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Article Excerpt
While demand for steel line pipe continues to be slow, the market could be at a turning point. Several factors point to better times ahead, including firm natural gas prices, rising drill rig counts, expected shortages of natural gas storage, an aging pipeline infrastructure and hope that large transmission companies will soon regain their financial health.
Indications that the United States might pass an energy bill--legislation passed by the House and Senate will head to conference committee this month and could be crafted into a bill that President Bush is willing to sign--also bodes well for the future of the line pipe industry.
"Line pipe demand had been going strong a few years ago, but the collapse of Enron and other energy transmission companies sucked the wind right out of the market," says Donald R. McNeeley, president and chief operating officer of Chicago Tube and Iron Co.
Doug Yadon, publisher of the Preston Pipe Report, Galveston, Texas, notes that the line pipe industry was bolstered for several years by the strong business of the large energy companies, including Enron Corp., Williams Companies Inc., Duke Energy Corp., El Paso Corp., and some transmission line operators. In the boom days of the dot-coms, these companies put their resources into developing energy trading businesses and made a lot of money "before the house of cards collapsed," Yadon says.
After Euron's failure, energy companies found themselves under scrutiny by major financial houses. With their shares downgraded because of high debt levels, the energy companies concentrated on staving off bankruptcy, and had little capital to invest in pipeline projects.
The energy market scandals could not have come at a worse time, with capital for energy projects drying up just as the...
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