Metal Bulletin Research Strategic Outlook for the OCTG Heat Treatment 2 | Page 5

A Strategic Outlook for the OCTG Heat Treatment, Threading, Coupling and Premium Connection Sectors out to 2020

2. Latin America
threading capacity of 500,000 tpy, handling tubes from 1.33”-10.75“. The plant is capable of heat
treating 350,000 tpy of pipe, and can produce up to 400,000 couplings units per year. We believe it had
a threading capacity utilisation rate of 95% in 2011. Of total output, 60% was API and 40% premium
connections.
zz The Siat facility is located in Buenos Aires, Argentina, producing welded pipes and tubes. MBR
estimates that the mill has a capacity of 420,000 tpy, of which up to 90,000 tpy is OCTG. The plant has
a threading capacity of 40,000 tpy at one line. MBR estimates that Siat mill achieved 90% capacity
utilisation in 2011, of which 100% was API. The mill has heat treatment capacity of 180,000 tpy, but
this is also used for line pipe.
zz Founded in 1943 and currently owned by Tenaris, the Brazilian mill Confab is primarily focused on line
pipe with a total of 550,000 tpy. However, it has a 100,000 tpy ERW mill that p roduces OCTG casing.
Threading capacity is a nominal 60,000 tpy on a single line while it has a 32,000 tpy heat treatment
facility. MBR estimates Tenaris Confab enjoyed a 100% capacity utilisation in 2011, of which 85% was
API and 15% premium output.
zz In Colombia, Tubos de Caribe facility produces welded pipe with a nominal capacity of 200,000 tpy. It
runs a single threading line capable of processing of 90,000 tonnes of pipes from 2 3/8”-9 5/8” and a
50,000 tpy heat treatment line. Tenaris has announced a $200m investment programme to double the
plant’s current capacity, but we believe this may not be finally achieved until 2015. It supplies the local
and Venezuelan market as well as more distant markets. In 2011, OCTG accounted for more than 75%
of the mill output of 163,000 tonnes (125,000 tonnes).We believe that the threading line operated at
100% capacity, with around two-thirds being API connections.
In addition to the above production facilities, Tenaris has a number of service facilities in the region,
primarily engaged in threading, repair services and logistics.

Vallourec
Vallourec has a dominant position in Brazil, where we estimate that around 75% of output is of OCTG.
Vallourec
Figure 40: Vallourec output in Latin America output in Latin America
Other pipe/tubes
output
25%

Source: MBR

OCTG output
75%

Source: MBR

Until 2011, it had capacity of 540,000 tpy, most of which is OCTG and is sold into the domestic market.
In addition, this mill has been used to produce mother tube that is then threaded in overseas markets
(particularly Mexico). This integrated plant has a full range of production equipment including two blast
finances, a steel mill, two hot-rolling mills and a cold drawing line. Plant’s finishing capacity includes
three threading lines and a heat treatment line. Total threading capacity is estimated at 450,000 tpy with
300,000 tpy of heat treatment.
72

See www.metalbulletinresearch.com for more information