Vallourec shuts down plants in France, Germany

French pipemaker Vallourec is reshaping its European business structure and downsizing its organisation with the ambition to “refocus European plants”, it says in its first-quarter financial report monitored by Kallanish.

The group is starting the shutdown process of the heat treatment line of Saint-Saulve in France and of the threading line in Bellshill in Scotland, while also completing the divestment of Vallourec Bearing Tubes.

The closing of its finishing tube rolling plants in Germany is also underway and will be carried out over the next two years. The company decided in 2021 to divest its German and other European mills, but has still not found a buyer.

The German output for the Oil & Gas segment will be relocated to the firm’s Brazilian plants by end-2023 for an investment of €110 million ($117m). The German plants’ shutdown will mean a 685,000 tonnes/year reduction in Vallourec’s rolling capacity.

“This rationalisation will entail the consolidation of all European threading activities in a single location in Aulnoye in France,” the company says. It adds it is optimising its activities towards achieving higher productivity, “a leaner organisation in all regions, lower overheads and central costs”.

Vallourec sees an improving market environment and increased investment in global exploration and production (E&P) capital spending for the period 2022-2025. Drilling activity is increasing again globally, particularly in North America and the Middle East, but also in North Africa. Thanks to global demand resumption, OCTG prices are also increasing. The group expects to report strong results this year.

Vallourec posted €916 million ($961m) revenue in Q1, a 30% year-over-year increase led mostly by North America. Ebitda was €45m compared with €80m in Q1 2021, negatively impacted by the iron ore mine shutdown. However, thanks to improved market conditions, the firm forecasts 2022 Ebitda to be significantly above 2021.

Natalia Capra France