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DANIEL LACALLE

Economist and manager of investment funds

What are the most relevant factors behind this unexpected oil drop?

The main factor is increased production - greatly exceeding demand - in non-OPEC countries and in particular the USA, reaching the highest unprecedented supply levels over the past six years. This is clearly an offer crisis.

How long do you think this situation may last?

Normally this process can take several years. Increased production in low cost OPEC countries, improved efficiency in non-conventional oil producers and subsequent re-adjustment of the chain value at a lower price, are promoting a cut in oil marginal cost.

In your view, what are the challenges for companies like TUBACEX which are part of the sector supply chain?

The main challenge is added value. As customers demand specific quality solutions, strategy must be oriented to maximizing the margin and improving the quality of products instead of just focusing on increasing sales volume.

What would you recommend the TUBACEX team do? What position do you think the company should achieve to progress in this sector?

TUBACEX has reached a successful position and completed a restructuring process throughout the entire chain which allowed the company to be more strongly positioned. My recommendation is for the company to maintain their different innovative strategy, yet remain aware of the fact growth will be gradual, and focusing on the measures they have implemented to tackle the current situation: working capital management, debt reduction, product quality improvement and added value increase, among others.