Sumitomo Metals Seeks US$ 300/t or More Oil Well Tube Export Hike for 2H

Sumitomo Metal Industries will increase the seamless oil well tube export price by more than US$ 300 per tonne for contract users for second half of fiscal 2010 ending March 2011 from the first half. The firm already got higher price to cover higher raw materials cost for the first half at the negotiation with oil majors. However, the firm tries to increase the price more to realize appropriate price level under recovering market. The firm also seeks higher price for spot price as contract price.

The high grade oil well tube demand is strong when oil companies including majors, state owned companies and independent companies develop the resource aggressively under more than US$ 75 per barrel of oil price. The oil well tube international market price increases under the strong demand along with higher cost for iron ore and coal.

Sumitomo Metals got higher export price for oil well tube from contract users for first half of fiscal 2010 to cover higher raw materials cost. The spot export price also increased. The firm proposed new price mechanism to reflect quarterly price change for raw materials and the users accepted the new mechanism basically. Sumitomo Metals seeks higher price both for contract users and spot buyers to secure reasonable profit when the demand increases for high valued products under recovering energy demand.

Sumitomo Metals expects the seamless pipe sales will increase by 100,000 tonnes to 470,000 tonnes, which includes 230,000 tonnes in April-June and estimated 240,000 tonnes in July-September, in the first half from same period of fiscal 2009. The firm expects the sales reaches 950,000 tonnes in fiscal 2010, which is 160,000 tonnes higher than fiscal 2009, while the firm expected 900,000 tonnes originally.

The firm expects the high alloyed oil well tube sales volume will increase by 4,000 tonnes to 17,000 tonnes in fiscal 2010 from fiscal 2009. The firm plans higher sales for high end products when the firm plans to increase the sales by 34,000 tonnes to 75,000 tonnes for sour resistant grade products and by 10,000 tonnes to 61,000 tonnes for seamless with 13% chrome.