Standard (A53) pipe inventories in the US continue to work down due to steady demand and lack of imports, though stocks are still sufficient to meet the current demand.
Buyers say that although demand is solid and import arrivals continue to decline month after month, distributor inventories are still large enough to last for the rest of the year, and therefore, no more domestic price increases are expected to occur this year. Domestic A53 offers currently range from $42.00 cwt. to $44.00 cwt. ($926 /mt to $970 /mt or $840 /nt to $880 /nt) ex-mill.
Next year, however, market conditions should allow domestic standard pipe prices to rise. With Chinese producers expected to be absent from the market (pending the outcome of the AD/CVD case) and other import players being subject to the high ocean freight rates and weak US dollar, import offers should be few and high-priced, leaving room for domestic mills to raise prices.
These factors have also led some domestic pipe producers to take a cue from the flat rolled producers and start exporting more tonnage. Pipe exports aren't taking place in a major way yet, but more mills are reportedly considering this option.
Traders say that there are some import offers available from Indonesia, Malaysia, Taiwan and South Korea; however, they are not competitive and no one is interested in buying in large quantities right now.
Chinese mills continue to ship X42 line pipe of 2" to 8" diameter to the US at a range of $34.00 cwt. to $36.00 cwt. ($750 /mt to $794 /mt or $680 /nt to $720 /nt) FOB loaded-truck in Houston.
The pricing trend for these Chinese line pipe imports is up, due mostly to the rising hot rolled coil prices in China in addition to the high ocean freight rates. The domestic market is in little danger of being injured by imports; unlike the standard pipe and OCTG markets, the domestic line pipe market continues to see strong demand and rising prices. More North American line pipe production capacity is expected to be built in the coming years to meet the growing demand.
Data from the US Import Administration show that year-to-date at the end of August 2007, total line pipe (category includes seamless as well as welded) import arrivals in the US were 1,744,323 mt, up from 1,080,875 mt for the same period of last year. In the first eight months of 2007, the most line pipe tonnage came from: Canada (325,828 mt), China (313,048 mt), India (196,248 mt), South Korea (182,103 mt), and Italy (121,525 mt).
Due to the skyrocketing price of oil, oil exploration and drilling activity remain at historically high levels, which should continue to help the line pipe market. The Baker Hughes North American Rotary Rig Count shows 2,105 rigs in North America currently, compared to 2,095 a week ago and 2,087, one year ago.