In mid-December, SteelOrbis reported that most US domestic energy pipe mills had temporarily pulled spot offers from the market while they awaited greater clarity on their input costs. Since that time, scrap prices have settled up by $80-$120/gt across the board, and HRC prices have continued to shoot up at breakneck speed. Not surprisingly, domestic energy pipe offers have also spiked.
Today, US domestic J55 ERW OCTG casing is being quoted at $60+ cwt. ($1,323/mt or $1,200/nt), FOB mill, against $45 cwt. ($992/mt or $900/nt), ex-mill, in early December. US domestic API X-52 prices are now trending at $62.50+ cwt. ($1,378/mt or $1,250/nt), FOB mill, against $45.00-$47.50 cwt. ($992-$1,047/mt or $900-$950/nt), FOB mill in mid-December. One source said he was quoted as high as $71.50 cwt. ($1,576/mt or $1,430/nt) for new rolling.
“This pricing sounds about right for now, for about the next 37 minutes until the next increase is announced,” a source said. “It’s really crazy stuff.”
“This all comes down to simple math,” a second source said. “If the mills have to pay more than $50 cwt. ($1,102/mt or $1,000/nt) for HRC, there’s no way they’re going to be selling pipe for less than $57.50-$60 cwt. ($1,268-$1,323/mt or $1,150-$1,200/nt) ex-mill.”
A third source agreed that the market is “nothing short of insane. When COVID started, service centers worked through their stock and they stopped buying because oil prices and the rig count tanked. When that was done, they bought what mills already had on the ground. In October and November, when service center inventories started to get thin again, they didn’t buy because they thought the uptrend wasn’t sustainable, but it just keeps going up. Anyone who needs to book now is paying through the nose. It feels like there’s no end in sight.”
" I don’t think anyone is planning on buying inventory right now – too risky if prices start going down," another souce added. " It’s too sudden a jump."
Current prices, sources note, are expected to be temporary. Higher prices are likely to emerge “sooner than later.”