With abundant capacity for both electric resistance welded (ERW) oil country tubular goods (OCTG) casing and line pipe US domestically and offshore, attempts for mills to significantly raise prices will prove to be futile.
Korean mills' $1.00 cwt. ($22/mt or $20/nt) increase in prices in the US on J55 ERW OCTG casing last week that brought prices into the range of about $55.00-56.00 cwt. ($1,213-$1,235/mt or $1,100-$1,120/nt) DDP loaded truck in US Gulf ports isn't likely to stick. While Korean mills are citing higher hot rolled coil (HRC) costs for the increase, intense competition from other import sources is expected to push Korean prices down to pre-increase levels sooner rather than later.
Korea's strongest competitor at the moment continues to be Vietnam. Vietnamese J55 ERW OCTG casing prices in the US are about $54.00-$55.00 cwt. ($1,190-$1,213/mt or $1,080-$1,100/nt) DDP loaded truck in US Gulf ports--unchanged in the last week--but traders tell SteelOrbis that Vietnamese mills have been especially inclined to cut prices to get orders as of late, also due in part to other offshore competitors. Both Taiwanese and Turkish prices are about $0.50 cwt. ($11/mt or $10/nt) higher than Vietnamese prices, but with the new OCTG capacity that has come on stream in the domestic Taiwanese market, Taiwanese mills have been focusing more attention on exporting to the US, and will likely be cutting their prices soon in order to gain more market share, according to one trader in the South.
As for the US domestic market, mills continue to push for increases on J55 ERW OCTG casing spot prices, but despite consistent demand and a healthy US rig count, high domestic availability coupled with mounting import competition is preventing them from being entirely successful. Nonetheless, mills have been able to push through a $0.50 cwt. increase in the last week, bringing domestic spot prices into the range of $67.00-$68.00 cwt. ($1,477-$1,499/mt or $1,340-$1,360/nt) ex- mill--although the increase may be short-lived.
Demand is also holding steady in the US domestic line pipe market, but because domestic HRC spot prices began to soften last week, mills have not been able to implement any price increases based on higher raw material costs, keeping API X42 ERW line pipe spot prices between $64.50-$65.50 cwt. ($1,422-$1,444/mt or $1,290-$1,310/nt) ex-mill.
Import API X42 ERW line pipe prices haven't changed in the last week either, but demand remains the main culprit. Traders informed SteelOrbis that while Korean mills that produce both OCTG and line pipe products raised their offer prices on OCTG casing for the US, they are not pursuing any such increase on line pipe, as interest in imported line pipe in the US is only mediocre. As a result, Korean API X42 ERW line pipe sales prices in the US have stayed in the range of $49.00-$50.00 cwt. ($1,080-$1,102/mt or $980-$1,000/nt) DDP loaded truck in US Gulf ports.