The US domestic energy pipe markets are still dealing with “depressed activity levels,” sources note, adding a widespread belief that “there’s not a lot of room for prices to go down.”
“Prices have been holding in the past few weeks because HRC prices have been stable,” a source notes, adding that even if scrap comes down next month, that in the absence of a spike in mills’ capacity utilization rates, that HRC “could be able to hold on.”
And while domestic capacity utilization rates are up slightly, week-over-week, cap utilization rates have yet to break 55%. Yesterday, it was reported that for the week ending June 20, the capacity utilization rate was recorded at 54.6%, compared to 54.0% one week prior.
Rig counts, on the other hand, are still facing pressure. On Friday, SteelOrbis reported that the total US rotary rig count had decreased by 13 rigs, to 266, following a five-rig decrease the week before. The oil rig count was tallied at 189, which reflect a 701-rig decrease from the same reporting period in 2019.
“It’s all a mess,” another source added. “New business is hard to come by and we’re having a hard time collecting accounts receivables from customers who have lost money.”
In terms of pricing, spot market prices for stock API-X52 line pipe is being still heard at approximately $42.50 cwt. ($937/mt or $850/nt), ex-mill, although some sources have reported that deals are still available. Import material from Mexico is still being heard at approximately $45.00 cwt. ($992/mt or $900/nt), FOB Texas.
“The idea that import material costs more than domestic material is absolutely insane, but that’s the world we’re living in at the moment,” another source said.
Also, as with last week, sources have once again confirmed that stock domestic J55 ERW OCTG casing is still being traded at or slightly below $45.00 cwt. ($992/mt or $900/nt), ex-mill. Korean material is also being offered at approximately $45.00 cwt. ($992/mt or $900/nt), DDP loaded truck in US Gulf ports.
What’s interesting, however, is that sources have said that Korean producers are “giving up their quota,” meaning that they have not been able to sell enough pipe to US buyers to hit their quota cap.
“The best thing I can say about the market right now is that oil prices are back up around $40 per barrel, but even then, there’s some concern that this could lead to increased production, which could hurt pricing,” a source concluded.