Tenaris: North America Drove Company Growth in Q3

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