Market sources confirm that pipe buyers in the US are indeed accepting the January price increases set by domestic mills.
Taking into account the $50 /nt ($55 /mt or $2.50 cwt.) price hike US pipe mills announced for January shipments, A53 standard pipe prices now range from $44.50 cwt. to $46.50 cwt. ($980 /mt to $1,025 mt or $890 /nt to $930 /nt) FOB mill. On the West Coast, prices are rising too, though West Coast A53 prices are approximately $2.00 cwt. to $3.00 cwt. cheaper than in the Midwest, mainly due to the West Coast's proximity to Asia.
Domestic prices for A500 structural pipe will rise by $40 /nt ($44 /mt or $2.00 cwt.) in January to a range of $40.00 cwt. to $42.00 cwt. ($882 /mt to $926 /mt or $800 /nt to $840 /nt) FOB mill.
In addition to the January price hikes, US mills plan to raise prices by a similar amount in February as well, largely to reflect the February price increases that flat rolled producers have announced.
Import competition for A53 is still minimal, though some material from South Korea and Taiwan is arriving at the West Coast. The prices are not competitive compared to domestic though and their prices continue to trend up with the rising flat rolled prices in Asia. A53 pipes ex-Taiwan and South Korea are being offered at approximately $850 /nt ($42.50 cwt. or $937 /mt), the same price that West Coast mills like CSI are offering at. And with freight costs to send the material east to the rest of the country, the import price becomes at least as high as domestic prices once the material gets to the Midwest. For these cost reasons, there is not too much booking at these levels, and the pipes that have come in, for the most part, have not worked their way east of the Rockies.
In the Gulf market, there are some A53 offers of Turkish origin, but not much else. These prices range from approximately $41.50 cwt. to $42.50 cwt. ($915 /mt to $937 /mt or $830 /nt to $850 /nt), an increase of $30 /nt ($33 /mt or $1.50 cwt.) in the past two weeks. These offers are trending up quickly with the rising flat rolled market in Turkey.
The pricing trend for both domestic and import standard pipes in the US is pointing upward. Although demand is still somewhat sluggish and no potential pickup has been seen or is expected for the near future, rising costs of raw materials, energy, and transportation, as well as the gaping hole that China's exit from the market has left, will result in further price hikes.
On the line pipe side of the market, business is very strong, especially for the large diameter pipes. A good deal of Chinese import line pipe has arrived in the past few months following the AD and CVD against standard pipes, but demand for line pipe is strong enough to counteract the high inventories, with both domestic and import prices expecting to keep rising in the first quarter.
Also, there's a good chance that US pipemakers may be able to restrict Chinese line pipe imports in addition to the standard pipe imports - The petitioners that filed the AD and CVD cases against standard and structural pipe from China have recently submitted a letter to the US DOC requesting a revision of the scope of the investigations to include single-stenciled API line pipe if the pipe is used or intended for use in standard or structural applications or if it meets certain physical criteria. It apparently has not gone unnoticed that some of the Chinese line pipe imports are being used as standard pipe, and there is a good chance that the domestic petitioners will be successful in closing this loophole.
Meanwhile, high energy prices continue to support drilling, a major consuming market of line pipe, with no slowdown in sight. The Baker Hughes North American Rotary Rig count for the week ended December 14 totaled 2,243, compared to 2,216 rigs the previous week, and 2,213 rigs for the same week of the previous year.
Data from the US Import Administration show that, unlike other steel imports, line pipe import arrivals to the US have increased significantly in 2007 compared to the previous year. For the first ten months of 2007, total line pipe import tonnage in the US was 2,193,087 mt, up from 1,423,354 mt for the same period of 2006. The US' top import sources for line pipe for the first ten months of the year were: China, at 378,165 mt (compared to 271,475 mt the previous year); Canada, at 371,030 mt (compared to 230,146 mt); India, at 294,375 mt (compared to only 19,184 the year before); South Korea, at 232.476 mt (compared to 185.373 mt) and Italy, at 164,773 (compared to 63,910 mt).