OCTG remains bright spot for US Steel in Q4

Wednesday, 01 February 2012 02:30:36 (GMT+2)

While Pittsburgh, Pennsylvania-based US Steel reported a $226 million net loss in Q4 2011 and a $68 million net loss for the full year 2011, its tubular segment was profitable, with a $119 million operating profit in Q4 2011, and $316 million for the full year 2011. "Our operating results for the fourth quarter included another solid performance by our Tubular segment reflecting the continued strength of oil-directed drilling," said US Steel President and CEO John Surma. High oil and liquids prices are supporting continued increases in drilling, he added.

The oil country tubular goods (OCTG) market remains firm and US Steel expects stable prices going forward with little impact from the flat-rolled steel market, but shipments are likely to increase. US Steel has been moving more toward alloy and seamless products, Surma said, as demand for more premium products in drilling increases.

Regarding the supply and demand situation in the US, he said US Steel will be able to "remain really competitive" because it is the only fully integrated domestic producer and "customers like that." Surma also quipped, "maybe imports should give back some of the share they've taken."

As for natural gas, Surma explained that while there have been some recent indications that drilling on the gas side will be cut back and redirected more toward liquids drilling, US Steel won't change its product mix if natural gas prices stay as low as they are today. It's a demand, not a supply problem, he added. The US has a large supply of natural gas but demand is too low.

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