US standard pipe prices have continued to drop in recent weeks, as weak demand and high inventories continue to negatively affect the market.
Suppliers say that there is hardly any interest in new pipe offers right now, as everyone is still in "inventory reduction" mode. While the market for hot rolled coil, the raw material for welded pipe, seems to have just about bottomed out, the pipe market will take longer to recover due to the high inventories.
Domestic pipe mills, unlike the tubing mills, are not publicly announcing any price decreases, but the spot price continues to drop. While a month ago, ERW A53 BPE offers from domestic mills were in the low $50s cwt. (low $1,100s/mt or low $1,000s/nt) ex-mill, buyers say that the domestic offering range has dropped to the mid-$40s cwt. (high $900s/mt or low $900s/nt) ex-mill.
Both domestic mills and distributors are doing their best to keep prices from sliding, buyers say, but they are not very successful in doing so since demand is so dead.
On the import side, prices continue to fall as well, though again, very few new orders are being booked. Most new import offers for ERW A53 BPE to the US are in the high $30s cwt. (mid-$800s/mt or mid-$700s/nt) duty-paid, FOB loaded truck, in US Gulf ports, with the most competitive offers coming from Turkey. Southeast Asia and India are also among the sources offering standard pipe to the US. Generally, foreign mills currently offering standard pipe to the US are rather negotiable in their offers, as long as they are able to make a profit based on their HRC costs.
The current pricing gap between standard pipe (A53) and structural tubing (A500) in the US is a bit more narrow than usual, which is likely because pipe sales are even weaker than tube sales. Although the tubing market is weak as well, the pipe market was especially hard-hit by the pricing fallout in the second half of '08 due to the long lead times for pipe in the first half of the year. With a lot of pipe orders arriving well after the market started to plummet, distributors and consumers were left with bloated, de-valued inventories. It is expected that it could take at least six months for the current inventories to draw down.
Regarding pipe for energy-applications, particularly OCTG, conditions are even worse. While the domestic pipe industry has been protected from imports of welded standard and line pipe from China for some time now by the antidumping and countervailing duty cases against these products, OCTG imports reached new heights in 2008. And with the global financial crisis accelerating and oil and natural gas prices tanking in the fourth quarter, the US OCTG market became overburdened with the glut inventories, which continue to arrive in US ports. Imports of most steel products registered declines in November, but OCTG imports hit a record high of 496,629 mt, over 300,000 mt of which came from China. OCTG imports were only slightly down, at 401,718 mt, in December (based on licensing data). While it seemed unlikely with the record high profits of domestic OCTG manufacturers last year, now, a trade action against Chinese OCTG may be in the cards.
As for the CVD case against Chinese line pipe, the US International Trade Commission's (ITC) countervailing duty determination was made official in December, with the ITC voting unanimously in the affirmative. The ITC is scheduled to make its final determination in the antidumping investigation against Chinese line pipe some time in January.