Weak oil prices, stalled drilling projects and ongoing market volatility have finally taken their toll on the US domestic line pipe market. Spot prices, which have been trending sideways for more than nine months, have taken a $3.00 cwt. ($66/mt or $60/nt) downturn since our last report a week ago, bringing the new range for API X-42 ERW line pipe to $48.00-$49.00 cwt. ($1,058-$1,087/mt or $960-$980/nt), ex-Midwest mill.
Offshore producers, who are equally hungry for orders have revised their pricing downward as well. Taiwanese and Vietnamese mills have taken offer prices down by $3.50 cwt. ($77/mt or $70/nt), bringing their ranges to $35.00-$37.00 cwt. ($772-$816/mt or $700-$740/nt), both DDP loaded truck in US Gulf coast ports.
“It’s pretty ugly out there, if not downright depressing,” according to one Midwest-based source, who also points out that despite the drop in pricing, “no one is doing much buying these days.” Drilling projects are stalling, rig counts are falling and activity is trending weak. And while the speculation is that the market may experience a U-shaped recovery, it’s believed that the current lull could last into the late third, if not fourth quarter of this year.