While demand for offshore standard and energy pipe has remained relatively neutral over the past several weeks, booked activity is beginning to slow, despite import offer prices declining sharply.
Imported standard pipe products had demonstrated modest growth in terms of activity and price from the end of the first quarter, but it was the energy pipe market, most notably oil country tubular goods (OCTG) that had sprung a revival, with flurries of activity and consistent weekly price increases. However, since mid-May, activity for all pipe imports has slowed, while prices have dropped faster than they increased just a few months earlier.
The most attractive import OCTG offers continue to be seen from Korea, but now at an average price range of $51.00 cwt. to $53.00 cwt. ($1,124/mt to $1,169/mt or $1,020/nt to $1,060/nt) duty-paid, FOB loaded truck in US Gulf ports. This represents a decrease of approximately $6.00 cwt. ($132/mt or $120/nt) from the price peak in mid-May. And despite US domestic mills holding firm with pricing, many buyers are too hesitant to invest in offshore purchases, despite the lower prices, especially considering lead times already reaching into November. At the same time, it is interesting to look at the current imported OCTG shipments being received in the US, although these orders were booked during first quarter. According to license data from the Steel Import Monitoring and Analysis System (SIMA), the US imported 216,481 mt of OCTG during May, which is a significant increase from the 148,149 mt recorded in April.
Another thing to note about OCTG is that according to Baker Hughes, US rig counts decreased by 29 last week to a total count of 1,506 for the week ending June 4. While rig counts often fluctuate and a decrease here and there is usually not an immediate call for concern, the 29 rig decrease is the largest weekly decrease since the third week of April 2009.
The other energy pipe product, API X42 ERW line pipe, has decreased an average of $5.00 cwt. ($110/mt or $100/nt) over the last three weeks, with offers out of Korea being seen at approximately $47.00 cwt. to $48.00 cwt. ($1,036/mt to $1,058/mt or $940/nt to $960) duty-paid, FOB loaded truck in US Gulf ports. Turkish offers of the same product are currently ranging about $1.00 cwt. ($22/mt or $20/nt) lower than Korean offers, at $46.00 cwt. to $47.00 cwt. ($1,014/mt to $1,036/mt or $920/nt to $940/nt) duty-paid, FOB loaded truck in US Gulf ports. Some traders have mentioned a little more interest in the Turkish offers recently; however, this has yet to result in any significant bookings.
Switching focus to the structural standard pipe market, prices have continued to slide on the heels of a lackluster US construction industry and domestic hot rolled coil (HRC) prices softening on a weekly basis. Most imported electric resistance welded (ERW) black plain end (BPE) A53 Grade A standard pipe offers from Turkey and India may now be found in the approximate range of $43.50 cwt. to $44.50 cwt. ($959/mt to $981/mt or $870/nt to $890/nt) duty-paid, FOB loaded truck in US Gulf ports, reflecting a $3.50 cwt. ($77/mt or $70/nt) decrease from our last report two weeks ago. Korean offers are mostly been offered at around $45.00 cwt. to $46.00cwt. ($992/mt to $1,014/mt or $900/nt to $920/nt) duty-paid, FOB loaded truck in US Gulf ports.
On the coated side, interest in Indian standard galvanized plain end (GPE) pipe has waned significantly in recent weeks. Furthermore, most traders do not have a current assessment of an accurate price range since Indian GPE mills are becoming more resigned to provide traders with an offer only after the order specs and quantity are sent over. With that being said, offers for Indian GPE may possible be found at a minimum of $50.00 cwt. ($1,102/mt or $1,000/nt) duty-paid, FOB loaded truck in US Gulf ports.