With an influx of oil country tubular goods (OCTG) arriving at US ports last month and continuing in August, US buyers are a little more hesitant about investing in future overseas orders.
OCTG has experienced a healthy 2010 comparative to other pipe sectors; however, traders' previously noted success in the spring may actually hinder their ability to make further bookings over the next couple months (and perhaps for the remainder of this year).
According to the US Department of Commerce, 225,419 mt of OCTG was imported to the US during July (the highest in more than 12 months), while, as of August 11, another 124,296 mt had already arrived in US ports during August. August import OCTG tonnage is on pace to eclipse July levels. While this is a testament to the successful April/May order books, many buyers worry that this significant inventory increase could flood the market again with excess inventory. "All it takes is one or two deals gone bad to set off a downward spiral again," commented one trader.
Although quoting activity has been slow the past several weeks, US OCTG demand has been steady, mostly due to increasing rig counts. According to Baker Hughes, active North American rig counts increased 35 from the previous week to 1,640 for the week ending August 13; the most since the last week of 2008, at 1,721.
Regarding import offerings of API J55 electric resistance welded (ERW) OCTG casing, levels remain mostly neutral from our last report two weeks ago. Taiwanese and Turkish offerings continue to be offered from approximately $46.00 cwt. to $48.00 cwt. ($1,014/mt to $1,058/mt or $920/nt to $960/nt) duty-paid, FOB loaded truck in US Gulf ports, while Korean offers are found at about $1.00 cwt. ($22/mt or $20/nt) higher.
The structural standard pipe sector has remained quiet through most of the summer. Offers for ERW black plain end (BPE) A53 Grade A standard pipe from Turkey and India have trended neutral from two weeks ago, at about $41.00 cwt. to $43.00cwt. ($904/mt to $948/mt or $820/nt to $860/nt) duty-paid, FOB loaded truck in US Gulf ports; however, Indian offers are very limited, as most mills are under antidumping orders and Lloyds is currently under review. Although the product is available in small quantities from other sources, traders have noticed a substantial drop in galvanized plain end (GPE) standard pipe quotes, due to Indian antidumping issues.
Overall import quoting activity is losing steam on all pipe products, as arrival times are now into the last couple months of the year. Traders do not expect another uptick in quoting activity until early October for early spring arrivals.
