With growing downward pressure on the US domestic flat-rolled market, domestic energy pipe prices may not be holding steady for much longer.
US domestic flat-rolled spot prices have been edging lower over the last two to three weeks, and for at least another few weeks, the trend is likely to continue (although there is hope for a possible uptrend as the year draws to a close and lead times move into 2012). As a result, energy pipe industry players have been growing concerned that if domestic hot rolled coil (HRC) spot prices drop significantly, a decline in spot prices for welded pipe will follow. But if the US rig count continues to rise following last week's major 22 rig gain, any decline in pipe spot prices may not be as substantial as decreases for HRC.
Nonetheless, if predictions of pipe market softening do materialize, they are likely to hit the US domestic line pipe market first, which has been experiencing consistent, but at times mediocre demand over the last couple months; however, sources tell SteelOrbis that oil country tubular goods (OCTG) casing prices may see a downward correction as well. For the time being, though, spot prices for API X42 electric resistance (ERW) line pipe are still 64.50-$65.50 cwt. ($1,422-$1,444/mt or $1,290-$1,310/nt) ex-mill, and J55 ERW OCTG casing spot prices are largely between $67.00-$68.00 cwt. ($1,477-$1,499/mt or $1,340-$1,360/nt) ex- mill, although any sizeable order on both OCTG and line pipe "easily demands a discount," according to one distributor in the South.
As for the US import market, there is no shortage of offers from offshore on OCTG casing at the moment, and traders tell SteelOrbis that there appear to be more offers available with every passing week (either from multiple mills in the same country or from mills in different countries). While the immense competition may result in a decline in import prices in the US not too far down the road, notable import prices in the US have stayed neutral over the last week. Korean J55 ERW OCTG casing prices in the US are still $55.00-56.00 cwt. ($1,213-$1,235/mt or $1,100-$1,120/nt) DDP loaded truck in US Gulf ports, and prices from Turkey and Taiwan are about $0.50 cwt .($11/mt or $10/nt) lower. Vietnamese OCTG casing sales prices are $54.00-$55.00 cwt. ($1,190-$1,213/mt or $1,080-$1,100/nt) DDP loaded truck in US Gulf ports.
The number of import line pipe offers in the US is much lower as compared to OCTG, but activity is quieter as well. Korean API X42 line pipe offer prices are still the most competitive 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, reflecting no change from last week, but with domestic Korean HRC prices on the brink of a downtrend, line pipe prices may drop as well. Indian offer prices are about $2.00 cwt. ($44/mt or $40/nt) higher, but with Korean prices much lower, Indian mills aren't finding too much interest from the US market.