Metal Products - Business Overview
An Offshore Platform where OCTG is used
It is taken for granted that gasoline, for instance, is readily available. However, if we think about it, gasoline is delivered to Japanese consumers from distant places abroad where oil, the raw material of gasoline, is produced from deep wells. Tubular products, one of the steel products, play an important role in supporting that process.
Tubular products are, literally, steel pipes. While they are used for familiar purposes such as making furniture and carrying water, pipes are also extremely important for numerous other applications including the oil and gas essential for us to live comfortably.
Sumitomo Corporation's tubular products business mainly consists of four sectors dealing in different kinds of pipes: 1) pipes to produce oil and gas from under the ground (oil country tubular goods [OCTG]); 2) pipes to transmit oil and gas to remote locations (line pipe); 3) tube and pipes used primarily for oil refinery, gas processing and power generation plants (specialty tubular products); and 4) diverse pipes including those for domestic industrial uses and gas pipes.
Pipeline under Construction
Sumitomo Corporation has a long corporate history and many notable achievements within the tubular products business. While production volumes of oil and gas are low in Japan and domestic markets of products such as OCTG and line pipe are very small, there is a huge demand globally for such products. As these products are used under severe conditions, customer requirements are demanding. Sumitomo Corporation, with the support of a Sumitomo group manufacturer having strong engineering capabilities, provides quality products and services and has gained a very good reputation.
Sumitomo Corporation's tubular products business has changed drastically with the times. The business model of product sales only has expanded to be both a product sales and service provider model to the energy industry. Let us look back over this history.
OCTG in Stock
Sumitomo Corporation's tubular products business began by placing focus on the export of tubular products manufactured in Japan. Exports of OCTG to the United States formed the crux of operations of the tubular products business then.
Meanwhile, from the late 1970s to the early 1980s, trade friction with the U.S. emerged as a major issue, and exports of OCTG were gradually regulated. To overcome that situation, Sumitomo Corporation sought business opportunities in addition to exporting. This came to represent the first major turning point – the entry into the OCTG distribution business in the United States.
An OCTG distributor named Premier Pipe was founded in the United States in 1987 following the establishment of another OCTG distributor in Canada in the previous year. Premier Pipe, since its beginning, has worked hard to win long-term supply contracts with customers, especially oil majors. In 1993, they initiated their first SCM contract. Sumitomo Corporation was on top of market changes and strived fervently to develop new business opportunities.
Sumitomo Corporation was the pioneer among Japanese trading companies to have a distributor dedicated to OCTG in the U.S. market. By having a local distributor, it moved from a business focused on exports to a business where OCTG purchased in the United States were also sold in the U.S. market.
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