Global steel prices have been on a wild ride since March 2020, and the US domestic energy pipe market has not been an exception to the rule, according to panelists at the National Association of Steel Pipe Distributors (NASPD) conference last week. After the wide swings seen after the start of the global pandemic, 2022 energy pipe prices spiked to roughly $150 cwt. ($3,307/mt or $3,000/nt) after Russia invaded Ukraine due to the massive price rebound for hot rolled coil.
Since that time, several things have happened. First, the rig count stalled due to issues with labor and pipe availability, and both J55 ERW OCTG casing and API X-52 prices have finally started to level off, with prices for both products being “relatively stable” for the past 7-8 months.
Market players have also noted that increases seen in the oil rig count have been offset by decreases in natural gas rigs. This, coupled with the steep decline in HRC prices between June 2022 and today, energy pipe prices have dropped by roughly $36 cwt.($726/mt or $800/nt) from their peak.
During a panelist segment held on Friday, February 17, Tubular Synergy Group CEO Byron Dunn indicated that it appears that the energy pipe market is pretty well-determined for the first half of this year, adding that many of the OCTG mills are booked out through the end of June. And while natural gas drillers continue to lay down their rigs, due to still-soft pricing for that commodity, oil prices are forecast remain at around $80 per barrel, which is still quite lucrative.
Kelly Pipe President and CEO Art Shelton said he’s also optimistic based on the numerous pending projects that are on the horizon. Many of the Inflation Reduction Act projects are shovel-ready, he said, adding that there are at least five oil and gas terminals slated to be built in the Gulf of Mexico.
The panelists also believed that energy pipe prices will remain supported by strong HRC prices, which mills are continuing to try to push up.
“Many of the ERW mills in the US have solid bookings, and from what I’m hearing, the [domestic] mills will keep trying to push prices up,” Shelton continued. “Raw materials costs are also still going up.”
The ERW mills, the panelists concluded, are not in an oversupply position but instead, production appears to be in sync based on the current rig count. Consequently, energy pipe pricing support is expected to be maintained by both equalized supply and demand and still healthy HRC prices.