Gulf Construction Online - OASP sets pace for regional expansion

Pipes

Saudi Arabia absorbs 90 per cent of OASP’s sales. BELOW: OASP’s office.

OASP sets pace for regional expansion

01 August 2011

WITH the stainless steel process parts market set to expand rapidly, Outokumpu Armetal Stainless Steel Pipe Company (OASP) believes expansions in its production capacities will strategically position the company to lead the way in stainless steel tubular products.

The facility, a Saudi-European joint venture, has invested in a state-of-the-art stainless steel process factory with production lines for longitudinally welded pipes of up to eight inches in diameter and 8.2 mm in wall thickness. The output capacity at the $21.1 million plant will be approximately 4,000 tonnes annually once it is in full commercial production later this year.

OASP is also installing a line for the manufacture of pipes with diameters ranging from 2.5 inches to 8 inches, with a capacity of 6,600 tonnes annually. It currently operates a line to produce pipes of half-inch to two-inch diameter with a capacity at 2,400 tonnes annually.

“With this investment, OASP will be the only company of its kind within the Middle East market. With a total capacity across both new and existing production lines of around 13,000 tonnes of steel each year, it will be a ‘significant player’,” says Christer Asp, OASP managing director.

OASP was established in October 2008 in Riyadh as a joint venture between Sweden-based business unit Outokumpu Stainless Tubular Products (OSTP), part of Finnish giant Outokumpu, and Saudi Arabia’s Al Hejailan Group, which acquired Armetal several years ago.

Armetal was founded in 1985 as the first manufacturer of architectural stainless steel products in the Middle East. In 2003, it moved into the production of architectural stainless pipes, process pipes and satin and mirror sheets.

“Through its constituent Armetal, OASP has a long tradition and knowledge of the stainless steel industry in the GCC region,” says Asp. “Our close proximity to this market is a key benefit as it enables clients to purchase products locally without time-consuming and costly customs procedures and charges. We have implemented the latest state-of-the-art technology to meet the requirements of the process industry and operate a fully integrated and cost-competitive production site in Riyadh.”

As much as 90 per cent of the products that OASP distributes including those manufactured by its partner OSTP at its various international sites is consumed within Saudi Arabia. The main overseas buyer last year was Qatar. The company’s sales were worth SR22 million ($5.86 million) in 2010, including those of products produced by OSTP at its sites outside Saudi Arabia.

“The main goal of OASP is to focus on developing the process pipe business in the Middle East and North Africa (Mena) region, and to become the preferred supplier for steel stockists, traders and projects operating within this market,” says its commercial manager Marwan Tawha.

“Although a relatively new enterprise, OASP’s strength is based on the unique combination of Armetal’s strong local connections and knowledge of the market and OSTP’s skills and know-how in the process pipes industry. Together, the company can offer clients valuable advantages when it comes to product range, quality and service,” he says.

OASP’s commercial activities cover the GCC region and the Levant states.

“The Middle East is currently one of the world’s fastest growing markets with huge investments planned in the oil and gas, petrochemical, and water and desalination industries, which will require a multitude of stainless steel products. Taking this into consideration, we believe that OASP entered the market at the ideal time to meet these demands with a competitive advantage in delivering products of European quality standards in a very short time and on a local basis. The company has been built on strong foundations, opening up the possibility for further development and expansion either in the product range or service level,” adds Tawha.

The JV partner OSTP manufactures and markets welded stainless steel tubes and pipes including butt-welded and threaded fittings with an annual delivery capacity of approximately 100,000 tonnes at various international locations.

With its 18 per cent market share in the process pipe sector, OSTP is one of Europe’s largest producers of welded, stainless steel tubular products with manufacturing plants in Sweden, Finland, Estonia, the US and Canada. The main products of process pipes and fittings, heavy wall pipes and heat exchanger pipes are used throughout the process sector including oil and gas, chemical and petrochemical, pulp and paper, automotive and construction.