OCTG sales lead the US pipe market with prices and volume

Wednesday, 10 March 2010 03:22:00 (GMT+3)   |  
       

Most pipe products continue to be the rare bright spot in the current US steel market with better-than-most steel consumption.  And although import offers and shipments are finally beginning to show up, not all conditions are perceived positive. For some, the most recent wave of price increases over the last couple weeks is beginning to evoke signs of a price bubble.

Oil country tubular goods (OCTG) continue to be the hottest tubular, if not the hottest steel product in the US; and rising rig count supports the latest increase in OCTG consumption.  According to a report by Baker Hughes, the total active US rig counts for week ending March 5 was 1,396. This is up 51 rigs from our report two weeks ago. This represents a 176 rig increase from the first week in January and is an increase of 397 rigs, or +28 percent, from last September.

The most aggressive import offers of API J55 electric resistance welded (ERW) OCTG remain out of Korea. Most Korean offers may currently be found ranging from approximately $50.00 cwt. to $52.00 cwt. ($1,102/mt to $1,146/mt or $1,000/nt to $1,040/nt) duty-paid, FOB loaded truck in US Gulf ports. These offers reflect a significant increase of about $5.00 cwt. ($110/mt or $100/nt) since our last report two weeks ago. While these offers may eventually stick for some customers still clamoring for OCTG into mid-summer, the demand appears to be slowing a bit over the past couple weeks, especially as import shipments continues to trickle in. License data from the Steel Import Monitoring and Analysis System (SIMA) demonstrates that total import tonnage of OCTG to the US has decreased in February from January at 83,972 mt and 98,901 mt respectively, after January imports were nearly doubled from December 2009, at 50,595 mt (final census data). Korea imports to the US decreased from 28,087 mt in January to 16,956 mt in February.

Meanwhile, US domestic ERW black plain end (BPE) A53 Grade A standard pipe offers increased approximately $2.50 cwt. to $3.50 cwt. ($55/mt to $77/mt or $50/nt to $70/nt) ex-mill, depending on mill. Korean offers for the same product also increased by about $3.50 cwt. ($77/mt or $70/nt) over the last couple weeks and are now ranging from around $43.50 cwt. to $45.00 cwt. ($959/mt to $992/mt or $870/nt to $900/nt) duty-paid, FOB loaded truck in US Gulf ports. However, other import offers haven't increased as significantly during the same time frame, making Korean offers less attractive. Most Turkish offers have remained neutral over the past couple weeks and are now leading the way with lower import offers to the US, at approximately $41.00 cwt. to $43.00 cwt. ($904/mt to $948/mt or $820/nt to $860/nt) duty-paid, FOB loaded truck in US Gulf ports. Taiwanese offers increased approximately $2.00 cwt. ($44/mt or $40/nt) since our last report and are being found, on average, slightly below Korean offers at approximately $43.00 cwt. to $45.00 cwt. ($948/mt to $992/mt or $860/nt to $900/nt) duty-paid, FOB loaded truck in US Gulf ports.

On the coated side, most Indian ERW ASTM A53 Grade A galvanized plain end (GPE) standard pipe offers increased an average of $2.00 cwt. ($44/mt to $40/nt) over the past two weeks and are being seen ranging from approximately $47.00 cwt. to $48.00 cwt. ($1.036/mt to $1,058/mt or $940/nt to $960/nt) duty-paid, FOB loaded truck in US Gulf ports. SIMA license data shows that total import tonnage of standard carbon steel pipe decreased from 53,601 mt in January to 40,305 mt in February. Indian standard pipe exports to the US decreased from 8,438 mt in January to 4,600 mt in February.


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