The US
pipe market is still robust, with strong demand for line
pipe and OCTG.
Distributors are reporting excellent end user demand in all segments, including
construction, energy, and infrastructure. Demand for
pipe used to transmit oil and gas is especially strong.
Because of the booming oil and gas industry, domestic producers are
manufacturing more API
pipe and less standard
pipe. ERW line
pipe producers in particular should be able to maintain strong prices this year. It doesn't look like demand will let up any time soon, with sky high crude oil prices as well as Chevron's new deal with the Venezuelan government to form joint ventures with Swiss mining and
trading company Glencore,
UK oil major BP's North American unit, Japanese engineering company Marubeni, and
Brazil's federal energy company Petrobras, to increase oil drilling of the coast of
Venezuela. Also, the Alaska gas pipeline project, scheduled to start in 2012, should keep the line
pipe market strong for years to come.
As domestic demand remains strong, import statistics show that welded standard
pipe imports have increased by 10 percent in 2005.
The boom in US oil and gas drilling has seen a surge in seamless OCTG
pipe imports as well.
China has capitalized on this, more than doubling seamless casing and
tubing export in 2005. Before 2005,
China focused on exporting standard, structural, and mechanical pipes, which are easy to produce quickly. More and more producers, like
Baosteel for example, now have major seamless
pipe capacities.
Customers report that they have many options to buy inexpensive Chinese
pipe, especially welded standard and OCTG grades. Deliveries from
China, however, are often unpredictable, and the level of quality varies greatly from mill to mill.
Pipe import pricing had been heading downward for the past six months, with the exception of large diameter pipes, which held up well because of limited global
production capacity and numerous projects involving large diameter
pipe. Now, prices for all
pipe products seem to have bottomed out and are now on the upswing due to the increased costs of hot rolled coil and plates. Sheet and coil prices in
China and
Turkey have increased due to higher raw materials prices, with flat rolled mills from both of these countries raising offering prices.
Import prices for line
pipe and OCTG have a very large spread, depending on size and specification. Chinese prices for A53 standard
pipe range from $560 /nt to $600 /nt ($617 /mt to $661 /mt or $28.00 cwt. to $30.00 cwt.) FOB loaded-truck, Houston and Tampa, with prices from the rest of importing countries ranging from about $630 /nt to $660 /nt ($694 /mt to $728 /mt or $31.50 cwt. to $33.00 cwt.) FOB, loaded-truck, Houston and Tampa. Subject product is ASTM A53 Grade A, ½ through 6”.
Industry experts predict that standard and hollow section prices will stay firm in 2006 until
construction demand slows and coil prices fall in 2007. This year, seamless and lower grade OCTG prices are expected to soften slightly due to increased supply, though high-alloy grades will remain firm.