Sources close to SteelOrbis have noted that most US domestic energy pipe mills have temporarily pulled spot orders from the market while they await greater clarity on their input costs.
“With HRC, scrap, iron ore doing what it is doing, nobody wants to offer until they have a clearer picture,” a source said.
A service center source described current market conditions as “bizarre.”
“At the service center level, HRC is officially selling for more than pipe. Seriously, we’re selling HRC at a higher cost than we’re selling energy pipe. Go figure. I think this will be short lived, for sure, but this is oddly a sign of the times.”
On Friday, SteelOrbis reported that the average spot market price transaction range for US domestic HRC was trending at $43-$45 cwt. ($948-$992/mt or $860-$900/nt) ex-mill. Today, most offers are trending closer to the top end of that range, and prices are expected to trend up through “at least the end of the year.”
A third source added that service centers have had a hard time getting energy pipe spot market prices up because demand within the pipe sector is still lagging. “Demand in the energy sector still pretty bleak,” he said. “The rig count going up but [the total rig count] is still below 350.”
Baker Hughes reported that as of week ending Dec. 11, the total US rig count increased by 15, to 338. The number of rotary rigs drilling for oil was up by 12 to 258, however, there are 409 fewer rigs targeting oil than last year. Rigs targeting natural gas were up by 4, to 79. The number of rigs drilling for gas is 50 lower than last year.