Posted on 24 Feb 2020
Tenaris foresees further destocking in the Middle East in 2020 after the firm’s 2019 sales in the region were hampered by Saudi Aramco destocking in Saudi Arabia. Middle East drilling activity is, however, expected to pick up on-year.
Tenaris’ Middle East and Africa segment sales dropped -19% on-year in the fourth quarter of 2019 to $352 million. In full-year 2019 sales fell -13% on-year to $1.34 billion.
“In the Middle East & Africa, the acquisition of Saudi Steel Pipe and an increase in sales in the Middle East outside of Saudi Arabia… did not compensate for the drop in sales of offshore line pipe following the completion of deliveries for East Mediterranean gas development projects,” Tenaris says.
Tenaris Eastern Hemisphere area manager Gabriel Podskubka said during Tenaris’ fourth-quarter conference call monitored by Kallanish that pricing in the Eastern Hemisphere division remains competitive.
“We have a positive momentum in our average pricing, given our backlog of a rich mix due to the gas developments in the Middle East and some offshore as well,” he observed. “So, year-over-year pricing moves in a positive dynamic within a competitive environment.”
“We also see some tightness in some specific niches of sour service corrosion-resistant alloys, where we’re able to push some price increases, but this has a limited impact in the overall portfolio,” he added.
Tenaris chairman and chief executive Paolo Rocca said that the expected increase in premium connections sales for offshore projects in 2020 should help offset weaker Saudi demand due to destocking.
Commenting on Tenaris’ prospective joint venture pipe plant with Severstal in Russia, Podskubka said commissioning is expected as planned in the second half of 2021. Capital expenditure on the project is budgeted at $70 million in 2020 and a similar figure in 2021.
Source:Kallanish
