Steel Mills

Tenaris: North America Drove Company Growth in Q3

November 4, 2021

Steel tube producer Tenaris saw global sales jump 15% sequentially to $1.75 billion in the third quarter of 2021, with sales 73% above the same year-ago quarter. The successive increase in Q3 was driven by an 8% increase in volumes, aided by a 6% increase in selling prices.

Sales surged by 28% in North America to $901 million, supported by a steady recovery in energy drilling activity and rising prices during the third quarter. Drilling activity in both the U.S. and Canada were stable in the third quarter after gaining momentum in the first half of the year. Growth is still expected for the balance of the year, though at a slower pace. Drilling activity in the Eastern hemisphere declined 16% compared to the first nine months of 2020.

Tenaris The Luxembourg-based steel tube producer reported its best quarterly results, posting net earnings of $379 million in the third quarter. The mark bested Q2’s results by 26% or $78 million and was a near fourfold increase year on year.

Seamless tube sales rose 10% sequentially to 675,000 metric tons, 76% above sales in Q3 2020. At 71,000 metric tons, welded tube sales were down 10% sequentially and 28% from a year ago, the company reported.

“The strength of the global economic rebound so far this year and lower levels of investment in the energy sector over the past years have resulted in a tighter energy market,” said the company. “As OPEC+ countries continue to contain production levels and large, publicly listed U.S. shale producers restrain capital spending, global oil inventories have declined below five-year average levels and are supportive of high prices.”

Tenaris anticipates its sales will increase further in the fourth quarter, again led by North America where the market has absorbed excess OCTG inventories and prices are increasing. They expect their net earnings margin in Q4 to remain close to the current level as price increases compensate for raw material, energy and logistic cost increases.

The tuber continues to ramp up its industrial facilities in the U.S., including the reopening of its Ambridge, Pa., seamless pipe mill and its Baytown, Texas, heat treatment and finishing facilities. Working capital, as a result, increase by $276 million during the quarter, the company said.

In a preliminary deal reached on Nov. 2, Tenaris and JFE Holdings Inc. have agreed to terminate the seamless pipe manufacturing joint venture, NKKTubes, located in Kawasaki, Japan, the company said.

NKKTubes’ operations are entirely reliant on JFE’s Keihin steel complex – which will be permanently closed by the fiscal year ending March 2024 – for the supply of raw materials. Thus, the companies have determined that the project is no longer economically sustainable and have agreed to cease NKKTubes’ manufacturing operations by the end of June 2022, and to dissolve the company by the end of December 2022.

Tenaris is a global manufacturer of pipe and related services serving energy and other industrial applications with operations in 16 countries.

By David Schollaert, David@SteelMarketUpdate.com

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.