TOKYO (Reuters) - Japan's biggest steelmaker Nippon Steel & Sumitomo Metal Corp (T:5401) and trading firm Sumitomo Corp (T:8053) said on Wednesday they have renewed their 10-year contract with BP (L:BP) to supply oil pipes, despite a slump in oil prices.
Nippon Steel, which also supplies high-end pipes under a long-term contract to other oil giants such as Royal Dutch Shell PLC (L:RDSa), Exxon Mobil Corp (N:XOM), and Statoil ASA (OL:STL), said the new contract is effective from Jan. 1 this year, but declined to disclose details.
Global oil prices (CLc1) (LCOc1) have tumbled more than 70 percent since mid-2014, forcing a number of oil and gas companies to scale back capital spending plans.
That has battered Nippon Steel, with orders for its seamless pipes including line pipes falling about 30 percent in the last financial year, that ended March 31, 2016.
However, the recent sharp rally in crude prices led to a pick-up in export orders of oil pipes since January.
The Wakayama plant in western Japan, which makes seamless pipes for oil drilling, is now operating at full capacity, a Nippon Steel spokeswoman said.
"Demand from the Middle East and Europe has been solid although the U.S. demand remains weak," she said.