Oil and gas boom helping U.S. steel industry
By Jamison Cocklin
The nationwide oil-and-gas boom is helping the bottom line of the U.S. steel industry, as demand for specialty-steel products has helped bolster domestic shipments.
Down-hole casing, tubular pipe and other oil-field equipment needed for extensive drilling operations in places such as North Dakota, Texas, overseas and offshore, has helped curb the decline in product orders in recent years.
The energy sector as a whole is expected to be a strong source of steel demand in the coming decade as the nation’s energy infrastructure is developed and burgeoning countries overseas require more raw materials to do the same.
Though it’s unclear how much domestic steel is used for fracking operations across the country’s oil patch, manufacturers and steelmakers in Ohio are witnessing healthy levels of domestic orders.
But the same can be said for foreign producers as well.
“We buy all our steel domestically and produce it here,” said Tim Feeney, general manager for operations at the JMC Steel Group in Sharon, Pa. “The market is strong, but there’s a lot of imports for energy. The tubing market out there is pretty big. It will spur more activity on both sides, and it’s a big issue, especially for us because we’re a domestic producer.”
JMC operates Wheatland Tube Co. in Warren, which recently was branded as an Energex facility. Feeney said the company wanted buyers to know which of its facilities specialize in energy products.
World crude-steel production hit a record in 2012, reaching 1,548 megatons, up 1.2 percent from 2011, according to a market analysis published in March by Zacks Investment Research. China retained its leadership position last year, yielding 46 percent of global output, while the U.S. held the third position, accounting for 6 percent.
At the end of last year, U.S. consumption increased by 7 percent, and production capacity neared 80 percent last week, according to the American Iron and Steel Institute.
A statement from V&M in Youngstown, which produces pipe for fracking, said the company’s products are for North American markets in the U.S. and Canada.
The facility is thought to be saturated with domestic orders. It opened a billion- dollar rolling mill last year to meet demand for smaller- diameter pipe.
Ohio remains a top steel producer, second only to Indiana. U.S. Steel’s new Lorain plant and TMK-IPSCO’s plant in Brookfield are both busy filling orders for the drilling industry as well.
At the beginning of the year, five U.S. plants were either under consideration or being built to use cheaper natural gas from the drilling boom or help meet new demand for specialty steel products.
A joint venture between an Australian company and a commodities trader is expected to land one of those plants somewhere in Ohio in the near future.