Metal Bulletin Research Strategic Outlook for the OCTG Heat Treatment Thre

A Strategic Outlook for the OCTG Heat Treatment, Threading, Coupling and Premium Connection Sectors out to 2020

1. North America
MBR assumes that the production flowchart will allow the company to fully supply itself with couplings, with
total coupling capacity estimated at 1,000,000 units per year.
The Tenaris Canadian division operates two pipe and tube facilities, acquired via the acquisition of the
Maverick Corporation by Tenaris in 2006 and from Algoma in 2001.
The Calgary-based Prudential tube mill produces welded pipes from 4” to 16“. Total annual production
capacity is 400,000 tpy, of which we estimate 120,000 tpy is OCTG. The facility’s four threading lines can
thread up to 380,000 tpy.
Algoma Tubes is a seamless tube producer with annual production of 250,000 tpy, of which we estimate
up to 188,000 tpy is OCTG. The mill has 160,000 tpy of threading and some 100,000 tpy of heat treatment
capacity installed. In addition, MBR believes that the facility can produce up to 1m coupling units.
Tenaris Tamsa is the major OCTG producer in Mexico producing seamless pipe with diameter from 2.375“
up to 20“. The mill is capable of producing 780,000 tpy of tubulars, with OCTG being 75% of the output,
from H40 up to Q125 and proprietary grades. Total threading capacity is estimated at 600,000 tpy at three
threading lines with 450,000 tpy of heat treatment. The facility has a nominal capacity of up to 4m units of
coupling.
In addition to on-site threading, Tenaris owns the Hydril repair and manufacturing facilities, offering Tenaris
local presence. The acquired network brought some 1.45 m tpy of threading capacity to Tenaris’s portfolio.
We believe this operated 95% of its total threading capacity in 2011, with 20% being API and 80%
premium.
These four companies dominate OCTG tubular capacity in North America – particularly in seamless, where
they total 95% of capacity. In welded, their market share is much smaller at just 60%.
Figure 22: NAFTA seamless OCTG market
Figure 23: NAFTA welded OCTG market

by company
by company

Source: MBR

Source: MBR

MBR has also provided analysis on what we would term the second-tier suppliers in terms of market size.
While the majors were historically dominant and they have invested in upgrading and new capacity, a
couple of factors have increased the penetration of new mills.
1. The relatively low capital cost of building welded capacity has encouraged new market entrants, such as
Lakeside, WTC and NW Pipe.
2. The imposition of anti-dumping action against Chinese welded and seamless OCTG in USA, Canada and
Mexico has removed the low-priced threat, allowing higher prices for commodity products. It has also
encouraged inward investment by TPCO in seamless.
3. The growth of demand in the shales in particular has increased overall market demand.

56

See www.metalbulletinresearch.com for more information