Oil & gas tendering activity in the Middle East and Asia should increase in the second half of 2018 following a rebound in volumes and prices in H1, according to pipemaker Vallourec.
Vallourec’s Asia and Middle East segment nevertheless saw revenue fall -5.6% on-year in H1 to €527 million ($616m) as higher volumes and prices were offset by a different product mix and foreign exchange impact.
“What we see on the oil & gas related markets is a progressive rebound both in volume and prices,” Tenaris Senior Vice President Middle East/Asia Edouard Gunotte said during a conference call monitored by Kallanish.
“They take a much longer time than the US because the business model in this region is based on longer-term tenders… so the prices and volumes are increasing at the pace these tenders are released on the market,” he continued. “So we already witnessed… some volume and price increases and we expect this to continue into H2 and probably into the beginning of next year.”
“Not so rosy… is the situation in power generation-related markets where definitely the trend is down in terms of business opportunities and therefore our capacity to get volumes in this segment,” he added.
As for Section 232, Vallourec is yet to see any product re-rerouted into the Asian and Middle Eastern markets as a result of US tariffs. “We don’t expect these to materialise in the very short term because this would require to have these countries qualified by most customers and this is a very lengthy process, so if ever we were to see this it wouldn’t materialise before a few quarters at least,” Gunotte explained.
South Korean pipemakers, for example, mainly produce electric resistance welded (ERW) pipe, which has only limited acceptance among buyers in the Middle East and Asia.