SteelOrbis

US import OCTG to be impacted by politics

Tuesday, 14 February 2017 00:38:43 (GMT+3)   -   San Diego

Last week, the US Department of Commerce moved to delay its annual review in the antidumping (AD) and countervailing duty (CVD) case against oil country tubular goods imports from Korean steelmakers; the ruling will be announced on March 30.

And while the current dumping margins, which span from 3.98 percent to 5.24 percent, have done little to discourage US buyers and Korean OCTG producers from engaging in commerce, the “wildcard” in the market is how policies and procedures under the Trump administration will impact AD/CVD duties moving forward.

“It’s hard to say if they’re looking for more time to sort this out or if they’re shoe-horning for more time so they can get a higher duty,” one source said. “Even if the DOC does find a way to slap a much higher margin on Korean imports, that will still need to jockey through the courts for months before it’s resolved.  And even if that’s overturned, kicking Korean pipe out of the market, even for six months, will throw everything into upheaval.”

Others say they’re skeptical that the Trump administration would instruct the US DOC to “get aggressive” with duties against imported goods from South Korea, due to rising tensions with North Korea; on Sunday, North Korea carried out a ballistic missile test.

“Starting a trade war with South Korea might not be the administration’s top priority at the moment,” another source said.|

Current pricing for Korean, unfinished J55 ERW OCTG casing in the US domestic market is trending in the approximate range of $41.50-$42.50 cwt. ($915-$937/mt or $830-$850/nt), DDP loaded truck in US Gulf coast ports.

In terms of current overall demand, the source notes that increases in rig counts has “most certainly” led to increased demand for OCTG. “Demand is greater than it’s been in the past because now, one rig can now consume far more tons of OCTG because drillers can drill multiple lateral wells off a single pad or wellbore.”

The source further notes an expectation that pricing for US domestic J55 ERW oil country tubular goods casing (OCTG), which is still trending at $45-$47 cwt. ($992-1036/mt or $900-$940/nt), ex-mill, will “continue to rise through Q2 and Q3 before leveling off,” he said. “Pricing will probably decline in the fourth quarter after budgets are exhausted, and after the mills are able to bring supply and demand back into equilibrium.”



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