US domestic buyers of welded oil country tubular goods (OCTG) casing have been raising doubts over the effectiveness of recent price increases from domestic mills. While increases from some mills were targeted toward seamless and alloy OCTG casing and tubing--products that are in high demand and often short supply--others were across the board, including for commonly produced material such as J55 electric resistance welded (ERW) OCTG casing.
Any increase on J55 ERW OCTG casing--at least until early next year--has little chance of sticking, according to industry insiders, as availability remains high, while US raw material prices remain under pressure. Domestic spot market prices are not entirely firm, and while the most commonly reported transaction prices are approximately $65.00-$66.00 cwt. ($1,433-$1,455/mt or $1,300-$1,320/nt) ex-mill, unchanged in the last week, activity below the range remains prevalent. With recent facility expansions and start-ups, mills are intensely fighting for market share, often cutting prices significantly to get orders.
Falling import J55 ERW OCTG casing offer prices to the US are also putting pressure on the US domestic market. Korean sales prices in the US have fallen about $1.50 cwt. ($33/mt or $30/nt) in the last week to the range of $51.00-$52.00 cwt. ($1,124-$1,146/mt or $1,020-$1,040/nt) DDP loaded truck in US Gulf ports and prices from Taiwan are within a similar range. Traders in the US continue to hold off on placing offshore orders under the expectation that further drops may still loom as a result of little demand and ongoing weakness in flat rolled and raw material prices in the Far East.