US pipe makers have a lot to be proud of this Independence Day - After successfully ousting China from several major segments of the US' pipe market, US pipe producers are seeing very strong demand for their domestic product and have been able to raise their prices accordingly.
With US Steel enacting the unprecedentedly high price hike of $550 /nt ($606 /mt or $27.50 cwt.) for all pipe products in late June, the US pipe market's strength is apparent. Though flat rolled prices have lost some of their upward momentum, oil and natural gas demand and pricing is soaring, creating a huge domestic market for API pipes.
On the welded standard pipe side of the market, while it is not benefiting directly from the energy sector, end-use demand from commercial construction is still holding up despite the weak economy, and, most significantly, there have been a drastic decrease in tons in the market since China's departure in the second half of 2007, resulting in very tight supplies. This situation doesn't look like it will change anytime soon, since, with the foreign steel markets continuing to soar, no other country has emerged to take China's place as the US' main supplier of bargain-priced ERW standard pipe.
There are some Indian offers in the market for ERW A53 BPE, ranging from approximately $74.00 cwt. to $76.00 cwt. ($1,631 /mt to $1,676 /mt or $1,480 /nt to $1,520 /nt) FOB loaded truck in US Gulf ports. These offering prices continue to trend up due to the country's rising flat rolled costs. In addition, it is hard to get many tons for BPE (black plain end) , since many mills only want to do GPE (galvanized plain end).
There are also some scattered offers from South America and Eastern Europe, but in general, foreign mills are more interested in producing more value-added pipe like the API grades. At the same time, domestic production of welded standard pipes is not high enough to meet the domestic demand, hence the tight supplies. Some traders even say that they are able to virtually "name their price" because of the tight availability.
Domestic mills are now shooting for about $1,850 /nt ($2,039 /mt or $92.50 cwt.) for August/September delivery of ERW A53 BPE, with lead times going out three to four months. With scrap prices expected to keep rising in the short term, more price hikes on the raw material side are foreseeable for the near future, undoubtedly resulting in more price increases on the pipe side (although flat rolled prices are trending sideways at present). However, even without any raw material increases, when it comes to pricing, the ball would still remain in the domestic producers' proverbial court due to the lack of import supplies.
Preliminary Census Data from the US Import Administration show that the Chinese presence on the standard pipe side of the market has diminished to 7,054 /mt in May 2008, compared to 82,700 mt only a year earlier. In addition to welded, this category also includes seamless pipes, which are not subject to antidumping. Chinese seamless pipe (A106) imports continue to some extent, though there is a chance that these pipes may get hit with antidumping as well - there are also rumors that the European Union will launch an antidumping case against Chinese seamless pipes imminently.