Despite consistent demand levels throughout Q2, US domestic energy pipe prices are showing the first signs of softening. Since mid-May, US domestic J55 electric resistance weld (ERW) oil country tubular goods (OCTG) casing spot prices have fallen about $1.00 cwt. ($22/mt or $20/nt) on the high end to $66.00-$67.00 cwt. ($1,455-$1,477/mt or $1,320-$1,340/nt) ex-mill. Spot prices for API X42 ERW line pipe are still within previously reported ranges two weeks ago of $66.50-$67.50 cwt. ($1,466-$1,488/mt or $1,330-$1,350/nt) ex- mill, although the line pipe spot prices are beginning to weaken as well. Sources indicate that although line pipe is the weaker product in the energy pipe market, mills haven't been offering big discounts on line pipe--yet. Customers with enough tonnage however, may be able to negotiate line pipe offers under the above range.
Last week's 17 rotary rig jump in the US rig count is an optimistic sign for the US energy pipe market, considering neutral rig counts two weeks ago, and a six rig count drop the week before. Last week's increase indicates that although spot prices for domestic OCTG and line pipe have shown some signs of initial softening, demand is steady enough that the drop in spot prices won't be substantial, even though US domestic hot rolled coil (HRC) spot prices have fallen to $37.00-$38.00 cwt. ($816-$838/mt or $740-$760/nt) ex-Midwest mill from their peak of $43.00-$45.00 cwt. ($948-$992/mt or $860-$900/nt) ex-Midwest mill less than two months ago.
Import activity is, for the most part at least, steady as well. Traders tell SteelOrbis that there has been a slight downtick in buyers' appetite for imports in the last couple weeks, but nothing too significant. However, US service center inventories are well-stocked, and with the expectation that some import offer prices are likely to drop further by the end of Q2, many US buyers are being cautious regarding taking a heavy position on import inventory-especially considering that existing inventories from arriving imports in April and May are already high. According to US Steel Import Monitoring and Analysis (SIMA) data, the US imported 184,222 mt (preliminary census data) of line pipe in April, and 168,807 mt (license data) in May, compared to 122,011 mt (census data) in March.
Arriving imports of OCTG have been high as well, with 186,110 mt (preliminary census data) arriving in April and 208,802 mt (license data) arriving into the US in May. Most notably is a major decline in OCTG imports from Korea. The US has imported over 50,000 mt of OCTG per month from Korea since January, but May license data is pointing to a dramatically lower 20,919 mt arriving (as of May 31). Meanwhile, imports from other countries are soaring. After exporting just over 700 mt of OCTG in to the US in March, Turkey exported 11,725 mt (preliminary census data) to the US in April, and 10,548 mt (license data) in May.
As for current import offers, Korean mills are offering J55 ERW OCTG casing to the US at approximately $55.00-$56.00 cwt. ($1,213-$1,235/mt or $1,100-$1,120/nt) DDP loaded truck in US Gulf ports-down about $2.00 cwt. ($44/mt or $40/nt) since our last report two weeks ago.
Korean offers of API X42 ERW line pipe however, have not moved in the last two weeks, and still range from $53.50-$54.50 cwt. ($1,179-$1,202/mt or $1,070-$1,090) DDP loaded truck in US Gulf ports. Taiwanese offer prices are also neutral from two weeks ago, still approximately $53.50-$54.50 cwt. ($1,179-$1,202/mt or $1,070-$1,090) DDP loaded truck in US Gulf ports.