200 million in investments in its Regina facility in western Canada to meet demand from the sector, he said.

The company, which has also invested $100 million in its Pueblo rail mill in Colorado, sees upside in the rail sector, as well. Even as Class 1 railroads have been hit hard by a recent decline in coal shipments, intermodal transportation has picked up, Winkler said.

"That market remains, even if it's a little bit down year over year, it remains relatively strong," Winkler said. "We continue to play aggressively in this market."

The plate sector has seen some growth of late, as well, tied to a modest improvement in nonresidential construction. However, the strong US dollar and imported material continues to depress pricing, he said.

"The overall demand is OK, but the unfairly traded imports have put so much pressure on us," Winkler said.

He and others are monitoring how three recent sheet trade cases filed by US producers will play out, and whether new trade remedies that make injury easier to prove and shorten the timeframe for relief will have a significant impact on the domestic market.

"We're waiting to see whether the trade remedies can deliver, now that we've got the right legislation through," Winkler said.
 
 
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