Sources close to SteelOrbis say that while some mills continue to offer energy pipe floor stock at last month’s price points, which were in the approximate range of $110-$120 cwt. ($2,425-$2,646/mt or $2,200-$2,400/nt) FOB mill for both API X-52 and J55 ERW OCTG casing, pricing for new production is largely “to be determined.”
“I’m hearing that the sheet mills pulled their offers from the ERW mills until they have a better idea about what’s going on with their pricing, and that a lot of the pipe mills have also temporarily pulled offers for new production” a source said.
“What you’re hearing is 100% true,” a second source added. “Korean suppliers have also pulled out of the market and are wisely taking a ‘wait and see’ approach.”
Other sources have confirmed hearing the same, saying that in many ways, this makes sense.
For example, last week, SteelOrbis reported that all offshore HRC offers to the US have been pulled by foreign producers while they reevaluate production costs and global supply chain issues spurred by Russia’s invasion of Ukraine. Consequently, not only will domestic sheet mills need to scramble to meet anticipated upticks in demand (which is being further compounded by mills’ hiring issues and the fact that they still need people to fill open positions), this lack of offshore competition “basically means that [flat rolled mills] will have the upper hand when it comes to pricing,” another source added.
March settled scrap prices, which trended up by $125/gt for cut grades and shredded scrap, and up by $175+/gt for busheling scrap, are also having an impact on the market.
Another source noted that price uncertainty is also impacting buyers, adding that some buyers are shelving non-urgent projects.
“I know of some midstream companies that had been focusing on a lot of front-end work infrastructure updates, repair work, and projects like that, have completely pulled back,” he said. “Ever since [Russia invaded Ukraine], pricing has gone haywire. Once the end users started seeing that they kind of started to put cold water on all of their projects, saying let’s do the day-to-day stuff that we need to do, but anything that we can put on hold, we’re putting that on hold.”
A final distribution center source said that he’s also not hearing anything that’s going to make the current state of the market any easier.
“A lot of the mills have pulled all of their offers,” he said. “We’ve heard that Interpipe will obviously not be able to supply their open contracts, and I know of one larger operator who had placed a large order with Interpipe and they’re panicking. They need to replace those tons, and that’s going to put more pressure on OCTG pricing. I think for now, that sellers will take advantage whatever stock that they have available, and I imagine all offers [from mills to their customers] that haven’t been pulled will be pulled soon, and that the mills will come back out with pricing closer to $150 cwt. ($3,307/mt or $3,000/nt) FOB mill once they start to offer again. I don’t think there will be any relief anytime soon.”