US pipe market – Energy pipes still robust, but standard is slumping

The domestic ERW pipe market is still afloat and is among the stronger steel products during this period of seasonal price declines in the steel industry. However, the standard pipe market has lost some of its strength in the past month, with prices falling off slightly. Most domestic offers for A53 now range from $46.00 cwt. to $47.00 cwt. ($1,013 /mt to $1,036 mt or $920 /nt to $940 /nt) ex-mill, down from the $49.00 cwt. to $50.00 cwt. ($1,080 /mt to $1,102 /mt or $980 /nt to $1,000 /nt) range they had been hovering at in November. Experts say that standard pipe prices have come down partially from the slow construction market and seasonal slowdown, though the main problem is high inventories. Even with mills' planned fourth quarter outages taking place, there is still a lot of tonnage on the market. Still, demand is strong enough so that no major price decreases are expected, and prices are expected to remain at the current range for the rest of the year before starting to trend up again in the spring when inventories will be depleted and construction activity will pick up again. While the standard pipe market is sluggish, the market for energy pipes is still robust. The pricing trend for both domestic line pipe and OCTG remains strong, with strong demand and pricing expected to continue in the New Year. Energy companies are expected to ramp up drilling activity in January, and gas prices are expected to rebound at this time as well. Baker Hughes rig statistics show for the current week, a total of 2,187 rigs in North America, compared to 2,159 rigs last week, and 2,162 rigs for the same week last year. Domestic line pipe offers on the market are currently in the low $50 's cwt. The import pricing trend for ERW pipe is still slightly down, as inventories are high and competition between Chinese mills remains fierce, keeping prices from rising. While buyers predict that import OCTG will remain strong, Chinese line pipe and standard pipe are still being offered at rates significantly below domestic prices. Though the lower grades of Chinese pipe are very competitive compared to domestic rates, the US construction industry, the end user for most standard pipe, is somewhat protected by the many governmental construction projects that are required to use domestic pipe. For now, Chinese offers for A53 standard pipe still range from $590 /nt to $630 /nt ($650 /mt to $694 /mt or $29.50 cwt. to $31.50 cwt.) FOB loaded-truck, Houston, Texas. Offers for sizes larger than 8” diameter from China range from $690 /nt to $730 /nt ($761 /mt to $805 /mt or $34.50 cwt. to $36.50 cwt.) FOB loaded-truck at West and Gulf Coast discharge ports. While larger than 8” pipe is generally made from hot rolled coils made from slabs, smaller diameter pipes are made from HRC made from billets. As of now, Chinese line pipe (API 5L X42) offers still range from approximately $700 /nt to $750 /nt ($772 /mt to $827 /mt or $35.00 cwt. to $37.50 cwt.) FOB loaded-truck in Houston, with extras for pipe larger than 8”. US Steel Import Monitor statistics show that during the month of November, the following countries exported the most standard pipe to the US: China, at 50,201 mt; Canada, at 24,112 mt; Mexico, at 5,451 mt; Korea, at 4,570 mt; and Taiwan, at 3,710 mt. The most line pipe imports during the month of November came from the following countries: China, at 53,599 mt; Korea, at 31,326 mt; Canada, at 30,911 mt; Brazil, at 23,158 mt; and Japan, at 16,373 mt.