OCTG buyers remain cautious amid price hike

Nov 08, 2011 | 04:25 PM | Michael Cowden

Tags  Tenaris, OCTG, price increase, vallourec, u.s. steel, michael cowden

TORONTO — Major domestic oil country tubular goods (OCTG) producers have announced price increases for 2012, but some buyers may remain on the sidelines despite a healthy drill rig count, a key indicator of OCTG demand.

Market sources contacted by AMM recited a litany of worries, including political and economic uncertainty, concerns of additional domestic capacity and import volumes. Meanwhile, flat-rolled tags are increasing as scrap prices take a tumble, sending mixed messages to a hesitant market.

"Caution is in the air. Keeping a conservative profile and avoiding speculating too far out is the business model today," one distributor source said.

Such caution includes not automatically buying ahead of a price increase just because one has been announced, buyer sources said. Still, others argued that mills might not be trying to entice buyers to place orders so much as they are trying to improve margins to what they consider acceptable levels, given current strong drilling activity.....

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