US pipe market – Import market seeking its wings

Despite the rallying import prices for virtually every other steel product market, import steel pipe prices haven't quite taken off yet. In fact, Chinese standard pipe prices have settled down slightly since last month, as the earlier bullish offers weren't met with broad acceptance. At the lower end of spectrum, Chinese pipe offers have decreased by about $10 /nt since last month, with offers for A53 standard pipe now ranging from $580 /nt to $620 /nt ($639 /mt to $683 /mt or $29.00 cwt. to $31.00 cwt.) FOB loaded-truck, Houston, Texas. Offers for larger than 8” diameter pipes from China are going for approximately $670 /nt to $690 /nt ($739 /mt to $761 /mt or $33.50 cwt. to $34.50 cwt.) FOB loaded-truck at West and Gulf coast discharge ports. Despite the slight softening of Chinese prices this month, the pricing trend for pipe imports is still strongly up. All non-Chinese mills have increased their offering prices and are quietly waiting for Chinese prices to pick up and so they can resume order bookings to the US. Fortunately, the demand for pipe in other major markets is also healthy and mills are having no problem finding homes for their output. Chinese mills will undoubtedly raise their prices as well. Many Chinese pipe makers are now holding back their offers under the uncertainty of the changing tax regulation. If the value added tax rebate is decreased, the cost of exports will rise. In addition, flat rolled prices are also continuing to rise in China. Eventually, all of these cost increases should affect the export prices. Statistical analysis reveals the dominance of Chinese origin for all major pipe and tubing imports. During the month of April 2006, the top three countries from which the US imported standard pipe from were: China, at 47,440 mt; Canada, at 33,290 mt; and at a distant third place, Romania, at 8,845 mt. In April, the top three countries the US imported OCTG from were: China, at 56,514 mt; Korea, at 19,575 mt; and Austria, at 15,014 mt. For line pipe imports in April, the top three countries were: Canada, at 30,268 mt; China, at 28,026 mt; and Japan, at 21,926 mt. The pricing trend for pipe in the US is up as well, due to the strength of the domestic flat rolled market as well as high drilling activity and rising prices in the oil and gas industries. The current rig count in North America for the week ended May 20, 2006 was 1906, compared to a rig count of 1826 the previous week and a count of 1582 for the same week the previous year. Demand is especially strong for line pipe and OCTG, therefore domestic manufacturers are focusing production more on API pipe instead of competing on standard pipe with China. Domestic pipe mills have announced price increases. If they have their way, the new prices for standard pipe would be pushing $1,000 /nt ($1,102 /mt or $50.00 cwt.). API pipes would start at $1,100 /nt ($1,213 /mt or $55.00 cwt.).