India: Domestic ferrous scrap markets stay shut

The business environment in which steel companies provide material to the oil and gas industry could remain challenging for the next several quarters, according to Synalloy. The Virginia-based steel pipes and tubes maker indicated it would be difficult to overcome persistently low crude oil prices and COVID-19-related economic issues. The company refrained from giving an outlook for the rest of 2020 while reporting its Q1 earnings, but said that, save for its Palmer, Texas facility—which manufactured steel pipes, tubes, and tanks for the oil and gas industry— the company’s order book remained healthy. Synalloy’s consolidated net sales fell by 11.9pc to $74.7mn in the first quarter of this year from the same quarter last year. The downtrend was led by falling sales in its metals segment, which decreased by 14.7pc to $60.7mn in Q1 2020 compared to Q1 2019, because of a $6.4mn decline in sales at the company’s Palmer, Texas facility. The company halted operations at this plant in early April after its order book was hit with significant cancellations and postponements a month earlier because of the pandemic, as well as steeply declining prices in the oil and gas industry. According to Synalloy, the plant had completed tank orders worth $1mn during that time, which will be shipped this quarter. Breaking down sales from its steel segment in Q1, the company reported that sales volumes for its seamless carbon pipe and tube products dropped by 7.1pc, with sales revenues declining by 15pc due to mill price reductions. The company’s stainless steel and galvanized pipe sales, however, rose by 9.7pc and 7.8pc, respectively, over Q1 2019. But weak demand and low prices towards the end of the quarter affected the overall pricing of the two products by 10pc and 14pc, respectively, and resulted in a net sales decline of $900,000 between both products. Synalloy reported a net loss of $1.2mn in Q1 2020 compared to a net loss of $900,000 during the same quarter last year. Its operating income from its metals segment fell to $900,000 in the last quarter compared with $1.4mn in Q1 2019.