Optima Specialty Steel Inc said that demand for specialty-steel products used in hydraulic fracking is poised to continue rising next year as energy companies step up exploration and production in shale-rock formations.
Mr Kevin Stevick CEO of the closely held company said that Optima's sales of steel tubing to natural gas producers have climbed 15% in 2012, and a similar increase is forecast for 2013. Growth at the Miami-based company is coming from fracking in states including Ohio, West Virginia, Pennsylvania and New York.
He said that "Those regions are really building," Stevick said in a Nov. 21 telephone interview. "We don't see that slowing down."
Mr Ken Hoffman an analyst for Bloomberg Industries said that Optima competes with companies including ArcelorMittal, Nucor Corp and Republic Steel Corp. in specialty steel for energy and auto markets. Demand for special-bar quality steel, which is used in some specialty steel products, has increased 9% this year, compared with 7.5% in the overall steel market.
Mr Kuni Chen an analyst for Stamford, Connecticut-based CRT Capital Group LLC said that "Overall, the prognosis for gas rigs continues to be positive, driven by shale-gas drilling."
Optima said November. 19 it agreed to acquire KES Acquisition Co which owns a mill producing special bar quality steel. It will pay New York-based ALJ Regional Holdings Inc USD 112.5 million for KES. Optima's Niagara Lasalle Corp. unit, which makes cold finished steel bars for auto markets, is KES's largest customer.
