Domestic offering prices for ERW standard pipe have remained flat in recent weeks and are expected to continue trending sideways through October.
However, pipe producers are generally optimistic about the market as Chinese import competition has all but disappeared, and buyers expect producers to raise prices in November or December to make up for rising flat rolled costs. Looking forward to Q1 of next year, the outlook is even more positive, as import inventories will have dwindled further.
For now, most domestic A53 offers are at a range of $42.00 cwt. to $44.00 cwt. ($926 /mt to $970 /mt or $840 /nt to $880 /nt) ex-mill.
Demand for ERW standard pipes is steady, with a decent amount of activity taking place in commercial construction, and water and natural gas transmission. Producers are confident that because of the good demand, once the Chinese inventories for standard pipe disappear entirely, the domestic market will be able to thrive. However, while the general expectation is that the AD/CVD case against Chinese pipe will be successful, the level of relief granted will not be known until November at the soonest and January '08 at the latest.
There is also a chance that the investigations could be stopped entirely -- most recently, sources close to the US Department of Commerce (DOC) indicated that a suspension agreement might be in the works for Chinese standard and structural pipes. If this agreement were to be concluded, the current AD/CVD investigation would be stopped, and China would receive a quota and set minimum or "reference" prices from the DOC which would take the US Producers Price Index into consideration. Still, the domestic industry would receive significant import relief from a suspension agreement, as it would still stop China from exporting to the US at significantly low prices.
For now, there are no new standard pipe offers coming out of China, and the import standard pipe offers that are available for the US -- including some from the Middle East and India -- are not very competitive compared to domestic prices. At this time, buyers aren't looking to replenish inventories just yet, as they are still sitting on a lot of material that was purchased in anticipation of the stoppage of Chinese offers. Eventually, a new competitive import leader is expected to emerge, but it is unclear which country or countries will fill that role. India and Turkey are certainly promising suppliers with histories of decent quantity imports; however, recent high freight rates and lack of breakbulk ships are preventing them from entering the market with competitive prices. There are reports of container shipments from both of these countries to various ports.
The domestic market for line pipe and OCTG remains steady due to the strong business from drilling, which is expected to continue due to the high price of oil. Also, while Chinese mills can still ship these products to the US, rising flat rolled prices in China along with the high ocean freight rates, are keeping Chinese import numbers stable at present.
Energy-related pipe producers are still experiencing euphoric market conditions in general. A representative of a foreign line pipe producer in the US told SteelOrbis that their mill is completely booked until the middle of 2008.
At present, line pipe and OCTG import inventories are relatively high despite the strong demand -- even though imports are down year-on-year for most steel products, line pipe imports are actually up year-on-year, and OCTG imports are down only slightly from last year. Final census data from the US Import administration show that YTD July 2007, line pipe imports totaled 1,539,846 mt, compared to 1,080,875 mt imported during the same period of the previous year. During the same period, OCTG imports totaled 1,046,913 mt, compared to 1,291,090 mt imported during the corresponding period of '06.