A number of offshore line pipe and oil country tubular goods (OCTG) mills are seeking to raise their offer prices to the US in the next couple weeks.
As a result of rising hot rolled coil (HRC) prices in the Far East, Korean and Taiwanese mills are on the verge of raising their J55 electric resistance welded (ERW) OCTG casing and API X42 ERW line pipe offer prices to the US in the coming weeks. One trader in the south told SteelOrbis that another reason for the expected increase is consistent demand levels; however, US buyers are not as bullish about the higher prices, and any major price increase could be met with some US-buyer pushback.
For the time being, Korean and Taiwanese J55 ERW OCTG casing offer prices are still $52.75-$53.75 cwt. ($1,163-$1,185/mt or $1,055-$1,075/nt) DDP loaded truck in US Gulf ports, unchanged in the last week after rising $0.75 cwt. ($17/mt or $15/nt) a week ago.
API X42 ERW line pipe prices from Korea and Taiwan have also stayed neutral and continue to be offered in the range of $48.00-$49.00 cwt. ($1,058-$1,080/mt or $960-$980/nt) DDP loaded truck in US Gulf ports. Indian mills are also offering API X42 ERW line pipe to the US, but offer prices in the $50.00-$51.00 cwt. ($1,102-$1,124/mt or $1,000-$1,020/nt) DDP loaded truck in US Gulf ports range is too high for US buyers to take interest.
One reason that buyers in the US are likely to resist higher import prices is that many already have high levels of import OCTG casing and line pipe in stock, and sources tell SteelOrbis that some of these buyers with excess stock are trying to sell off existing inventories before placing any major orders with import mills. US Steel Import Monitoring and Analysis (SIMA) data show that 257,574 mt (license data) of oil country goods arrived in the US in August, compared to 234,634 mt in July (preliminary census data), representing the highest level in over a year. Korea was the US' major import OCTG source in August with 37,633 mt, but other sources are hot on Korea's heels--imports from Argentina jumped from 4,051 mt in July to 21,487 mt in August, while imports from Saudi Arabia were 17,886 mt in August compared to 6,287 mt in July.
Imports of line pipe into the US in August were also higher, albeit not as significantly as OCTG imports. US SIMA data indicate that 134,439 mt of imported line pipe arrived in August, compared to 128,105 mt arriving in July. As usual, Korea was the US' major source of line pipe with 45,545 mt arriving in August. Other major sources were Mexico (14,088 mt), Canada (12,793 mt) and even Turkey with 5,040 mt after no Turkish line pipe imports were recorded in June or July.
In the US domestic market, even with a seven rig count drop in the Baker Hughes rig count last week, the overall rotary rig count levels remain high (up 315 rigs over last year) and the drop followed about two months of nearly consecutive major increases, so industry insiders are little concerned about a small drop that is likely a result of inclement weather (earthquakes, hurricanes and tropical storms) in the East Coast and some Midwestern states over the last couple weeks. US buyers continue to make purchases consistently, keeping both domestic demand levels and spot prices steady. In the last week, both J55 ERW OCTG casing and API X42 ERW line pipe spot prices were stable, remaining in the range of $66.00-$67.00 cwt. ($1,455-$1,477/mt or $1,320-$1,340/nt) and $65.50-$66.50 cwt. ($1,444-$1,466/mt or $1,310-$1,330/nt), respectively, both ex-Midwest mill.