Pessimistic forecasts in the US flats market coupled with heavy levels of imported pipe currently arriving into the US has the energy pipe market anticipating prices to soften in the near term.
The US domestic spot price ranges for both API X42 electric resistance weld (ERW) line pipe and J55 ERW oil country tubular goods (OCTG) casing have not moved in the last week and are still largely in the range of $66.00-$67.00 cwt. ($1,455-$1,477/mt or $1,320-$1,340/nt) ex-Midwest mill. Most spot transactions are being placed toward the lower end of the range, however, and spot ranges are likely to slip in July, especially if US domestic hot rolled coil (HRC) spot prices fall below current spot price levels of $37.00-$38.00 cwt. ($816-$838/mt or $740-$760/nt) ex-Midwest mill, as many suggest.
Sources tell SteelOrbis that many domestic pipe mills are still busy enough with project tons-stemming from active oil and natural gas collection in major US shale plays-and have orders booked well into Q3. In turn, even mills with spot tons available aren't offering big discounts just yet. But if buyer inventories rise significantly with imported pipe throughout June and July as recent data suggest, "demand for pipe domestically is going to quickly taper off," according to one US domestic line pipe distributor.
According to the US Steel Import Monitoring and Analysis System (SIMA), after importing 172,125 mt (license data) of line pipe in May, and 186,628 mt (census data) in April, US imports of line pipe are already up to 113,606 mt (license data) as of June 14. Line pipe imports from Korea have already reached 46,274 mt (license data) for June, compared to 31,904 mt (license data) for all of May. Current Korean offers of API X42 ERW line pipe are within previously reported ranges a week ago of $53.00-$54.00 cwt. ($1,168-$1,190/mt or $1,060-$1,080/nt) DDP loaded truck in US Gulf ports. Taiwanese line pipe offers to the US are within the same the same range.
Korean exports of oil country goods to the US have been heavy as well so far in June, with license data pointing to 54,722 mt having arrived as of June 14, compared to 20,919 mt (license data) arriving in the US in May. And current interest into Korean offers of J55 ERW casing to the US is still strong, with most offers heard in the range of $55.00-$56.00 cwt. ($1,213-$1,235/mt or $1,100-$1,120/nt) DDP loaded truck in US Gulf ports. Taiwanese mills are also offering OCTG casing to the US, but at offer prices slightly above Korea.