Activity for North American Steel Pipe Mill Capacity Expansion Reaches Fevered Pitch

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Researched by Industrial Info Resources (Sugar Land, Texas). Steel pipe and tubing manufacturers are battling for North American market share resulting in a number of capacity expansions, grassroot construction, and consolidation. Drilling rig counts are at record highs and pipeline construction activity is on the rise spurring a wave of market moves by pipe manufacturers to position themselves to take advantage of increasing energy sector construction in North America. The Oil & Gas Industry requires a large amount of pipe to drill for reserves and also to transport those reserves to market via natural gas and oil pipelines.

In recent years, Industrial Info has reported on more than $1 billion worth of pipe mill construction work in North America. Currently, there is more than $500 million worth of projects in this sector scheduled to begin construction in 2007 or beyond in North America.

Click on the image at right to view a chart showing the breakdown of pipe mill project spending by market region.

In mid-2006, Ipsco began a site study for a new tubular products mill to produce 300-600,000 tons per year to serve southern U.S. oil and gas markets. With the purchase of NS Group in December 2006, Ipsco, Incorporated (Lisle, Illinois) has put plans on hold for construction of a new $250 million tubular products mill in Louisiana or Alabama as it integrates NS Group capacity. With the acquisition of NS Group, IPSCO added pipe mills in Wilder, Kentucky; Catoosa, Oklahoma and Ambridge, Pennsylvania, bringing its total number of pipe mills to eight and increasing pipe making capacity by more than 750,000 tons per year.

The company is also spending in excess of $75 million on two separate projects at its Regina, Saskatchewan works to increase pipe-making capacity to 500,000 tons per year by the end of 2008. A $25 million coil preparation line is under construction now. That project should be complete by October 2007. IPSCO is currently lining up contractors for construction of a fourth large diameter pipe mill at Regina, which will begin construction shortly. The company is also constructing a $40 million pipe heat-treating expansion at its Blytheville, Arkansas mill, which should be complete Fall 2007.

IPSCO is not alone in its quest to increase market share in North America. At least five other companies are looking at grassroot pipe mills in the U.S. Lonestar Welspun, a joint venture between Lone Star Technologies and India-based Welspun Group is looking at building a plant in the Southwestern U.S. Berg Steel is conducting site studies in Louisiana and Alabama for a 300,000-ton per year mill. South Korean SeAH Steel Corporation and Posco, Limited have formed a partnership and are looking at building a pipe mill in Northern California.

In 2006, Tenaris SA (Luxembourg) purchased Maverick Tube, which recently finished a $62 million new plant in Louisville, Kentucky, consolidating production and closing pipe mills in Georgia, Michigan, and Ohio.

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