European seamless steel tube producer Tenaris expects higher shipments in the fourth quarter, driven by pipeline projects and additional pricing gains that will also increase sales.
Overall, the company was advancing pipeline activity to support oil and gas developments, mainly in Argentina and the Middle East, Tenaris said in its Q3 earnings report.
Drilling activity had increased in 2022, with further increases forecast, it said, particularly in the Middle East and offshore with global demand for oil country tubular goods (OCTG) expected to surpass pre-COVID levels in 2023.
“In an environment of high geopolitical and macro-economic risk, global economic growth is slowing, and energy prices have come off their recent highs,” the company said.
“Conditions in the energy industry, however, remain supportive for an increased level of investment, with low levels of spare capacity and inventories, uncertainty about the impact of further sanctions on Russian exports and a renewed focus on energy security around the world.”
Q3 tube shipments fell 4% quarter on quarter but rose 15% year on year to 856,000 mt. Of these, shipments of seamless tubes, the core business of the company, dropped 8% quarter on quarter, but were up 11% on the year to 750,000 mt.
Q3 welded tubes shipments rose 41% quarter on quarter and climbed 49% year on year to 106,000 mt.
Tube net sales rise
In Q3, total tubes net sales increased 8% quarter on quarter to $2.83 billion, which was also up 76% year on year, as pricing gains more than compensated lower quarter-on-quarter shipments, which were affected by lower deliveries to pipeline projects and seasonal factors.
North and South American sales increased 11% and 30%, respectively, quarter on quarter to $1.76 billion and $600 million, while sales fell in other countries compared to Q2.
In North America, sales increased thanks to higher OCTG prices throughout the region and higher OCTG shipments in Canada, while in South America, Tenaris said there were higher OCTG sales to offshore projects in Guyana and higher sales for pipelines in Argentina.
In Europe, however, sales declined 27% from Q2 to $190 million due to lower sales for offshore line pipe projects and of industrial products, the company said.
In the Middle East and Africa, sales dropped 10% on the quarter to $234 million on lower sales in Saudi Arabia and lower sales of high alloy products in the UAE, while sales in Asia Pacific fell 31% to $46 million due to the discontinuation of sales from NKKTubes in Japan and lower sales in China.
To produce seamless tubes, Tenaris uses iron ore as its main raw material.
Platts, part of S&P Global Commodity Insights, assessed the 62% Fe Iron Ore Index at $95.95/dmt CFR North China at the end of Q3, up from $116.45/dmt at the start of the quarter.
Platts assessed the 62% Fe Iron Ore Index at $83.75/dmt CFR North China Nov. 3, up 29.9% since the start of 2022.
— Annalisa Villa