US pipe market – Import prices continue to rise

Import standard and line pipe prices have increased another $10 /nt ($11 /mt or $0.50 cwt.) in the past two weeks, reflecting the strengthening Chinese market. Chinese A53 standard pipe offers now range from $610 /nt to $650 /nt ($672 /mt to $717 /mt or $30.50 cwt. to $32.50 cwt.) FOB loaded-truck, Houston, Texas, and sizes over 8” range from $710 /nt to $750 /nt ($723 /mt to $827 /mt or $35.50 cwt. to $37.50 cwt.) FOB loaded-truck, Houston. This price range is also valid for most West Coast ports. Import line pipe offering prices have gone up too, with Chinese line pipe (API 5L X42) offers now ranging 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 similar extras for pipe larger than 8”. The pricing trend for import pipe is now slightly up, as recent increases in Chinese flat rolled pricing are being passed along to pipe, and China's domestic pipe consumption is getting stronger. Pipe distributors in the US also say that shipments from China have slowed in recent weeks. Due to these factors, more increases are expected for import pipe prices in the coming weeks. As for the domestic market, the pricing trend remains flat. In the past two weeks, domestic pipe prices have remained stable at a range of 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. Most ERW line pipe offers range from $51.00 cwt. to $52.00 cwt. ($1,124 /mt to $1,146 /mt or $1,020 /nt to $1,040 /nt) ex-mill. Market players say that there is still an overhang of pipe inventories, but that they are being depleted and are not large enough to be problematic. Demand is still steady, but it has not picked up any in recent weeks, as the cold weather in most of the US has prevented construction activity. However, this situation should change as the weather warms up and inventories are consumed. Also, recently announced price increases in the domestic flat rolled market will eventually boost pipe prices if they go through. It is still too soon to say if hot rolled coil customers will pay the full $30 /nt that mills announced, but since scrap prices are increasing and market conditions for the flat rolled market are improving, it is widely believed that the market will accept the increase. Drilling is still at healthy levels, and most market players believe that the energy market, which is key to the health of the pipe market, particularly for line pipe and OCTG, will remain strong in 2007 as it was in 2006. The Baker Hughes North American Rotary Rig Count shows that as of February 16, 2007, the rig count was 2,382, ten rigs higher than the amount of rigs a week ago, and 119 rigs higher than the year-ago amount. We anticipate that the pipe market will start to pick up again in late March to early April. Until that time, the pricing trend will likely remain flat.