Energy sector drives pipe and tube demand: Service center execs

Jan 31, 2012 | 07:00 PM | AMM staff

Tags  Center Piece, steel tube and pipe market, service center market, energy market, David H. Hannah, AMM Staff

A number of factors affect how service centers tailor their approaches to customers, the market in general and the establishment of best business practices.

When it comes to prices, for example, steel pipe and tube have followed separate paths in recent months, with energy tubulars generally recording gains while non-energy pipe and tube tags continue to suffer.

On a more general front, some service center executives said the daily headlines, though accurate on unemployment and the lack of consumer confidence, are much gloomier than actual demand for metals would indicate. In fact, 2012 could be a strong year for pipe and tube business.

In non-energy products, the exception continues to be specialty items, such as cold-drawn seamless mechanical tubing, which have maintained solid prices and long lead times thanks to limited capacity and steady demand from the industrial and heavy equipment markets, according to buyer sources.

On the energy side, while commodity-grade line pipe and oil country tubular goods (OCTG) may have experienced small price moves up or down, alloy material is continuing its upward price trend as strong demand from shale plays drives drilling activity.

Distributors have a variety of opinions on how those price increases might play out on their side of the industry. One Midwest service center source argued that any increase might be hard to push through, given continued short lead times, especially from tube mills.....