Drilling slowdown hits Tenaris tube shipments

Luxembourg-based tubular steelmaker Tenaris said continuing lower drilling activity in the US and Argentina created headwinds for its second half sales.

Tubular steel sales dropped by 7pc to 796,000t in the third quarter, down from 853,000t a year ago.

Welded pipe sales fell by 25pc to 150,000t, while seamless pipe sales inched down by 1pc to 645,000t from a year prior.

US and Canadian drilling activity slowed during the quarter as the industry prioritized investor returns and tighter spending inside budget guidelines over production growth, Tenaris said. Improved North American drilling activity is not anticipated in 2020.

US gas and oil rig count averaged 920 during the period, down by 13pc from the third quarter from a year ago, according to oil field services firm Baker Hughes.

The company said US steel pipe prices have slid thanks to a competitive market exacerbated by lower hot-rolled coil (HRC) prices and sustained high import costs, despite the Section 232 25pc tariff and quotas. North American sales slipped by 13pc to $772mn compared to last year.

The company's Argentinian sales declined amid reduced activity in the Vaca Muerta shale caused by uncertainty surrounding the incoming government's expected policies. South American sales decreased by 8pc to $308mn versus 2018.

Middle East and Africa was the only division that increased net sales revenue in the quarter, thanks to recovering offshore drilling and gas developments in the Middle East. Net sales rose to $369mn, up by 5pc from a year ago.

European sales also contracted by 8pc to $136mn, while Asia Pacific sales edged down by 1pc to $77mn.

The company expects its sales to rise in the first quarter of next year led by improved offshore and gas drilling ventures.

In the third quarter, Tenaris earned $101mn in profit on $1.76bn in revenues, down from $247mn in profit on $1.90bn in revenues a year earlier.