Despite a drop in oil rig counts last week, both US domestic and import energy pipe demand continues to be strong.
The US rotary rig count fell by 10 rigs last week; however, the week-on-week drop is of little concern to buyers of line pipe and oil country tubular goods (OCTG), especially considering that rig counts dropped by 32 in mid-February before beginning an upward climb. The 10-rig count drop last week follows week-on-week increases the past six weeks; in total, rig counts are up 65 since early March. And so, industry insiders report consistent activity levels in the energy pipe market, and growing interest in import offers.
US domestic spot prices for J55 electric resistance welded (ERW) OCTG casing are unchanged from our last report two weeks ago, and still range from approximately $66.00-$68.00 cwt. ($1,455-$1,499/mt or $1,320-$1,360/nt) ex-mill. But with demand expected to remain strong in the foreseeable future, spot prices are expected to trend toward the top of the range going into May.
The trend is positive for import offers to the US as well. Taiwanese and Korean J55 ERW OCTG casing sales prices remain in the range of $57.00-$58.00 cwt. ($1,257-$1,179/mt or $1,140-$1,160/nt) duty-paid FOB loaded truck in US Gulf ports, and order activity looks to be strengthening.
According to the most recent data from the Steel Import Monitoring and Analysis System (SIMA), high numbers of OCTG are already arriving into the US. In March, the US imported 211,563 mt (license data) of OCTG, compared to 164,161 mt (census data) in February. In particular, Korean mills exported 52,897 mt (license data) of OCTG in March-while this is almost unchanged from February imports, license data already indicates that Korean exports of OCTG to the US have already surpassed exports the past two months, totaling 58,011 mt.
Similarly, arriving line pipe imports into the US stayed relatively neutral from February to March according to license data; however, April is shaping up to be a strong import month for line pipe as well. SIMA license data shows that the US imported 149,164 mt of line pipe in April, compared to 116,462 mt (license data) in March. The biggest jump is coming from India, which exported 34,875 mt (license data) of line pipe to the US so far in April, compared to just 3,131 mt (license data) in March.
As for current line pipe offers, while Taiwanese and Korean API X42 ERW line pipe offers are still in the range of $54.00-$55.00 cwt. ($1,190-$1,213/mt or $1,080-$1,100/nt) duty-paid FOB loaded truck in US Gulf ports, SteelOrbis continues to hear of sporadic orders being placed below $54.00 cwt., as line pipe demand is still trailing demand for OCTG casing pipe.