SeAH acquires two US steel mills
By Lee Hyo-sik
SeAH Steel CEO Howard Lee
SeAH Steel has acquired two mills in the United States, specializing in the manufacture of oil pipes, as part of its efforts to protect itself from possible growing U.S. protectionism, the company said Wednesday.
Korea’s largest steel pipe maker bought Laguna Tubular Products Corp. from Mexican steelmaker Tuberia Laguna, and OMK Tube from Russian steelmaker OMK. SeAH did not disclose how much it paid for the two plants in Houston, Texas, which produce oil country tubular goods (OCTG), seamless rolled products consisting of drill pipes, casings and tubing that are used in oil and gas production. Industry analysts estimate that the two acquisitions are worth a combined $100 million.
SeAH has so far been operating only distribution and sales networks in the world’s largest economy. But with the acquisitions of the two oil pipe mills, the company will be able to operate OCTG production facilities, putting it in a better position to deal with a range of potential protectionist policies by the U.S. administration.
SeAH also expects the two pipe mills will manufacture oil pipes at lower costs and bring them to oil and gas companies in a shorter period of time.
“The newly-acquired plants will create synergy with our sales entity SeAH Steel America in the OCTG market,” SeAH Steel CEO Howard Lee said. “When the global economy picks up, the demand for oil and gas will increase and our OCTG manufacturing business will benefit from this.”
SeAH will also be in a better position than other domestic steelmakers after Donald Trump becomes the U.S. president next January as he has vowed to impose higher tariffs on imported steel goods and introduce other non-tariff measures.
The firm’s OCTG business has remained in the doldrums in recent years in line with low global oil prices. In addition, it has been facing higher tariffs and growing trade barriers in the United States and elsewhere.
In 2014, the United Stated imposed a 15.75 percent anti-dumping tariff on made-in-Korea OCTG. SeAH’s exports to the United States dropped to 518.7 billion won in 2015 from 825.8 billion won in 2014.
“We believe that we will more effectively deal with rising protectionism in the United States and realize larger benefits when the global economy rebounds,” Lee said. “SeAH will continue to actively respond to customer needs and adapt to rapidly changing market conditions to achieve sustainable growth.”