Consumption and demand for standard, OCTG, and line
pipe in the US remains steady, but the domestic pricing trend for these products is now neutral.
The higher priced offers are finding more resistance and it is unlikely that current prices, close to all-time highs, will be able to rise much further. Still, there has been no slippage in business for the thriving energy industry – the North American rig count as of the week ended July 7, 2006 totaled 2,219, up from 2,139 the previous week, and 1,761 for the same week the previous year.
The offshore drilling bill recently proposed in the US Senate, if passed, will allow for more natural gas and oil drilling in the eastern Gulf of
Mexico, which will continue to keep line
pipe and OCTG demand from the energy sector tight.
For the more common applications such as water and low pressure gas pipes, current domestic offers on the market for A53 standard
pipe range from about $47.00 cwt. to $48.00 cwt. ($1,036 /mt to $1,058 /mt or $940 /nt to $960 /nt), however, mills emphasize
production of value-added grades, such as API, for better returns, leaving the cheaper, lower grades to the import market.
Import
pipe prices have been on a slow rise, though Chinese offers are still much lower-priced than Turkish offers. Turkish and offers from other origins for A53 standard
pipe are currently about $40 /nt to $80 /nt higher priced than the Chinese offers.
Turkey hasn't been offering much
pipe in the past few months because of rising flat rolled prices in the Black Sea area. These raw material price increases are now over, so it would be an appropriate time to do more exporting, however,
Turkey still can't compete with the cheap Chinese offers dominating the market. But now that the incredible flat rolled rally in that region seems to have cooled off, we expect the Turkish offers to become more competitive in the upcoming months.
Chinese prices have been climbing up at a painfully slow pace. The reason for this is that when most major
pipe mills raise their prices, bargain offers start to show up from lesser-known
pipe mills. Now that the flat rolled prices started to soften some in
China, the pricing trend for pipes has gone from up to neutral, and further price increase expectations are mostly diminished. For now, the offers remain stable at the current level.
On balance, Chinese offers for A53 standard
pipe have gone up by $10 /nt in the last two weeks, and are now ranging from $610 /nt to $650 /nt ($30.50 cwt. to $32.50 cwt. or $672 /mt to $717 /mt) FOB loaded-truck, Houston, Texas. Offers for sizes larger than 8” diameter from
China are now going for approximately $700 /nt to $740 /nt ($35.00 cwt. to $37.00 cwt. or $772 /mt to $816 /mt) FOB loaded-truck at West and Gulf Coast discharge ports.
US government import statistics show that the countries that exported the most standard
pipe to the US, year-to-date as of July 11, are the following:
China, at 244,972 mt;
Canada, at 191,591 mt;
Thailand, at 45,325 mt;
Mexico, at 38,703 mt; and
India, at 36,011 mt.