Oil price slide effecting US drill pipe demand: Borusan Mannesmann

Bursa — Turkey's largest steel pipe producer, Borusan Mannesmann (BM), announced relatively strong first quarter results, despite unfavorable market conditions arising from the COVID-19 pandemic in March.

BM, which has also a pipe mill in the US, said demand in the US drill pipe market, which reached 6 million mt in 2018, has weakened on the oil price slide and a weak outlook. The spiral welded steel pipe market was facing distressed days due to market protection measures, despite high demand in the US.

Drawing attention to sharp shrinkage seen in the Turkish and European automotive markets in March, BM also said: "Negative growth is foreseen for the automotive sector in the second quarter. However, we are targeting to protect our leader position also in 2020 in producing high value added products to the automotive sector."

BM's prime-quality sales rose by 3% year on year in Q1 to 170,000 mt. Its value-added pipe sales rose by 6% year on year in Q1, while the company directed 72% of its prime-quality sales to export markets in that period, the company said..

BM's pipe sales to the automotive sector, however, fell in Q1 due to domestic market slackness and the slowness seen in the European auto market, the company noted.

The firm's turnover remained relatively stable on year at Lira 1.15 billion ($170 million) in Q1, while net profit rose by 23% on year to Lira 16.88 million ($2.5 million).

BM's Turkish mill capacity is 750,000 mt/year of longitudinal welded pipe and 300,000 mt/year of spiral welded pipe. Capacity for cold-drawn special pipe at its Vobarno plant in Italy is 28,000 mt/year.

The company's US electric-resistance welded pipe mill in Baytown, Texas, has a capacity of 300,000 mt/year.

BM, which paused output at some of its mills in Turkey as of April 3, due to the coronavirus outbreak, restarted output at its Turkish mills as of April 13, while the stoppage at its Vobarno plant in Italy was extended till May 3 in line with the Italian government's decision to stop production activities due to COVID-19 outbreak.

The company continued pipe production without any stoppage during the pandemic at its US mill, which was classified as a business with strategic importance within the scope of the US law, with minimal workers in a rotating protocol taking into account all the necessary precautions.