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From the
AmericaS
80
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uly
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ugust
2007
With its Lone Star purchase, US Steel aims to
become leading North American provider
United States Steel Corp plans to buy Lone Star Technologies, the
Dallas, Texas-based maker of welded pipe for oilfield applications,
to create North America’s largest producer of tubular steel. The
Pittsburgh-based steel giant said that it intends to combine its largely
seamless tubular business with Lone Star’s welded tubular operation,
broadening the USS line of products for the energy industry.
On completion of the $2.1 billion cash purchase, at a premium of
about 39 per cent over Lone Star’s closing share price on March
29, US Steel will be able to produce about 2.8 million tons of tubular
steel per year in North America, the company said. John P Surma,
US Steel’s chief executive, said the transaction represented ‘a
compelling strategic opportunity’ that significantly expands the
company’s tubular product offerings, production capacity, and
geographic footprint.
The deal was expected to close by the end of the third quarter. US
Steel is looking for a prompt benefit in the form of higher profit in
2007, excluding certain accounting adjustments related to inventory.
US Steel also enlist two Korean partners to
enhance its position at home
To build a presence in what it sees as a rapidly growing large-
diameter linepipe market in North America, US Steel Corp
announced on April 4 that it would form a joint venture for a new
spiral-weld facility with two South Korean companies. These
companies are Posco, the leading steel producer in that republic,
and SeAH Steel Corp, a tubular products manufacturer. The
site is adjacent to existing USS-Posco Industries (UPI) facilities
in Pittsburg, California – not to be confused with US Steel’s
headquarters city of Pittsburgh, Pennsylvania.
The joint venture – United Spiral Pipe LLC – will design, engineer
and build of mills capable of producing 300,000 net tons per year of
spiral-welded tubular products in the range 24" to 64" in diameter.
High-quality hot rolled coil will be supplied to the mill by both US
Steel and Posco, with the newly formed company responsible for
marketing the output.
US Steel and Posco will each hold a 35 per cent interest; SeAH,
30 per cent. Investment will total approximately $93 million, with
profits to be shared by the partners proportional to their stakes. The
facility is expected to begin production in 2008.
For Posco, the spiral-weld venture represents a new phase in its
relationship with US Steel. Through UPI, the two companies have
been partners for more than 20 years. US Steel chairman and chief
executive officer John P Surma said that the newcomer, SeAH, will
contribute its expertise in producing and marketing spiral welded
tubular products.
• On April 24, US Steel reported that first-quarter profit rose
6.6 per cent on strong growth in its European operations.
Flat-rolled and tubular segments declined, but results for the