US ERW pipe market trends sideways

Despite the falling hollow section prices in the US, electric resistance welded (ERW) standard pipe prices have not decreased noticeably in recent weeks, and the pricing trend remains neutral. The market saw pipe prices decrease last month due to high inventories and lower hot rolled coil tags. The decrease in oil prices may also have something to do with last month's drop in pipe prices. Now that the flat rolled market is expected to rebound and the New Year has begun, the pipe market should remain pretty stable for the time being, and perhaps avoid decaying prices over the next few months. Most domestic offers for A53 range from $46.00 cwt. to $47.00 cwt. ($1,013 /mt to $1,036 /mt or $920 /nt to $940 /nt) ex-mill, while domestic line pipe offers range from $54.00 cwt. to $55.00 cwt. ($1,191 /mt to $1,213 /mt or $1,080 /nt to $1,100 /nt) ex-mill. Traders report that ERW pipe sales in the US are pretty flat. People are buying for basic inventory needs but are not stocking up, as the market has not really rebounded from its slump yet. However, on the whole, 2007 is expected to be a good year for pipe. Non-residential and industrial construction are both expected to keep going strong this year, as well as bridge works and road works, keeping the standard pipe market healthy. There are also a number of oil exploration projects to take place in '07, which will require the use of plenty of energy pipes. As of now, the OCTG market is very strong compared to standard and line pipe, and this trend is expected to continue. The Baker Hughes North American rig count shows 2,112 rigs for the week ending January 5, compared to 2,139 for the previous week, and 2,058 for the week ending January 5 of the previous year. This steady drilling activity is not expected to slow down any time soon. Import prices have fallen some since our last report, with Chinese A53 and standard pipe prices decreasing $10 /nt ($11 /mt or $0.50 cwt.) in the last month, which could mark a short term bottom price. Chinese prices for A53 standard pipe now range from $580 /nt to $620 /nt ($29.00 cwt. to $31.00 cwt. or $639 /mt to $683 /mt) FOB loaded-truck, Houston, Texas. Offers for sizes larger than 8” diameter from China range from $680 /nt to $720 /nt ($34.00 cwt. to $36.00 cwt. or $750 /mt to $794 /mt) FOB loaded-truck at West and Gulf Coast discharge ports. Chinese line pipe (API 5L X42) offers now range from approximately $690 /nt to $740 /nt ($34.50 cwt. to $37.00 cwt. or $750 /mt to $816 /mt) FOB loaded-truck in Houston, with extras for pipe larger than 8”. Despite the decrease seen since last month, the pricing trend for import pipes is now neutral, since Chinese flat rolled prices are now on the rise. The trend for Chinese pipes will eventually start to turn up again as the pipe market reflects the higher hot rolled coil prices. However, this may not happen until February. China remains the low-priced leader for pipes, shipping mostly smaller diameter pipe. Market professionals report that there is still not any significant import pipe tonnage coming from any other countries. Census data from the US Import Steel Monitor shows that from January through October 2006, the US imported 512,851 mt of standard pipe from China, compared to 304,818 mt from Canada. For the same period of 2005, the US imported 311,894 mt from China.